Government in Development:
a pragmatic approach for improving the health care system of Bali.
Eelco Rusman
Rijksuniversiteit Groningen Faculteit Bedrijfskunde September 2002
Preface
The graduation thesis you are about to read marks the end of two important periods of my life. First, it officially ends my time as a student ‘Bedrijfskunde’at the Rijksuniversiteit Groningen (RuG). Secondly, it shows the results of my research project in Bali,
Indonesia. This research focused on the consequences of a decentralising government for the health care system in Bali. By completing this thesis, I also close this interesting and exciting period.
During my stay in Indonesia I have learned that the theoretical knowledge I have gained during my study is useless when you are not able to apply it to a specific situation. The continuous tension between theory and practice is sometimes confusing, but in the end it is this same tension that enables you to comprehend the situations you face.
My research concerned a political sensitive subject: the decentralisation process of the government. After years of dictatorship, Indonesia is struggling to develop a effective form of government. During my research period in Kalimantan and Bali I experienced and witnessed myself how this issue is directly influencing the lives of the people on these islands. An old saying tells that “each nation receives the government it deserves”.
I hope that the people of Indonesia now finally receive what is rightfully theirs:
a democratic, controllable, effective and efficient government that provides the services that the people need.
Eelco Rusman, ‘s Hertogenbosch september 2002
Acknowledgements
From this place I would like to thank all the people who supported me when I could use some help. Of course, there are two persons who deserve to be named first: my parents.
"The art of raising a child is first the art of forming, but after that it becomes the art of daring to let go”. Mama and Papa, thanks for the trust and the support!
Then, the people of Work Group Matching (WGM), who helped me to organise my trip and made me familiar with the Indonesian culture: Andreas, Bastiaan, Sonja and John.
Furthermore, the people on who I could depend in Indonesia: Ferty Desianti, mister Bendesa and the other people of Universitas Udayana. Wayan and Joe, for being my translators in times of need.
And of course, Adi Sukerti and her family. During my time in Bali I was allowed to stay four months with this Balinese family. I’m still overwhelmed by the kindness and wisdom of these people. Without the countless conversations with all three generations living there, I would never been able to understand the least of the impressing Balinese culture.
And than of course, the people who helped me in my struggle to translate my comprehension of the complex situation there in Bali into a readable, academic acceptable graduation thesis. Kees van Veen and Delano Maccow.
Kees, thanks for your patience, critical remarks and the helping hand when I was in the danger of drowning in the complexity of the subject.
Delano, thanks for the trust and the calming influence you had on me, especially when my original first mentor quitted. And Inge and Monique: the two best secretaries of the whole WSN-building.
And finally, Barend and Reyn, two friends who have continuously showed real involvement during this research project.
Eelco
Stellingen
1. “Wie bang is om te verliezen, kan ook nooit winnen.” (Johan Cruyf)
2. “Wat ontwikkelingshulp betreft, naar mijn oordeel is de Balinese beschaving veel verder dan de onze Westerse beschaving. Men heeft daar duidelijk meer respect voor de natuur, ouderen, elkaar en anders denkenden. Ik heb de stellige indruk gekregen dat wij meer van hen kunnen leren dan andersom.”(Eelco Rusman)
3. “De typering idealist wordt tegenwoordig al snel gelijk gesteld aan een kinderlijke naïeveling die van een andere planeet lijkt te komen. Het feit dat iemand nog van een beter wereld durft te dromen wordt eerder als zorgelijk dan wenselijk gezien.”
(Eelco Rusman)
4. “Zolang je met de verwondering van een kind de wereld in kunt kijken zul je altijd in staat blijven om: te leren van het leven en genieten van de kleine dingen die dat leven zo mooi maken”. (Eelco Rusman)
5. “Rust en regelmaat, dat is goed voor jou” (Tjamke Maria Rusman-Ebbing)
6. “Choose a job you love, and you never have to work a day in your life.” (Confusius) 7. “Een gat in je CV is per definitie een onjuiste uitdrukking. Je kan geen gat in je
levensloop hebben en ik zou me daar dan ook niet druk over maken.” (Eelco Rusman)
Executive summary: A mind map
Customer/problem owner:
Central government of Indonesia
Research institution:
Work Group Matching (WGM)
Researcher:
Eelco Rusman
What are the consequences of the decentralisation process?
What are the consequences of the decentralisation process of the Indonesian government for the quality of the health care system in Bali and what
could be done in order to increase the quality?
(2.1)
Broad & Complex !!!
➀ Diagnose
➁ Design
➂ Implementation
Solutions to reduce complexity:
• Problem boundaries (2.3)
• Methodology of de Leeuw (1986):
The three design steps applied in this research:
Introduction (Chapter 1) Problem analysis (Chapter 2) ➀ Stakeholder analysis (Chapter 3) Organisational (re)design (Chapter 4) ➁ Conclusions & recommendations (Chapter 5) will form the start of the implementation phase (➂). This phase falls out of the scope of this research.
Result
Proposed new organisational structure for the health care system in Bali (4.3)
Evaluation (4.4):
This will be done in this research by using a program of demands.
But in the end this design should be evaluated by the decision makers. They have to decide whether the design (or parts of it) should be implemented.
