SUMMARY FINANCIAL MANAGEMENT FLEXIBILITY ANALYSIS TOWARDS FINANCIAL PERFORMANCE ON HEALTH SECTOR PUBLIC SERVICES INSTITUTION BEFORE AND AFTER THE APPLICATION OF FINANCIAL MINISTER DECREE NUMBER: 273/KMK.05/2007 (A Study in RSUP DR. Soeradji Tirtonegoro, Klaten)

CHAPTER I

1.1.     Background

A health institution as BLU has a function as a service business unit which provide social services in health sector. Hospital management system after the Public Service Institution concept will change from Public goods which has the characteristics of hospital organizational bureaucracy such as legislation, regulation, otorization, and control towards the units supervised by the hospital into a Semi Public Goods which refer to services, and has the characteristics of non profit and Internal Services Agencies which give power to each of the Instalation and other work units with a semi autonomy or autonomy pattern.

Based on the Finance Minister Decree Number 273/KMK.05/2007 dated 21 Juni 2007 and the Health Minister Decree Number 756/MenKes/SK/VI/2007 dated 26 Juni 2007, RSUP dr. Soeradji Tirtonegoro Klaten was appointed as a Hospital with Public Services Institution's Financial Management Pattern. With the status change, the hospital is set to manage and process the funds so that it can produce from its investment and potential effectively, efficiently, transparently, and accountably. This BLU concept aims to improve the performance and the quality of the services to the stakeholders. If this BLU concept can be optimally utilized, it is expected to continue on to the development and application of good governance in the RSUP dr. Soeradji Tirtonegoro management. In the future, the concept of independent health services can be applied completely.

1.2.     Research Objectives

This research aims to test the difference in financial performance before and after the application of PK-BLU and evaluate the application of PK-BLU if its financial management flexibility may improve the financial performance of RSUP dr. Soeradji Tirtonegoro Klaten as a BLU work unit.

CHAPTER II

2.1.       Literature Review

Mahmudi (2010) suggested that there are several analysis technique for local government financial reports, that is:

1.    Variance Analysis

     This analysis is generally used to analyze the budget realization reports which done by evaluating the differences between the budget and the actual.

2.    Financial Ratios Analysis

This analysis is a comparison between two numbers which data were obtained from the financial reports. This analysis can be used to interpret the performance development from year to year.

3.    Trend Analysis

This analysis is done to identify the tendency both the increase and the decrease of performance within a specific time period.

4.    Regression Analysis

Regression analysis is done to test the influence of independent variable on the dependent variable. This analysis is beneficial for public policy research which results can be applied by the government.

5.    Prediction Analysis

The financial report data can also be used for prediction analysis of projection. For example, to predict next year income, the data for the current year and the previous years may also be used as prediction basis.

2.2.      The definition of BLU according to Chapter 1 UU No. 1/2004 about State Finance is an institution within the government scoper which was established to provide services to the community in the form of goods and/or services which are sold without porift orientation and perform its activities based on the efficiency and productivity principles.

2.2.      Previous Research

A research on financial performance differences before and after the application of PPK-BLU in an institution was done by Wijayaningrum (2011) in a thesis entitled " Financial Management Flexibility Analysis towards Financial Performance on Health Sector Public Services Institution before and after the Application of PPK-BLU (A Study in RSUP Dr. Sardjito Yogyakarta)". The result of the research showed that before converted into BLU the financial performance of RSUP Dr. Sardjito experienced a decrease in margin ratio, current ratio, quick ratio, ROA ratio and ROE ratio. however, after BLU was applied, the hospital has successfully improved its financial performance effectively and efficiently according to the purpose of PPK-BLU.

Another research was also done by Prihandini (2007) with a thesis entitled " Financial Performance Analysis on Public Services Institution and Identification of its Tax Subject (A Study in RSUP Fatmawati Jakarta)". The result of this research shows that before the hospital was a BLU, the financial performance of RSUP Fatmawati experienced a decrease which can be seen in the operating margin ratio, current ratio, quick ratio, ROA ratio dan ROE ratio. The decrease was caused due to the net balance of the activa was partly used on constant investment which has a very low level of investment return. After BLU, there was a decrease in the liquidity ratio which was shown in the reduction of idle cash such as time deposits. However, there were also increases in the ratios of total assets turnover, fixed assets turnover, current assets turn over, which indicated an increasing level of management efficiency level.

CHAPTER III

To compare the financial performance before and after the application of PPK-BLU in RSUP dr. Soeradji Tirtonegoro Klaten based on its financial reports, there is a need for standard measurements, that is financial ratios as financial performance evaluation indicators. Based on several sources likes, Brigham and Ehrhardt (2005), Brigham and Houston (2007), and others the financial ratios used to analyze the financial performance in this research are as follow.

