1.

1 International Scenario
1.2 Indian Scenario
1.3 Overview of Public and Private Health
Care Sector in India
1.4 Quality of Medical Services
1.5 Need for the Study
1.6 Objectives of the Study
1.7 Organization of the Study
 n the past, the perception o f services was confined to work only with service

I motto and today we find the services have been commercialized and
professionalized. It is due to the emergence of materialistic age in which financial
health o f an organization and economic status of an individual are found to be
important parameters to evaluate soundness, perfection and excellence. This has
helped germination o f the seeds o f competition for which either to maintain
existence or to thrive, it is imperative to be professional so that faculties are
enriched for generating profits, maximizing wealth, multiplying capital, excelling
on competition and establishing leadership. The industrial transformation, thus,
opens doors for social, cultural and economic transformation, which, in a natural
way transforms the basic nature and character o f our needs. Today we prefer to
spend our disposable income on the multi- faceted sophisticated amenities and
facilities developed by the industrial world. All these developments in the socio­
economic and cultural fabrics have helped the emergence of service sector in a

formal way.

1.1 International Scenario

The tremendous growth o f service sector has resulted in its increased
importance to the world economies. For instance in 1960, 58% of GDP of USA
was generated by services and the increasing trend in the use o f services has
continued with services contributing 75% of the USA’s GDP in the year 2004.
The United States is not unique in its conservation to a service economy. Similar
changes have taken place elsewhere. Today, service sector dominates the
economics o f other nations like Australia, France, Japan, Hong Kong, Sri Lanka,
Norway and Singapore to name a few, as is clear from Table 1.1. It is also
observed that the services sector has been growing in importance in all the
countries during the past five decades or so. Some countries have now attained
the optimal level where the contribution from services sector to their GDP is
above 70 percent. This indicates that the countries which are still below that level
have an enormous potential for further growth.

It has also been observed that countries which generate a share of 60

percent and above from the services sector have been able to record a sustainable
GDP expansion over the years. The larger share of services, as claimed by
critiques, has in no way contributed to retard their growth. In fact, the
preponderant growth in the services sector has helped them to improve both
agriculture and the industry sectors on efficiency grounds, infusing sustainability
to those two sectors as well.

Table-1.1: The Share of the Services Sector in Some Major

Countries of the world.
Value added as % of GD 3
Countries
1960 1980 1985 2004
UK 53 54 66 72
Australia 51 58 70 71
France 52 62 71 73
Japan 42 54 60 68
USA 58 64 72 75
Sinqapore 78 61 64 65
Hona Kong 62 67 83 88
China 20 21 31 35
India 30 36 41 52
Sri Lanka 48 43 52 58
Source: W o r ld Bank, 2005 World Development Indicators, Table 4.2, 186-188.

□
 Hence, it can be safely concluded that a share o f about 65 to 70 percent in
the services sector would provide a country with immense prospects for wealth
creation, provided it gains competitive advantage in the production of such
services. In this context, the future growth prospects available to China are
enormous, since its services sector still accounts for only 35 percent o f its GDP.
Both India and Sri Lanka too stand to gain on account o f the leeway available for
them to push the services sector’s contribution to above 65 percent. Hence, it is
important that they should exploit this growth potential without further delay.

As countries develop, the role o f agriculture in the economy declines and

that o f services rises. All developed countries have more than 50% GDP and
employment derived from services. A particular characteristic of the
development o f service employment over time is that it is less sensitive to
business cycle fluctuations than other types o f employment. The large and
rapidly growing service sector in most countries has resulted in the emergence of
a new breed o f larger and more sophisticated service companies. The major
service firms are now increasingly looking to international markets in search of
future markets. Globalization is assisting the process of defusing new service
developments across national boundaries and as the interest in the globalization
intensifies, service firms are makfng successful efforts to establish their
international networks and brands.