Contents
Preface 1
Acknowledgements 2
Stellingen 3
Executive summary 4
Contents 5
Chapter 1: Introduction 7
1.1 Goal of this research 1.2 History of Indonesia
1.3 Motives behind the decentralisation process 1.4 Constitutional laws 22/1999 and 25/1999 1.5 General political situation
1.6 The health service in Indonesia
Chapter 2: Research Introduction 15 2.1 Field of research
2.2 Program of demands 2.3 Problem boundaries 2.4 Methodology 2.4.1 Type of research
2.4.2 Method of data collection 2.4.3 Choice of sample
Chapter 3: The stakeholders and their interests 25 3.1 Introduction
3.2 Key stakeholders
3.2.1 Stakeholder I: Kabupaten Health departments 3.2.2 Stakeholder II: Provincial department
3.2.3 Stakeholder III: Central government 3.3 Other stakeholders
3.3.1 DPRD’s and mayors of the Kabupaten 3.3.2 Universitas Udayana
3.3.3 Non-governmental organisations (NGO’s) 3.3.4 Health centres (Puskesmas) and hospitals 3.3.5 Governor
3.3.6 The people of Bali
3.4 Summary and conclusions
Chapter 4: The organisational structure 40 4.1 Introduction
4.2 Analysis of the old and current situation 4.3 Design for the desired situation
4.3.1 Inter-organisational design 4.3.2 Intra-organisational design 4.4 Evaluation of the proposed design 4.5 Summary and conclusions
Chapter 5: Conclusion and recommendations 60
Literature 64
Chapter 1: Introduction 1.1 The goal of this research
This research is done to investigate what consequences the decentralisation process started by the government has for the health services in Bali. By implementing two constitutional laws the central government gave a lot of decision power to the
Kabupatens, the local government at municipal level. These health institutions were until then only used to execute orders and now have to made all decisions by themselves. This research will be describe how these Kabupatens now lack any kind of control by other institutions. It will be advocated that the current structure is adjusted to ensure effective health care in Bali. For this purpose the old and current situation of the health institutions in Bali are analysed to come to a new design of the organisational structure. Before we can speak about effective health care we must define what effectiveness means in health care, in other words: the objectives of the health care must be defined.
The central research question that must be answered in this research is: What are the consequences of the decentralisation process of the Indonesian government for the quality of the health care in Bali and what could be done in order to increase the quality?
The question will be answered by using the methodology of de Leeuw (1986) about effective management. De Leeuw has formulated five basic conditions that ‘systems’
must fulfil to be manageable. The conditions will be discussed in chapter 2. First I will give a general introduction into the subject by telling more about the history of Indonesia, the motives behind the decentralisation and the contents of the decentralisation laws.
1.2 The history of Indonesia
Indonesia is a country with a great diversity of cultures, ethnicity and religion. Because it is also widely spread, with thousands of islands, the ruling authorities have always felt that the country should be governed strongly. Centrality has always been one of the main characteristics of the government. During the colonial period of the Dutch such a
centralised system was organised, and the independent government of Sukarno more or less copied this structure. On 17 August 1945 Sukarno spoke out the Proclamation of Independence, and the Republic of Indonesia was found. The new political leaders of Indonesia felt a centralised government was needed, first to co-ordinate the independence war against the Dutch, after that to keep the young country together. The cultural
differences between the islands made it hard to create a feeling of patriotism among the people in the archipelago who before the independence primarily saw themselves as habitants of one island or member of one particular ethnic group. “Ever since Independence, the preservation of national unity has been at the top of the political agenda, hand in hand with economic development”.1
1 Nicole Niessen, Municipal Government in Indonesia, policy, law and practice of decentralization and urban spatial planning, Research School CNWS, Universiteit Leiden, 1999, page 19
The first president of Indonesia, President Sukarno played an important role in the creation of the kind of national feelings that seemed so needed for the continuation of the country. By playing the role of ‘father of the state’ and by emotional speeches often blaming foreign powers for the problems in Indonesia he tried to bond the people together. By making policies and regulations that applied to the whole country the government of Sukarno tried to give the Indonesian people a feeling of equality. Another important instrument for the nation-building process was the creation of the Pancasila state ideology. That ideology was based on five fundamental values:
1) Belief in one supreme God 2) Just and civilised humanity 3) The unity of Indonesia 4) Democracy led by the wisdom of deliberations among representatives 5) Social justice for all people of Indonesia2.
This ideology expressed the message that although the Indonesian people have many differences, they should feel united. The first value for example, the belief in one supreme God represents the idea that although every religion has its own form, they in the end all refer to the same God and therefore every religion should be respected. The whole Pancalisa state ideology can be summarised in the sentence: unity in diversity.
It is clear that over the years the Indonesian government has made considerable efforts to create a feeling of unity among its citizens. At the same time many people felt that the differences that undeniably existed among the different islands and cultures were denied.
Furthermore many people of the other islands protested against the leading and dictating position of the island Java in virtually all issues. For centuries Java has been the island that developed itself at the highest speed.3 Great Hindu (Majapahit), Buddha (Sailendra) and Islamic (Mataram) kingdoms ruled the island and conquered its neighbours. These kingdoms brought developments as infrastructure, trade and other inventions that gave Java a leading position on the other islands. When the Dutch conquered Indonesia they ruled the islands from Java and build their main city Batavia (Jakarta) on Java. Since then, the island of Java always has had more influence on political matters than the other islands.
