Linking Autonomy and Accountability: The Role of Internal Control in BLUD Hospitals

Hidayat Hidayat () and Rahman Laba
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Hidayat Hidayat: Hasanuddin University
Rahman Laba: Hasanuddin University

A chapter in Proceedings of the 10th International Conference on Accounting, Management, and Economics (10th ICAME 2025), 2026, pp 1066-1079 from Springer

Abstract: Abstract Decentralisation reforms in Indonesia have reshaped the governance of public health institutions through the Badan Layanan Umum Daerah (BLUD) framework, granting hospitals greater financial and administrative autonomy while maintaining public service obligations. Despite these reforms, significant variations in accountability outcomes persist, raising questions about the mechanisms through which autonomy translates into improved governance. This study investigates the influence of financial autonomy, administrative authority, and regulatory support on accountability performance in BLUD hospitals, with internal control effectiveness examined as a mediating variable. Drawing on good governance theory and the dynamic capabilities framework, the research employed a quantitative design using survey data from 180 senior administrators across BLUD hospitals in five Indonesian provinces. Partial Least Squares Structural Equation Modelling (PLS-SEM) was applied to test the measurement and structural models. The results demonstrate that financial autonomy, administrative authority, and regulatory support each exert significant positive effects on internal control effectiveness, which in turn strongly enhances accountability performance. Mediation analysis further confirmed that internal control serves as the critical mechanism linking decentralisation variables to accountability outcomes. Theoretically, the findings reconceptualise internal control as both a compliance mechanism and a dynamic capability, highlighting its dual role in ensuring integrity and enabling institutional adaptability. Practically, the study emphasises that autonomy reforms must be complemented by robust supervisory systems, coherent regulations, and capacity-building initiatives to achieve accountable governance in health institutions. These insights offer important policy guidance for strengthening decentralised health systems in Indonesia and comparable contexts.

Keywords: Decentralisation; BLUD hospitals; Financial Autonomy; Administrative Authority; Accountability Performance (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6239-709-5_73

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DOI: 10.2991/978-94-6239-709-5_73

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