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Understanding why the role of accounting is unchanged in Indonesian public hospitals

Heru Fahlevi (Department of Accounting, Syiah Kuala University, Banda Aceh, Indonesia)

Journal of Accounting & Organizational Change

ISSN: 1832-5912

Article publication date: 6 June 2016




This paper aims to understand why an expected enhanced role of accounting in Indonesian public hospitals has not occurred, although serial organizational changes and reform of hospital payment systems have taken place.


This study adopts a multiple case study research approach. It was carried out in two Indonesian public hospitals. Interviews were the main tool used for collecting data. The primary interviewees were the top managers, accountants and senior physicians in the hospitals surveyed.


Insights from the interviews revealed that the owners’ traditional role of funding deficits plus the conventional mindsets of managements and physicians who are only interested in health outcomes have hindered the infiltration of economic and accounting logic into the management of these two public hospitals. Consequently, the expected accounting innovations, i.e. an enhanced role of accounting in the hospitals’ daily activities did not emerge.

Research limitations/implications

This case study is not a longitudinal study and the interviewees, particularly senior physicians, were selected based on their availability and willingness to participate in the interviews. Thus, the findings should be treated with caution.

Practical implications

An enhanced role of accounting and other accounting innovations would indicate that the hospitals are responding as expected to the institutional and financial reforms.


Contingency theory and institutional theory have been used together in this study which aims to not only discuss the reasons for accounting changes occurring or not occurring, but also to understand the motivations behind the accounting changes or lack of change. Thus, a more comprehensive understanding of accounting innovations is expected.



An earlier draft of this paper was presented at the Fifth Asia Pacific Business Research Conference, Kuala Lumpur, February 19-18, 2014. The author is grateful for comments and suggestions from the participants of the conference. The paper also benefited from constructive comments from the two anonymous reviewers. The author also gratefully acknowledges the helpful comments from Professor Gisela Färber.


Fahlevi, H. (2016), "Understanding why the role of accounting is unchanged in Indonesian public hospitals", Journal of Accounting & Organizational Change, Vol. 12 No. 2, pp. 203-222.



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