1.3 The motives behind the decentralisation process
Many regions have never liked the strong influence of Jakarta and Java on their daily life, and almost from the start of the Republic of Indonesia cries for independence could be heard. Still, Ambon, Atjeh, Iran Jaya, East Timor and the Molukken are all regions that want to declare their independence. Other regions didn’t go so fare as to demand independence, but Niessen notes that: “Apart from a general consensus concerning the
2 Nicole Niessen, Municipal Government in Indonesia, policy, law and practice of decentralization and urban spatial planning, Research School CNWS, Universiteit Leiden, 1999
3 One amazing but sensible explanation for this leading position is sought in the fact that the land of Java was very fertile. This allowed wet-rice agriculture, but such agriculture demanded close co-operation between individuals and even villages. This causes the fact that the Javanese organised themselves in a sooner stage, this had a positive effect on the development of the island. According to: The lonely planet 2000, 6th edition, Hawthorn, Australia
nation-state’s basic frame, however, the elaboration of the relationship between the centre and the regions has remained subject to much debate.”4
The fact that Jakarta redistributed the resources that came from other islands caused many of these problems. This can be seen as a major reason for the central government to start decentralising the governmental system. By handing over decision power to regional authorities the central government hopes to prevent regions from separating from the Republic of Indonesia. But this seems not to be the only reason for the decentralisation process in Indonesia. The best way to find and explain the other motives for
decentralising government decision power is to first turn to literature on this subject.
According to Mawhood decentralisation “means the creation of bodies separated by law from the national centre, in which local representatives have formal power to decide on a range of public issues. Their political base is the locality and not the nation. Their area of authority is limited, but within that area their right to make decisions is entrenched by the law and can be altered only by new legislation. They have resources which, subject to the stated limits, are spent and invested at their own creation.”5. Rondinelli et al6 (1984) uses a comparable definition, but first distinguishes four sorts of decentralisation,
deconcentration, delegation, devolution and privatisation. The kind of decentralisation relevant here is devolution, but the general term decentralisation will be used here, following the definition of Mawhood.
But what are then the advantages of decentralising? Why do countries decentralise their governmental system? Niessen distinguished two main arguments, lend by Smith7 (1991): democratisation of government and government manageability.
The first argument refers to the existing resistance against the ruling government as described above. By decentralising principles as self-reliance and participation can be brought in practice. Furthermore the credibility of the government can be enhanced and inhabitants seem to be more likely to support a local government than the central
government. Also the accountability of the government can be enhanced because citizens have a better view of what their leaders do.
The second argument, government manageability is based on the assumption that the quality of policy making will improve when local authorities with specific knowledge of that area make the decisions. There are numerous examples in Indonesia of huge central planning programs that failed dramatically because the differences between the areas to which the program was applied where too big. Accordingly, Rondinelli et al state that expected advantages of decentralisation are: the reduction of overload and congestion in the channels of administration and communication and improvement of the effectiveness and efficiency of the governmental tasks.
4 Nicole Niessen, Municipal Government in Indonesia, policy, law and practice of decentralization and urban spatial planning, Research School CNWS, Universiteit Leiden, 1999, page 20
5 Mawhood, Ph., Decentralization: the concept and practice, in: Local government and the Third World.
Experience of decentralization in tropical Africa, Africa Institute of South Africa
6 Decentralization in Developing Countries, A Review of Recent Experience, Work Bank Staff Working Papers no 581, World Bank, 1984, Washington
7 Nicole Niessen, Municipal Government in Indonesia, policy, law and practice of decentralization and urban spatial planning, Research School CNWS, Universiteit Leiden, 1999, page 21
All authors presented here are careful to note however that the implementation of a decentralisation is difficult and that few of the possible benefits are realised in practice.
Rondinelli et al8 have identified four factors that influence outcome of the decentralisation:
“1) The degree to which central political leaders and bureaucracies support decentralisation and the organisations to which the responsibilities are transferred 2) The degree to which the dominant behaviour, attitudes and culture are conducive to
decentralised decision-making process and administration
3) The degree to which policies and programmes are appropriately designed and organised to promote decentralised decision-making and management
4) The degree to which financial, human and physical resources are made available to the organisations to which responsibilities are transferred.”
Now that we know the contents of the term decentralisation, the reasons for pursuing it and the problems with the implementation of it according to literature we can relate this knowledge to the situation in Indonesia. Before the literature on the subject of
decentralisation was discussed it was already noted that Indonesia pursued
decentralisation to prevent independence conflicts from escalating. The above literature makes it very likely that this was not the only reason. Indonesia also hopes to gain from the possible advantages of decentralisation, summarised as democratisation of
government and government manageability.
Indonesia faces many problems on governmental areas, but one of the main problems is that of KKN. KKN stands for corruption (Korupsi), collusion (Kollusi) and nepotism (Nepotism). Indonesia faces a huge corruption problem, a fact that is recognised by the United Nations that recently placed the country at the seventh place on a world-wide ranking.9 The problem lies for one part in the culture of Indonesia where it is normal to place your family and friends first, also in business context. But another part of the problem originates from the fact that the government isn’t accountable to the people anymore. This may well be a result of decades of dictatorship by the regime of Suharto.