1)   Current Ratio                                  =          Current Asset   x 100%

 Current liabilities

2) Quick Ratio                                    =          Current Asset-Inventoeries x 100%

                                                                                    Current Liabilities

3) Cash Ratio                                      =          Cash                             x 100%

                                                                        Current Liabilities

4) Debt Ratio                                      =          Total Assets-Total Equity x 100%

                                                                                    Total Assets

5) Rasio Solvabilitas                           =          Total Assets   x 100%

                                                                        Total Account Payables

6) Working Capital to Total Assets    =          Current Assets – Current Liabilities

                                                                                                Total Assets

7) Net Days Revenue in A/R              =          Receivables

                                                                        (Operational Income/365)

8) Net Activa on Total Activa                        =          TotalAktiva bersih  x 100%

                                                                           Total Asets

9) Total Asset Turnover Ratio =          Sales             x 100%

                                                                        Total Assets

10) Collection Period                          =          Account Receivables  x 100%

                                                                                    Sales

11) Return On Investment Ratio        =          EBIT + Depreciation     x 100%

                                                                        Capital Employed

12) Return On Asset Ratio                 =          Net Income    x 100%

                                                                        Total Assets

13) Inventory Turnover Ratio             =          Sales    x 100%

                                                                        Inventory

14) Profit Margin Ratio                      =          Net Income    x 100%

                                                                        Sales

15) Cash Flow Margin Ratio              =          (Net Activa - Income) x 100%

16) Money Growth Ratio                   =          Payables (n-0)    x 100%

                                                                        Payables 0

17) Payables on Income Ratio            =          Total Payables    x 100%

                                                                        Total Income

18) Income Growth Ratio                   =          Income (n-0)    x 100%

                                                                        Income 0

19) Fund Growth Ratio                      =          Fund (n-0)    x 100%

                                                                        Fund 0

20) Activa Growth Ratio                    =          Activa (n-0)    x 100%

                                                                        Activa 0

21) Passiva Growth Ratio                   =          Passiva (n-0)    x 100%

                                                                        Passiva 0

CHAPTER IV

4.1.            The Result of Financial Performance Analysis of RSUP Dr. Soeradji

            Tirtonegoro Klaten before BLU

The financial performance analysis data of RSUP Dr. Soeradji Tirtonegoro Klaten before becoming a BLU are the financial reports from the year 2003, 2004, 2005, and 2006 as well as their financial ratios as a comparison towards the financial report for before becoming a BLU or after becoming a BLU.

If we evaluate the financial reports from the year 2003 to 2006, we can see a significant increase in the operational income. The comparison of the income between 2003 and 2004 are 17.67%, whereas in 2005 it increases 40%, and in year 2006 it increases 47.24%. The comparison of operational expenses in 2003 and 2004 is 19.86%, whereas in 2005 it increases 12.43%, and in year 2006 it increases 39.63%.

4.2.            The Result of Financial Performance Analysis of RSUP Dr. Soeradji

            Tirtonegoro Klaten after BLU

            The data used is the financial data of RSUP Dr. Soeradji Tirtonegoro from 2007 to 2010. From the reports, we can see that there was an increase in the operational income within the period. In 2007, there was a 9.83%. In 2008, it increased to 51.21%, in 2009 it increased to 59.49%, and in 2010 it hiked to 30.10%. The increase in the operational income was not in balance with the increase of operational expenses. In 2007, the operational expenses increased 22.66%. in the next years, the operational expenses increased 39.40%, 19.78%, and 34.16% consecutively.

4.3.            Financial Performance Analysis of RSUP dr. Soeradji Tirtonegoro

            Klaten through Statistical Test

The indicators for RSUP dr. Soeradji Tirtonegoro Klaten financial performances before and after the BLU were measured based on the financial reports between 2003-2010. There were three phases in this analysis that is Descriptive Statistics before BLU periode, Descriptive Statistics after BLU periode, Hypothesis testing, and Data Analysis and Discussion.

The financial performance variables of RSUP dr. Soeradji Tirtonegoro Klaten measured using the financial ratios in the period after BLU application did not show significant changes compared to before the application of BLU. The change in the status to BLU in 2007 did not cause the financial management performance of RSUP Dr. Soeradji Tirtonegoro Klaten becomes better or worse.

The absence of evidences for all hypothesis indicate that the financial performance of RSUP dr. Soeradji Tirtonegoro Klaten before the BLU application has no significant differences if compared to the financial performance after the BLU when seen from the liquidity ratio, solvability, variance, proportion and financial growth.

CHAPTER V

5.1.       Conclusion

1.      The financial performance analysis in RSUP Dr. Soeradji Tirtonegoro Klaten done in this research was only based on the financial reports provided by RSUP Dr. Soeradji tirtonegore Klaten before and after the BLU was applied. This research was not done in-depth or by taking external factors and macro economy into account.

2.      Even though it is currently a BLU, RSUP Dr. Soeradji Tirtonegoro Klaten can directly utilize the operational income in which the surplus is used to fund the operational expenses for the continuity of the services to the community.

5.2.       Recommendation

1.      Government institutions with a BLU status and apply the PPK-BLU may improve their financial performance by utilizing the flexibility given optimally in PPK-BLU, that is by using the direct income for operational and using the surplus for investment that can increase the BLU income.

2. The financial performance can also be improved by optimally and efficiently utilizing the investment owned in the activa to improve services to the community.

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