Analyzing a service industry: Medical Tourism

By Ms Lilian Yap,

School of Business and Administration, Wawasan Open University

The Economist reported on 21 July 2012 that America was the worlds biggest exporter of services in

year 2011, with 13.9% of the $4.1 trillion total. So, what are services? What do they encompass? Or

how does one define services?

The issue with service is that service comes in a vast array of different and often very complex

activities, thus making it difficult to define. Many had attempted to define service but the well-suited

definition is given by Lovelock.

Services are economic activities offered by one party to another. Often time-based,

performances bring about desired results to recipients, objects, or other assets for which

purchasers have responsibility.

In exchange for money, time and effort, service customers expect value from access to goods,

labor, professional skills, facilities, networks, and systems; but they do not normally take

ownership of any of the physical elements involved. ~ Lovelock (1980)

Service business system

French researchers Pierre Eiglier and Eric Langeard conceptualized the service business as a system

that integrates marketing, operations and customers in 1981. The servuction system (combining the

terms service and production) term was then coined, to describe that part of the service organizations

physical environment that is visible to and experienced by customers.

The Servuction Model, adapted from the original Eiglier & Langeards concept as in Figure 1 below,

shows all the interactions that made up the customers contact experience in a high contact service

(high human contact). Customers interact with the service environment, service employees and even

other customers who are present during the service encounter. Each type of interaction creates value

(e.g. clean and pleasant environment, friendly and competent employees) or even destroy the value

(e.g. another customer jumping queue to see the doctor). The Servuction system consists of the

service operations system that is invisible to the customer and the service delivery system that is

visible and experienced by the customer.

We can visualize the Servuction Model in the context of medical tourism where the technical core

refers to the laboratory equipment to perform tests, imaging equipment for scanning the human body,

meals preparation in the kitchen, administrative office performing recruitment, payroll, marketing,

accounting and finance tasks at the Back Stage. Whilst at the Front Stage, the service delivery system

where contact interaction occurs between the patients and the front office customer service personnel

attending to their administrative issues, with the doctors diagnosing and treating the patient, with the

nurses conducting physical examination and measuring vital statistics of the patients, with the

pharmacy for dispensing medication to the patients, allied health and dietetic care for post-surgery

services to the patients.

Figure 1: The Servuction Model for the Medical industry

Developing service product

All service organizations face choices concerning the types of products to offer and how to deliver

them to customers. To better understand the nature of services, it is useful to distinguish between core

product and supplementary elements that facilitate its use and enhance its value to customers.

Core products are based on a set of benefits and solutions delivered to customers with reference to a

particular industry for instance, health care, transportation or medical industry. The core product in

the central component that supplies the principal, problem solving benefits customers seek. For

example the medical service solved the need of humans to seek treatment for their body ailment.

Whereas the delivery of the core product is usually accompanied by a variety of other service related

activities referred to as supplementary services. The supplementary elements will enhanced or

increase performance value level and the quality of the core product and enable the service provider to

charge a higher price.

Core product often shares a range of similar supplementary service elements, they are

Inanimate environment

Technical Core

Contact Personnel

Front Stage (visible)

Back Stage (invisible)

Service Operations System

Service Delivery System

Customer A

Customer B

i) Facilitating supplementary services which is required for either service delivery or aids in

the use of core product;

ii) Enhancing supplementary services which adds extra value to the customers.

We have identified the facilitating and enhancing supplementary services for medical tourism core

product in the table and also displayed them as petals surrounding the center of a flower below:

Core Product : Medical tourism services

Facilitating supplementary services Enhancing supplementary services

- Doctors consultation

- Doctors surgical procedures

- Pharmaceutical dispensary

- Laboratory support

- Imaging support

- Nursing care

- Dietrics

- Allied healthcare

- Customer service

- Transportation arrangements

- Interpreter service

- Currency exchange service

- Payment & insurance

Table 1: The facilitating and enhancing supplementary services of medical tourism core product.