During that time some people seemed to have obtained positions were they stood above the law. After the collapsing of that dictatorship many of those people stayed at their places. As a result the governmental system is corrupted and very few Indonesian citizens have confidence left in the Indonesian government. One of the side-goals of the
decentralisation might be to try to restore the trust in the government. By giving locals authorities the decision making power the accountability of the government should be restored. The close relation between the servants and the people should improve the communication and reduce the corruption problem. Principles as self-reliance and participation can be used to enhance the relation between the government and the habitants. In the end all these measures should result in the installation of governmental democracy and should restore confidence in the Indonesian authorities.
8 Decentralization in Developing Countries, A Review of Recent Experience, Work Bank Staff Working Papers no 581, World Bank, 1984, Washington, page 46,47
9 article in The Jakarta Post, July 2001
The second main argument named in literature on decentralisation, governmental manageability can also be applied to the situation in Indonesia. Before the start of the decentralisation the government of Indonesia largely depended on national planning programs for economical development, agriculture, health care and so on. This resulted in much resistance from the regions because such a rigid planning could never cover the needs of each specific region with all its specific characteristics. In the health sector, for example, national programs for malaria prevention and treatment were started, although this disease rarely existed in Bali. Nevertheless scarce resources were spend on this project, resources that were very welcome for other much more urgent programs in that province. Indonesian policymakers hope that the decentralisation process will improve the effectiveness of resource allocation. The idea behind this is that civil servants operating at the regional level will know best what is needed in that region.
Another argument for the decentralisation process that relates to governmental
manageability is that it might improve the efficiency of the governmental system. The government of Indonesia faces a huge efficiency problem. For years and years the budgets and the number of employees raised, while the productivity did not. One reason behind this problem is KKN, a topic already discussed above. Civil servants in high positions hired family and friends to help those relations to a job. Much of the time those new employees weren’t really needed. As reaction to this problem the central government issued a zero-growth policy in the budget year 1994/1995. This meant that all the
governmental institutions were forbidden to hire extra employees. New employees could only be hired when other employees left their job. Advocates of the decentralisation process expect that the efficiency can be improved further when regional units manage their own budgets. The incentives for civil servants to work harder are higher in the new situation. In the old situation the remainder of the budget given by the central government had to be given back to that authority when not used. That rule invoked inefficient use of community resources because the regional civil servants wanted to keep the resources within the region. In the new situation each region has its own budget to keep so every win in productivity has direct positive influence on the budget of that region. This should result in a higher level of efficiency of the civil servants.
In summary, the Indonesian government has several reasons to decentralise their governmental system. By decentralising the government hopes to minimise calls for independence in some regions, establish governmental democracy and improve the governmental manageability. The next question is now how this decentralisation is executed.
1.4 Constitutional laws 22/1999 and 25/1999
The installation of a decentralised form of government is the kind of fundamental change that warrants a change in the constitutional law of a country. In 1999 the Indonesian parliament accepted law 22/1999 and 25/1999 of the Undang-Undang (constitutional law of Indonesia). These laws were not the first laws on the subject of decentralisation. In 1974 the Indonesian government already decided to decentralise a part of the
governmental system. But that law was never fully implemented. In the situation before laws 22/1999 and 25/1999 two parallel systems existed: a decentralised and a
deconcentrated (see figure below). Officially the decentralised departments also had their
own tasks and budgets, but in practice the deconcentrated departments made all the decisions. The civil servants working at the deconcentrated departments were direct representatives of the central government and only executed orders that were given from Jakarta.
Figure 1: The old governmental structure, lent from De Ruiter
In the new structure those decentralised departments have received the decision power, and in many cases the deconcentralised departments (Kanwil and Dinas Kesehatan) disappear through a merge in the decentralised departments. It is important to note that the decision power is put at the lower level, at the municipal and regency level
(Kabupaten). In the new structure the provincial departments stand at the same level as the municipal and regency departments and have no hierarchical relation with each other.
This means that the Kabupaten departments have autonomy on all issues that are not managed by the central government. The central government still controls the following issues: international policies, defence and security, judicature, monetary and fiscal and religion. The responsibility for all other issues now lies at the Kabupatens, who receive budgets from Jakarta that they can spend according to their own priorities. This means the civil servants working at the Kabupaten departments have now much more
responsibilities, and one of the goals of this research is to find out how the can perform these tasks at a satisfying level.
President
Governor
Cabinet and departments
Deconcentrated Provincial departments (Kanwil) Province Region
Level I
(Dinas Tingkat I)
Municipal and Regency Region LevelII (Dinas Tingkat II)
Deconcentrated Regency/Municipal departmental offices (Kandep)
Mayor
1.5 General political situation
One of the four factors that Rondinelli et al name as important for the outcome of a decentralisation process is: “the degree to which central political leaders and
bureaucracies support decentralisation and the organisations to which the responsibilities are transferred”. In other words, it is important that a powerful government backs the changes.
