ECONOMIC VALUE OF AN INVESTMENT IN HOSPITAL DEVELOPMENT: A NET PRESENT VALUE ANALYSIS

Abstract

Background: As continously rise for the healtcare needs, it forces hospital to improve the quantity and quality of service.

Surabaya Pulmonary Specialty Hospital is one of hospitals in Surabaya Indonesia that intends to develop the status from a specialty hospital into a C-class General Hospital. The development will consist of renovation of the old buildings, construction of new building, and land expansion.

Materials and Methods: This study was conducted to determine the financial feasibility of investment in the hospital using Net Present Value (NPV) approach.

Result: The calculation result by assumption an expected discount factor of 12.5%, the NPV value is Rp70,299,009,525,00. This result indicates that the development of Surabaya Pulmonary Specialty Hospital become a C-Class General Hospital will generate a positive income of cash flow in the future. The internal rate of return was 14.97% and the payback period of the investments approximately will be 8 years.

Conclusion: Overall, the calculation of this financial analysis yield to conclusion that the development of the Surabaya Pulmonary Specialty Hospital into a C-Class General Hospital considered feasible.

Keywords: hospital, development, Net Present Value (NPV).