1.2 Indian Scenario

The service sector is assuming increasing importance in the Indian economy.
The share o f agriculture sector, which constituted 38% of GDP in 1950-80, has
now come down to around 20%. The service sector in the Indian economy
accounted for 38 % o f the total GDP in 1950-80. This share increased by 41.0%
in 1980-90, 46.6 in 1990-99, 48.3% in 1999-00, 48.9% in 2000-01 and 49.3%
in 2001-02 and has reached up to 54.1% in 2005-06. It shows sharp increase in
 Years Agriculture Industry Services

1950-80 38.0 24.0 38.0

1980-90 33.0 27.0 41.0

1990-99 26.4 27.0 46.6

1999-00 25.0 26.7 48.3

2000-01 23.9 > 27.2 48.9

2001-02 24.1 26.6 49.3

2002-03 21.5 27.3 51.2

2003-04 21.7 26.9 51.4

2004-05 20.5 27.1 52.4

2005-06 19.7 26.2 54.1

P = Provisional, QE = Quick Estimates, RE = Revised Estimates, AE = Advance Estimates,
NB: Industry includes Mining & Quarrying, Electricity, Gas & Water Supply and Construction.
Source: Central Statistical Organisation

the relative share o f service sector in the year 2004-05 and 2005-06, as is clear
from Table 1.2. Such a positive trend is found almost in all the developing
countries. However, the contribution of industry to the GDP is by and large
same.

A striking feature o f India’s growth performance over the past decade has
been the strength o f the services sector. Table 1.3 shows that on average services
grew more slowly than industry between 1951 and 1990. Growth of services
picked up in 1980s, accelerated in 1990s and averaged 7.4 per cent per annum,
thus providing a valuable proportion to industry and agriculture which grew on
average by 5.8 percent and 3.1 percent respectively. Growth rate of agriculture
between 2001and 2005 on average is 1.4 per cent and 6.0 per cent for industry
while as services grew on average by 7.8 per cent in the same period. Most
forecasters expect that services will grow at similar if not higher rates over the
next few years (Gordon and Poonam, 2003).

Table-1.3: India’s Sectoral Growth Rates

Average growth
Sectors (In percent per annum)
1951-1980 1981-1990 1991-2000 2001-2005
Agriculture 2.1 4.4 3.1 1.4
Industry 5.3 6.8 5.8 6.0

Services 4.5 6.6 7.4 7.8

GDP 3.5 5.8 5.8 5.9

Source: Own calculations using the CSO data and RBI (2006)

As India is moving forward to emerge as one o f the developed economies

in the world, its effervescent services sector is also fast growing as one of the
most spectacular byproducts o f ongoing resurgent in the country’s economic
growth. The service sector, the tertiary sector o f economy, covers a wide array of
activities like trading, banking and finance, health care, real estate,
transportation, security, management and technical consultancy among several
others. Industries such as software, biotechnology, finance, education and health
care are considered as the centre of excellence in Indian market. Among these
industries the growth in IT is the fastest. It has crossed $20 billion market and its
share has increased to 3.5% (2004-05) from 2.4% (2003-04) and 2.09% (2002-
03) in the world software and service market (Hearld, 2005). The other notable
fast growing services segments include Financial Services Industry (FSI) which
has undergone a more liberal reform process since liberalization of Indian
economy. Specifically, two segments viz., car finance and mutual fund have
witnessed fast growth rate in FSI (Hearld, 2005). Education is another field

□
which is not only a huge segment o f services sector within the country but also a
foreign exchange earner. Moving further on the gamut, entertainment industry
covering film, music, broadcast, television and live entertainment is another fast
emerging sunrise sector. The FCCI survey shows that the entertainment has
grown by 15 percent to an estimated market size o f Rs. 19,200 crore in 2003 and
by 17 percent to Rs.22,610 crore in 2005 (Hearld, 2005).

Like aforesaid service sectors, health sector is another major sector which
is continually showing an increased growth rate and is being touted as the next
‘Big Boom ’. This industry has accounted for 52% in India’s GDP in 2002 and is
expected to grow rapidly over the next decade to reach a level o f Rs.3,00,000
crore by 2012. India today has big names in health care sector like AIIMS, PGI,
Apollo, Batra, Escorts, Jaslok, Fortis, Hindujas, CARE, Shamkara Netralaya, etc.
These hospitals are well known through out the world for providing quality
medical services.

1.3 Overview of Public and Private Health Care Sector in India

India has a vast health care system costing an estimated one lakh eight
thousand seven hundred and thirty two corers in 2002 (USD $24 billion)
representing 4.8% o f India’s gross domestic product (National Commission of
Macroeconomics,2005). Broadly, health care in India is made up o f services
provided by two sectors: public and private. An important feature o f the Indian
public and private health care system is that it has perhaps the w orld’s largest
community-based tradition o f indigenous systems o f medicine, which include
Ayurveda, yoga/naturopathy, Unani, Siddha and Homeopathy (AYUSH).