Many people will agree that political stability isn’t the first characteristic that one would use to describe the country Indonesia. At the same time that stability is needed for successful implementation of the decentralisation process. The changes will create resistance by people who loose power and without support from a strong central government the change process might very well fail.10
Since the long period of dictatorship by Suharto (1965-1998) the country is political unstable. Conflicting parties, protests for ‘Reformasi’11 and corruption scandals have resulted in the fact that Indonesia has now its third president in four years. President Habibie was the first president after Suharto. In the short period that he was president he made some structural changes in the Indonesian society, the most important one was the installation of the freedom of speech and press. But the powerful student fractions saw Habibie as a follower of Suharto and never really accepted him and the suspected participation in a corruption scandal caused his resignation. He was succeeded by president Wahid, who came in power because some of the biggest Muslim parties didn’t want the winner of the elections Megawati Sukarno Putri as president because she was a woman. But President Wahid also faced some corruption scandals and had a poor health condition. After a political struggle that lasted several months he was impeached during a special session of the People’s Assembly. That same assembly elected Megawati Sukarno Putri as the new president of Indonesia. Megawati Sukarno Putri can count on great support of many people in Indonesia. During the dictatorship of Suharto she was the leader of the opposition and her party PDI was winner of the last election. The level of support is further raised by the fact that the vice president is now Hamzil Haz, an important person within the Muslim society in Indonesia. It would be beneficial for Indonesia when these two leaders could bring some stability in Indonesia, the same stability that is used for the decentralisation process.12
1.6 The health service in Indonesia
In this research I will look what consequences the decentralisation process will have for the civil servants. However, this research will focus on a particular group, the civil
10 Some political analysts believe that this failure was planned by the makers of the two laws. It is important to note that the laws were created under president Suharto during a period that he struggled to stay in power, some people believe he ordered to give the decision power to the governmental institutions that couldn’t threaten him: the lowest levels.
11 This word has become known as the symbol for the demanded changes in the governmental structure, most actively demanded by students
12 Megawati could also have a negative influence on the decentralisation process, because she is (like her father) in favour of a strong centralised government, but until now she didn’t made any negative comments on this process.
servants working at the Health departments in Bali. The choice for this focus is explained in the next chapter concerning the methodology of this research. This paragraph is used to give a short description of the health service in Indonesia.
In the period before the decentralisation the health service in Indonesia could be described as strongly centralised. All important decisions, regulations, programs and evaluations were made from Jakarta. Those decisions were than executed by the lower level, the provincial departments and the Kabupaten departments. These departments could be seen as deconcentrated units of the central government: they were only used to achieve the plans made by the central government. Between these departments there was also a strict hierarchy: the provincial departments managed the budgets of the lower levels and sent supervisors to inspect the operations at the lower levels.
The health service in Bali consisted of several different institutions: the national Health department in Jakarta, the provincial department, the Kabupaten departments, the hospitals and the health centres (Puskesmas). All the health centres and most hospitals were directed by the Kabupaten of that region, some bigger hospitals were directly managed by the national Health department.
In the new situation the Kabupatens receive their budgets from Jakarta and are fully responsible for the health service in their own region. Neither the central government nor the provincial department can direct or order these Kabupaten: law 22/1999 and 25/1999 give them full autonomy on this subject. The Kabupatens are directed by the mayor, who is responsible to the regional parliament (DPRD). The health centres and the hospitals still fall under the responsibility of these Kabupatens, the bigger hospitals still get some support from Jakarta but try to survive by becoming self-supportive. The decentralisation process has great influence on the civil servants working at the Kabupatens. In the old situation they only had to follow and execute orders, in the new situation they are supposed to make policy, programs and regulations on their own. In this research I will try to find out what the consequences are of this changes for these civil servants and their work environment.
Chapter 2: Research Introduction 2.1 Field of research
This research is part of the Work Group Matching (WGM) project OTODA (otonomi daerah), which investigates the consequences of the decentralisation process of the government in Indonesia. WGM is an organisation that promotes co-operation between the Rijksuniversiteit Groningen and University Indonesia. The main goals of WGM are to enable the exchange of knowledge between the Dutch and Indonesian participants and to execute projects that will attribute to the development of Indonesia. The OTODA project was started because the central government of Indonesia wanted to know what the effects would be of the proposed decentralisation process.
In this research I have focused on effects of this decentralisation process for the health service of Bali. Originally I planned to do this research in the province of Kalimantan, but as a result of the ethnical conflicts there I moved to the province of Bali.
The new constitutional laws 22/1999 and 25/1999 state that many areas of government formerly belonging to the central government will now become the responsibility of the lower authorities. Topics that concern the whole country (foreign affairs, defence and security, judicial, monetary, fiscal and religious policies) will still be handled by the central government, all other areas will be handed over.
This means each region can now make there own decision about topics as health, education, land development, industry, agriculture, tourism, environmental protection, human resources, etc.
This delegation of decision power will have big consequences for the civil servants working at the regional departments. The amount of tasks and the level of difficulty will rise significantly. The Kabupaten departments have received almost full autonomy without any form of control by other institutions. In this research I will investigate whether this current organisation structure enables an effective health service in Bali.
Research goal:
Discover how the organisation structure of the health care must be organised to ensure effective and efficient performance of the health institutions.
Research question:
What are the consequences of the decentralisation process of the Indonesian government for the quality of the Balinese health care system and what could be done in order to increase the quality?
In order to answer my main research question I have created sub-questions. By
examining and answering these sub-questions I will find the answer to my main research question.
