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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

Technical Core
Contact Personnel
Front Stage
Back Stage
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



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

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.

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.