The public sector accounts for approximately 20-25% o f the total health
care expenditure which represents only 1% o f GDP (Peters et.al. 2002). The
public sector is financed through general tax and non-tax revenues from both
internal and external agencies. The public sector’s major role is to plan, regulate
and shape the Indian health care delivery system. It consists o f central as well as
state and local government-run institutions/ centers and consists o f the following
numbers:-

• Sub Centers 137,311

• P rim a ry H e a lth Centers 22,842

• C o m m u n ity H e alth Centers 3,043

• H o sp ita ls 4 ,0 4 8

• Workforce 345,514
(National Commission o f Macroeconomics, 2005)

A large number o f dispensaries, medical colleges, paramedical training

institutions and laboratories are also part o f this system. Access to and utilization
o f public sector health care varies regionally as well as by urban versus rural
areas and by income group. It accounts for 20% of outpatient curative care, 50-
55% o f hospitalization care, 60% o f antenatal care and 90% of immunizations
(Mahal et.al. 2001). The annual per capita health care spending in the public
sector in India is higher than that o f Bangladesh or Indonesia, yet health care
outcomes such as infant mortality are worse in India than in either of these
countries (Peters et.al. 2002).

The private sector, in comparison, accounts for 70-80% of health care

expenditure- one o f the highest proportions o f private health care spending in the
world (National Commission o f Macroeconomics, 2005 and Peters et.al. 2002).
These studies have found that the private health care sector in India is highly
diverse ranging from voluntary, not-for-profit, for-profit, corporate, trusts, stand­
alone specialist services, diagnostic laboratories, pharmacy shops and unqualified
health service providers. Many health care service providers are unlicensed as
reported by Deshpande et al (2004). Approximately 80% o f all outpatient visits

□
(hospital and non-hospital based) take place in the private sector. This finding is
similar by income group, urban and rural populations, by gender, by caste and
tribe affiliation, and above and below the poverty line (Mahal et.al. 2001).
Hospitalizations and institutional deliveries (births) are shared almost equally
between the public and private sectors. Preventive services such as antenatal care
and immunizations, however, are predominantly given in the public sector (60%
o f antenatal visits, 90% of immunizations). Therefore, the main thrust of the
private health sector is the provision o f curative services, particularly in the
outpatient arena.

1.4 Quality of Medical Services

In the perspective o f health care, a person who avails services concerning
health whether as an outdoor or indoor patient is the consumer o f this sector and
his satisfaction is defined as “a measure o f patient’s attitude towards the doctors,
the medical care he receives and health care system (Hulka et.al., 1975). The
quality o f medical care is promoted when health care encounters are personalized
to individual needs and wants. The test of efficiency for any health care
institution is the consumer satisfaction (Goel and Kumar, 1989) and thus, they
must strive for maximum consumer satisfaction and consumer oriented services
>

(Prakash, 1989).

Though, the consumer is the most important dimension on which the

success o f the organization depends but the factors like medical and therapeutical
treatment, greater and refined medical and surgical knowledge, effective
facilities and equipments etc., which are the core factors for any health
organization’s effective performance, cannot be ignored (Srivastava, 1973). The
quality o f medical service revolves around these factors as well. Thus, it is
necessary that the health organizations should have a clear understanding of the
concept o f health care service product in order to provide maximum satisfaction
to the patients. On the other hand, full description o f health care service product

===S
is incomplete unless it includes the expectations o f the patients with regard to
doctors, nurses, physical comfort, facilities etc. along with other technical
qualities o f the products (Flexner et.al., 1985). The health care service product,
as remarked by Lytle and Mokwa (1992) is a unique combination o f tangible and
intangible benefits that should be adaptable to the needs of the patients. The
consumer will be satisfied if the service quality confirms to their needs and
requirements (Lytle and Mokwa, 1992 and Parasuraman et al., 1988). Greater the
service conformance to the requirements o f the consumers, the better will be the
service quality and consequently greater" will be the patient satisfaction
(Parasuraman et.al., 1988).