Sub-questions:
Who are the stakeholders of this process of change and what are their interests?
The first research question examines who are the parties involved in the change process.
What are their mutual interest, and are there any interests that interfere which each other?
This is important because the stakeholders individually and as a group can be seen as the actor steering changes in the internal labour market. If the stakeholders are identified it becomes possible to analyse which parties will support the process of change and which parties will resist it. This sub-question and the earlier research of Arjan de Ruiter form together the analysis phase of this research.
2. Which organisational design facilitates the best performance of the Kabupaten?
Through the decentralisation process the Kabupaten health departments receive new competencies and responsibilities. Through this research question I will investigate what organisational design will contribute best to the effective execution of these tasks by the civil servants of the Kabupaten. Designing (and evaluating) a organisation structure is a very complex task. One must be careful to include several, sometimes conflicting elements in it, without losing the broader picture. De Leeuw (1986) has developed a useful instrument for designing structures. He advises that every designer has to formulate a program of demands. Every (new) design should (at least) satisfy to these demands. This program can than be used to shape the broad lines of the design, so that the designer doesn’t get lost in details. This program of demands is also used by the Leeuw to diagnose organisations on their potential to be managed. In this research this program will therefore be used to evaluate the proposed new design.
In the following section, paragraph 2.2, I will describe and discuss the program of demands for this particular situation.
2.2 Program of demands
The design should enable the Kabupaten health department to be:
1. Effective
The mail goal of the Kabupaten should be providing the best possible quality of medical services to the people of Bali. The new design should enable the employees to optimally attribute to this goal. The organisation should adapt a more customer-oriented attitude, the habitants of Bali are their final customers, and their wishes should stand central in the organisation.13 However, these customers are mostly reached through a mediator, one of the hospitals or one of the health centres (puskesmas). The criterium of effectiveness should therefore be based on the relationship between the Kabupaten and the medical institutions that provide the concrete health services to the population.
13 This is one of the expected benefits of the decentralisation: local authorities are supposed to be better informed about the wished of the local population than the central government (Rondinelli et al 1984)
Before the decentralisation process all objectives for the health care in Bali were
formulated in Jakarta. The national department for Health created objectives that applied for all provinces and all regions. Budgets were also divided according to these objectives.
The advantage of this approach was that the national department had a good overview of the general medical needs in Indonesia. When the civil servants working at that
department for example discovered that the number of tuberculosis patients in Indonesia increased, they ordered to pay more attention to this disease.
The disadvantage of this approach was that local needs weren’t recognised. Dr. Nyoman Sutedja gave the characterising example of a national malaria program that was also actively implemented in Bali, although the disease malaria hardly ever occurred in Bali.
By handing the decision power over to the Kabupaten the health care can now be adapted to the local needs. But at the same time new objectives must be made. This situation creates both possibilities and dangers.
Although the main objective should be providing the best possible health service to the people of Bali, the danger exists that the formulated objectives are misused for
(collective) individual interests. All the different medical institutions have different interests (as will be explained in chapter 3) and these interest can lead to dysfunctional behaviour that could negatively effect the patients.
Maarse and Mur-Veeman (1990)14 have formulated three levels within a health system, a distinction that is very useful in this particular research.
Micro Meso Macro
Care Persons (personnel
and patients)
Servicing part of the institutions
Categorial care, the whole health system
Management Persons (managers,
civil servants, politicians
Managing part of the institutions
Financiers, advisory organs, profession clubs
Before the decentralisation process the emphasis was on the macro-care level. Big
national plans were implemented through the provincial departments and executed by the Kabupatens. Now the emphasis is on the meso-management level. The Kabupatens have the decision power, but they can’t perform the actual medical services themselves. They have to direct the health institutions that do perform these tasks, the health centres and the hospitals. The Kabupatens now also have to make their own objectives.
In this research, in chapter 4 in particular, I will bring some important arguments for the co-operation between these diverse municipal authorities. The same chapter will also include some strong arguments for a better allocation of tasks and responsibilities between the diverse institutions. At this moment I will focus on the two most important objectives of the health care in general: the health care must be effective and efficient.
14 Beleid en beheer in de gezondheidszorg, J.A.M. Maarse and I.M. Mur-Veeman, Assen, Van Gorcum, 1990, page 15
Being effective simply means doing the right things well. One of the expected advantages of the decentralisation is that the local authorities will know better what the medical needs of the local population will be. In order to claim this advantage the Kabupatens must establish direct contact with the population. They should make sure that the services they provide are the services the people need. A important role here should be played by the health centres and hospitals. These institutions have the first direct contact with the population, and they should act as the sensors of the Kabupaten. A problem that occurs is that the health centres and hospitals may have different interest. Several hospital directors already have claimed that they can perform better when their hospital receives more autonomy. The danger exists that they only provide the information that stimulates greater autonomy for these institutions. At the other hand, if these institutions claim to perform better with autonomy, maybe the Kabupaten should try this situation out. The main objective should be providing the best possible health service, and when this is done by giving more autonomy to the hospitals and health centres this should be allowed.