Figure 2: The Flower of Services for Medical Tourism

Do

cto

rs

co

nsu

lta

tio

n

Pharmacy

dispensary

Medical care

Thirteen clusters supplementary services are displayed above as petals surrounding the core product

this is called the Flower of Services. The petals are arranged in clockwise of sequence.

Facilitating Supplementary Services

Doctors consultation is to apply medical knowledge and skills to the diagnosis, prevention and

management of disease. They includes to correctly diagnose patients illness by examining at the

symptoms of the illness, assisted by the test results from laboratory support as well as images from x-

ray, Cat Scan, MRI and others from the imaging support. After which the doctor will be able to

prescribe the correct treatment either by pharmaceutical medication or surgical procedures or even

both.

While in recovery from the surgery, the patient will be under the nursing care for overall health

optimization through diagnosis and treatment. The dietrics will ensure an appropriate and balanced

diet that contains adequate amounts of nutrients in relation to bodily requirements. The Allied

Healthcare promotes rehabilitation, treatment, and health improvement intervention to restore and

maintain optimal physical, sensory, psychological, cognitive and social functions.

Enhancing Supplementary Services

Customer Service representative needs to be sensitive to the many questions and concerns from the

patients regarding administrative and payment procedures. Responding to patients and their family

concerns and questions requires knowledge, professionalism and understanding. Patients should be

informed of the hospitals billing practices upfront and should make sure that insurance and medicare

are properly and timely billed. They should provide patients with invoices outlining the services

they've received and the costs of these services, and offer a dispute process if a patient disputes all or

part of her bill. Additional services to foreign patients including providing interpreting services,

currency exchange services and perhaps booking of flight, transportation and lodging services to the

patients family members who are present to provide support to the patient.

Implications of the Flower of Services

1. Streamline operational procedures or process. With the flower of services, the organization is able

to identify its supplementary services to support their medical care core business. They will then

be able to streamline their operational process for each of their supplementary services to improve

their quality level of service to their patients. By improving the service level quality for all

specific aspect of the supplementary service process, it will serves as attractions to patients and

potential patients to the organisation. The organization will market their services by promoting

their high quality standards of care to their patients. This creates an avenue to build word-of-

mouth marketing of the organizations services from the existing patients to family and friends.

2. Promote word of mouth marketing. Word of mouth marketing is important in building the

organizations brand. As consumers are overwhelmed with product choices from the barrage of

advertisements and promotions, word of mouth marketing cuts through these effectively as it is a

recommendation from a trusted source. Word of mouth can prompt a patient to consider a

product, a brand or a service in a way that traditional advertising simply cannot. The right

messages from the existing patients resonate and expand within the medical networks, affecting

brands perceptions, purchase rates and market share. Its influence is greatest for patients for

seeking treatment of their new illness, when the illness is complex in nature and treatment is

relatively expensive. Patients tend to conduct more research by seeking more opinions and

possibly deliberate longer than they otherwise would.

3. Market positioning strategy. Poor customer service is a headache to both customers as well as

senior managers. Balancing the trade-offs between the cost of service and customer benefits they

provide is often difficult. By focusing more thoughtfully on the human side of customer service,

organizations are lowering their cost by improving customer satisfaction. In the medical industry,

organizations need to think harder as to the requirements of their patients and turn their service

weakness into strengths and possibly even position themselves to offer new service offerings. By

identifying each of the medical supplementary services, the organization will be able to position

itself to promote their quality service level as strengths in each of the supplementary services to

attract more potential customers seeking medical care.

Reference

Lovelock, C. H. (1980). Towards a classification of services (pp. 72-6). Chicago: American

Marketing Association.

Langeard, E., Bateson, J., Lovelock, C., & Eiglier, P. (1981). Marketing of services: New insights

from consumers and managers. Marketing Science Institute, Cambridge, MA, 81-104.