1.5 Need for the Study

Health care along with banking, insurance, education and many other
institutions is covered under the services sector. Like other counter parts, the
complaints from hospitals are not uncommon. People have numerous complaints
pertaining to the behaviour o f staff (from doctors to class fourth), sanitary
conditions, facilities o f treatment, bribery, nepotism and many other evils. The
most specific complaints about the hospitals are long waiting periods,
overcrowded waiting rooms, OPD’s and lack o f civic amenities and absence of
workable appointment system etc.

Consumers’ satisfaction is the pioneering point to understand marketing

dynamism and is the most important aspect for the success o f any organization
(Cronin and Taylor, 1992) in both developed and developing countries.
Satisfying consumer needs is considered as means to ends like competitive
advantage, customer loyalty, long-term growth and survival in both commercial
and non-commercial concerns (Gopala Krishna and Mummalaneni, 1993) and is

_____
an end itself in social concerns. Bolton and Drew (1987) and Ostwald et.al.,
(1998) while supporting this contention observed that consumer satisfaction is
strongly related to quality o f medical service and service quality is a pre-requisite
of patient satisfaction. Our public health system is basically set up to provide
adequate health care services to all. Despite the high priority given to this sector,
there is growing evidence o f its negative impact on the level of patient
satisfaction (Hardeep, 2002). The government has spent vast amount on the
infrastructure o f hospitals, primary health centers, dispensaries etc. Despite such
an elaborate network o f territory, secondary and primary health care units, the
quality medical service has not been improved and is still a neglected issue
(Tabish, 1998, 2003; Poonam, 2002). Apart from this, the faith o f patients in the
efficiency o f the public health system is decreasing day by day because of
negligence and indifference on the part o f hospital management (Goel and
Kumar, 1989 and Dave, 1991). The objective o f establishing public health care
units are not being realized and the money so far spent on it should be considered
as a total wastage o f public money (Rao and Rameshwaram, 1992 and Rao,
1986). The widespread frustration among community, in particular among the
weaker section o f our society, in public health care is quite evident (Bhat, 1990).
Intensified competition, mushrooming growth o f private sector and scarcity of
funds in the government sector have further aggravated the patient problems
(Sharma andChahal, 1995, 1999).

In the light o f above research findings, quality o f medical service is

critical to hospitals success particularly in today’s increasingly competitive
environment. In spite o f the tremendous importance o f customer care in health
care services, it has been almost academically unexplored in J & K. No
comprehensive study has, so far, been conducted to study the quality of medical
services and its dimensions in government and private hospitals. The present
study is aimed to fill up this gap in the existing literature with following

objectives:
1.6 Objectives of the Study

The study has been conducted with the following objectives in view:

1. To make a dimension specific assessment o f the quality of medical

services in hospitals using GAP MODEL.

2. To examine the expectations and perceptions o f patients and

hospital management regarding quality o f medical service in
hospitals, under study.

3. To make a comparison across government and private hospitals

operating in Jammu and Kashmir and Chandigarh on critical
medical service dimensions.

4. To suggest, on the basis o f study result, way and means for

improving customer care in hospitals with a view to make overall
hospital services more effective and efficient.

1.7 Organization o f the Study

The study has been organized in seven broad chapters. The first chapter of
the study, besides highlighting the contribution of service sector in GDP at
national and international level also reviews the concept o f quality of medical
service and provides an overview o f public and private hospitals in India. The
chapter highlights the need for the present study and objectives of the study. In
chapter second, a critical review of literature on the subject has been made with a
view to emphasize important contributions on the subject and the areas of
deficiency. At the end, the chapter brings to light agenda for future research.
Chapter third discusses research methodology, area o f the study, sample size,
demographic makeup o f respondents, besides the tools o f analysis. Chapter
fourth is devoted to empirical findings regarding quality o f medical service and
its dimensions in hospitals. Chapter fifth presents empirical findings related to

CD
expectations and perceptions o f patients. It also makes a comparison of
perceptions o f hospital management and respective patients regarding quality of
medical service in hospitals. In chapter sixth empirical findings regarding quality
o f medical service variations in hospitals have been discussed. The chapter
makes comparison o f public and private hospitals in Jammu and Kashmir and
Chandigarh regarding quality o f medical service dimensions. The last chapter is
devoted to integrate research findings and offer suggestions for improving
quality o f medical service in hospitals with a view to make overall hospital
service more effective and efficient.