2. Efficient
Each Kabupaten receives its own budget and this money should be used as efficient as possible. Before the decentralisation the motivation to work efficient was low because budget remains returned to Jakarta. In the current situation every Rupiah has to be spend right and should benefit the people of Bali, who indirectly also raise the budget. The new design should facilitate efficient work procedures and tasks allocation and should rule out KKN15 as much as possible. In the Indonesian culture it is almost accepted that civil servants are corrupt and as long as that attitude exists, the design should be aimed out ruling out the possibility to misuse the community budgets for personal benefits.
Efficiency is therefore defined as performing optimally while spending as less resources as possible. However, befroe one can determine the fficiency of a system, one should know the goals of that system. It is important that the right choices are made and than that the resources allocated to these priorities are as fully used as possible. I will therefore first start with a discussion about efficiency in the health care sector, a difficult subject because in involves choices about life and death. After that I will discuss how
accountability systems could improve the efficiency of the Kabupaten health departments.
The measurement of efficiency in the health care is difficult, because choosing the wrong criteria could have disastrous consequences. The percentage of used beds for example tells whether there are as much patients in process as possible, but doesn’t give information about the treatment. The average days spent is hospital tells how long a patient stays in the hospital, but tells nothing about whether the patient is cured.
Defining efficiency as the number of patients cured is also dangerous, because the
hospital workers might than start to focus on the patients with the less difficult diseases to treat and let the real problem cases just suffer. Efficiency in the health care is a sensitive subject because it involves the lives of people and looking at the numbers is therefore not enough.
15 Korrupsi, Kollusi, Nepotism
As shown by the above examples, efficiency in the health care must be dealt with extreme care. Another problem has occurred with the introduction of the swadana- system, where hospitals earn there own resources. The danger that exist is that hospitals start to focus on the patients who are in the first and second class and pay their own treatment and give less attention to the people in the third, social care class. The task of the Kabupatens should be to give clear objectives to the hospitals and make sure that every patient is helped, independent of his social status.16
The Kabupatens don’t have any direct influence on the efficiency of the medical
attention, but they can help to establish standards. The Kabupaten could investigate what the average hospital time, costs, needed treatment, etc. is for every disease and than make a standard of that. In this way the management of each hospital knows what kind of resources are normal to spend and can compare that with the achievements of its own hospital. By making the results of each hospital public, the management of the hospitals can benchmark their results and find out which departments aren’t working efficient enough.
Another good way of improving the efficiency of the health service would be the reduction of corruption. Corruption is a big problem in Indonesia and known as KKN (Korupsi, Kollusi Nepotism). The new design should prevent KKN as much as possible.
As discussed before, KKN seems to be a strong embedded element of the Indonesian (government) culture.17
M. Laica Marzuki, member of the Indonesian high court of justice even accuses judges from corruption and compares the legal system with that of prostitution. He further stated: “Corruption is since Soekarno a solid part of the Indonesian society. Our country has since then not been free from corruption. Even the high court of justice not.18 This quote indicates how strong the influence of corruption is. As long as it is a part of the Indonesian culture it will be impossible to let it disappear. But it is possible to make it more difficult to be corrupt.
In order to do this the governmental system should design better accountability systems.
Right now the Kabupatens receive their own budget and can spend it according to their own insight. The spendings aren’t inspected by an independent institution, and the Kabupatens also lack the knowledge to know what the medical activities cost. In the new situation the Kabupatens should share financial information with each other so that they can compare the spendings of each institution. Also they should develop internal control procedures so that every rupiah spend is controlled by at least two persons of two
different departments. This kind of measures are needed to prevent corruption. Ideally the spendings should also be controlled by an external party, like the provincial department.
But the Kabupatens would probably reject such a solution, because it might endanger
16 This statement can be seen as a personal ideology or as an interpretation of the objectives of health care institutions in general…
17 President Megawati Soekarno-Putri recently compared the civil servants of Indonesia with ‘trash cans’, unwilling to come out of their pleasant offices and do the needed work in the streets, Metro 11-02 2002
18 Rechtspraak Indonesië draait om geld, de Volkskrant, 17 januari 2002 Van onze correspondent Michel Maas
their independence. The key solution is to design an accountability system were people with different positions and different department control each other. The distant between these controlling positions should be as big as possible. In the current situation the people who make the decisions are linked to close together in business, or a part of the same social group/clan. This makes it very easy to ‘cut a deal’ together and share the corruption money.
By making tight budget in co-operation with an external institution the room for corruption should be decreased. Such budgets can also be used to motivate the
employees. Good budgets should put the aspiration level of performance just a bit higher than the actual attainable performance. The civil servants should realised that the
resources they spend are now paid by the people of Bali and should therefore also be optimally used to serve the people of Bali.
Where an accountability system strongly focuses on budgets and numbers there are also other related instruments that can be used to control the performances of the civil
servants. Ouchi (1979)19 has linked the knowledge of the transformation process with the ability to measure the output of work and comes than to three alternatives to control the employees. Behavioural control is only possible when there are clear cause and effect relationships, when you know that if the employees performs in a certain way, the quality will be alright. Output control is used when the knowledge of the transformation process is imperfect, but the output can be measured. Employees are than controlled on output and the means to their performance isn’t seen as important. Clan controls is regarded as the best possible form of control when both the knowledge of the transformation process and the ability to measure the output is lacking. Clan control is based on creating
solidarity and commitment towards the organisational goals so that the employees become personally involved. According to my analysis, both the ability to measure the output of the work of the Kabupaten and the knowledge of the (new) decision making processes is not quite enough to make use of output control or behavioural control. This would leave the clan control as the only advisable form of control. But the problem with this control device is that the members must be personally involved with the
organisational goals. And as I already mentioned, one of the biggest problems is that individuals pursue their own goals, like receiving corruption money. So the management of the Kabupaten should or create a new strong culture of collective membership (what seems quite impossible to do in a short period) or take measures to make the performance of the health service more measurable on output. It is my recommendation to focus on the last option.
3.Controllable (accountable and democratic)
Closely linked to the demand of efficiency is the demand of controllability. The Kabupaten departments have to be controlled in their performances by some other institution. At this moment the Kabupaten health departments can act completely
independent and they don't have to justify their policy to anyone. This situation promotes corruption and that isn’t only bad for the accountability, but it's also very undemocratic:
19 In: Management and cost accounting, C. Drury (1996), International Thomson Business Press, London, page 653
these governmental institutions should be responsible to the habitants of Bali, in some way of another.
Every, healthy, democratic organisation needs a check-and-balance structure, and such a check-and-balance structure is lacking in the current situation of the health service in Bali. The Kabupatens have received full autonomy on this subject. They receive their budgets from Jakarta and no other institution has any formal influence on their policies and behaviour. This situation can be characterised as an ‘open management loop’ there is no possibility for feedback and adjustment20.
This situation basically makes ‘the system’ (the Kabupaten health departments, or in broader context ‘the health care in Bali’) uncontrollable. There is absolutely no controlling mechanism that assures the accountability of the Kabupaten.
The current situation has also negative influence on the democratic level of Indonesia and Bali. Officially, the mayor leads all Kabupaten departments and he is controlled by the DPRD21 of his Kabupaten. But, as noted in chapter 3, the DPRD-members lack the knowledge to make sound judgements of the situation within the health department. This leads to a ‘carte blanche’for the management of this department.
Summarised, the new organisational design for the Kabupaten health departments should ensure the accountability and the democratic controllability of these departments .
4. Co-ordination mechanism
The Kabupatens now all have their own area in Bali for which they are responsible. But some health matters will extend the borders of these areas: in such cases there will be a strong need for co-ordination. The new design should therefore also possess an effective co-ordination mechanism between the diverse Kabupatens.
As noted before, this program of demands will be used to diagnose the current situation and will also be used to evaluate the new proposed design. A more useful instrument to actually design a new structure is the set of conditions for effective management formulated by the Leeuw. De Leeuw has named five conditions that are absolutely essential for an organisation to be manageable22. De Leeuw names the following five conditions:
1) A clear goal
2) A model of the managed system
3) Information about the environment and condition of the system 4) Enough steering measures
5) Capacity for information processing
20 In the old situation, before the decentralisation process, the Kabupatens were directed and controlled by the provincial departments, who received their orders from the central government in Jakarta
21 city council
22 Organisaties: Management, analyse ontwerp en verandering, A.C.J. de Leeuw, 1990, Van Gorcum
These five conditions will be used to analyse the old situation (before the
decentralisation), the current situation and the desirable situation. These five conditions will also be used in all the three phases of the diagnose-design-realisation methodology of the Leeuw (1986)23.
In this thesis, this diagnosis phase consists of: the introduction (chapter 1), the problem analysis (chapter 2) and a stakeholders analysis (chapter 3).
The next step, the design phase in this diagnose-design-realisation methodology will be made in chapter 4.
No real change can be done by one man or on research alone. Nevertheless I will try to make some conclusions and recommendations about the implementation of the proposed design in chapter 5.
2.3 Problem boundaries
Problem boundaries are interesting because they form the framework of my research. All other interesting aspects that I have found during my stay that don’t fit in this framework will not be included in this paper. Problem boundaries help to stay focused on the key issues and are therefore important. In a complicated situation, such as is this
decentralisation process, it is very to get lost in details, these boundaries have (hopefully) helped to prevent this.
The first boundary is the choice of province. I meant to do my research in the province of Kalimantan, but because of the terrible things happening there I could simply not stay there. In Bali the University Udayana helped me to continue my research in Bali. The people at the planning department BAPPEDA Tingkat I and II were also very helpful, and told me I can continue the research at Bali, with a focus on the area around Denpasar.
This area is a sub-province or you can call it a regency region (kabupaten) of Bali and will have many new responsibilities and tasks in the new governmental structure. Within that area lies the city Denpasar, were almost all facilities are placed. So the situation is the quite the same as in Kalimantan Tegah, were Palangkaraya is the main city.
I don’t expect the change of provinces will be a problem for my research, actually I think it could even be an advantage because I could compare the two provinces, using the questionnaires of drs. Arjan de Ruiter, and than analyse the differences. I will than have the results of two enquiries with the same questions, so I may even have a more solid base to build my change model for the internal labour market.
The second boundary is that of the departments. I will do research on the department of Health, because this service is in my opinion one of the most useful services for the people of Bali, and therefore should function optimally.
23 Organisaties: Management, analyse ontwerp en verandering, A.C.J. de Leeuw, 1990, Van Gorcum, page 230
