Tanaka Business School Imperial College London

An Insight into Malaysias Medical Tourism Industry from a New Entrant Perspective
by

Mr. Bhavin J. Shah

A report submitted in partial fulfillment of the requirements for the MBA degree and Diploma of Imperial College London

September 2008

SYNOPSIS

The overarching objective of this project is to provide an insight into Malaysias medical tourism industry. The study conducted offers assistance to a new upcoming hospital in Malaysia to understand the overall scenario of the market it wishes to enter in the near future. An external view using Porters Five Forces, an internal resource-based view and an industry snapshot using value network approach are evaluated to identify the pros and cons about the industry.

In the beginning, a brief about medical tourism is written along with the background to research, and project aims and objectives.

Next, a critical literature review is performed to explore previous research and to analyze merits and limitations of the theoretical frameworks. Interviews with managers and medical practitioners were arranged to gather primary data. Secondary data was also obtained from pertinent sources. The theoretical frameworks that form the academic basis for this study are used to analyze the data. The analyses are discussed along with other facts that were not captured by the framework or approach.

The analysis confirms that Malaysias medical tourism industry is attractive to enter and realize profits. There are a few strong players in the market, although, the overall market is still in the emerging phase. However, certain facts about the government, staffing, certifications, and lack of resources explain that the role players in the industry may need to work together to build up the industry.

Finally, a few recommendations have been noted to help the hospital make the right decisions.

ACKNOWLEDGMENTS

This dissertation was made possible due to the active support of the staff at Asian Neuro Cardiac Centre, Malaysia . In particular, I would like to thank Ms. Pinache and Mr. Beh for providing information about Malaysias medical tourism industry and the hospital. I also extend my gratitude towards Ms. Wendy and Mr. Zahirin without whom traveling would have been a nightmare in Malaysia.

At Imperial College London, I would like to thank my supervisor Dr. Timothy Heymann, first for awarding the studentship project and second for helping to target my efforts. I would even like to thank Mr. Ebrahim Mohamed and Mr. Simon Stockley for their moral support towards the write-up of this project.

Finally, special thanks to my wife Nansi, who has being so supportive during this project and throughout my MBA year. Bhavin Shah, September 2008.

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TABLE OF CONTENTS
SYNOPSIS ................................................................................................................. I ACKNOWLEDGMENTS ............................................................................................ II TABLE OF CONTENTS............................................................................................ III TABLE OF FIGURES ................................................................................................ V LIST OF TABLES ...................................................................................................... V 1 INTRODUCTION ................................................................................................ 1 1.1. 1.2. 1.3. 1.4. 1.5. 1.6. 1.7. 1.8. 1.9. 1.10. 2 2.1. What is Medical Tourism ............................................................................. 1 Benefits of Medical Tourism ........................................................................ 1 Why is medical tourism attractive ................................................................ 2 Downsides of Medical Tourism .................................................................... 2 Background to Research ............................................................................. 3 Project Aims ................................................................................................ 4 Organizational Context ................................................................................ 5 Project Objectives ....................................................................................... 5 Report Structure .......................................................................................... 5 Chapter Summary.................................................................................... 6 Introduction ................................................................................................. 7 Traditional strategic management ........................................................ 7 The services sector .............................................................................. 7 Criticism of Porters Five Forces ......................................................... 12 Criticisms of Resource-Based View.................................................... 13 Definition ............................................................................................ 14 Background of network study ............................................................. 15 About value network ........................................................................... 15 About value-chain............................................................................... 16 Value Network vs. Value-Chain .......................................................... 17 Value Network Analysis ...................................................................... 17 Value Network Analysis Methodology................................................. 18

LITERATURE REVIEW ...................................................................................... 7 2.1.1. 2.1.2. 2.2. 2.3. 2.4. 2.2.1. 2.3.1. 2.4.1. 2.4.2. 2.4.3. 2.4.4. 2.4.5. 2.4.6. 2.4.7. 2.2.

Porters Five Forces .................................................................................... 8 Resource-Based View (RBV) .................................................................... 12 Value Network ........................................................................................... 14

Chapter Summary ..................................................................................... 20 Research Approach and Participants ........................................................ 22 Primary Research...................................................................................... 22 Primary Research Coverage .............................................................. 22 Interviewee Profiles ............................................................................ 22 III

RESEARCH METHODOLOGY ........................................................................ 22 3.1. 3.2.

3.2.1. 3.2.2.

3.2.3. 3.2.4. 3.3. 3.4. 4 4.1.

Conduct of Interview........................................................................... 23 Limitations .......................................................................................... 24

Secondary Research ................................................................................. 24 Chapter Summary ..................................................................................... 25 Market Environment .................................................................................. 26 Malaysia (Country Description)........................................................... 26 Tourism Destinations.......................................................................... 26 Healthcare system in Malaysia ........................................................... 27 Medical Tourism in Malaysia .............................................................. 29 Assumptions....................................................................................... 30 Threat of Entry (Barriers) .................................................................... 30 Bargaining Power of Suppliers ........................................................... 31 Bargaining Power of Buyers ............................................................... 32 Threat of substitute products or services ............................................ 33 Rivalry from competitors ..................................................................... 34

ANALYSIS........................................................................................................ 26 4.1.1. 4.1.2. 4.1.3. 4.1.4. 4.2. 4.2.1. 4.2.2. 4.2.3. 4.2.4. 4.2.5. 4.2.6. 4.3. 4.4.

Competitive Landscape Assessment ......................................................... 29

Summary of Analysis ................................................................................. 35 Resource-based view ................................................................................ 36 Hospital Building................................................................................. 36 Hospital Equipment ............................................................................ 36 Services ............................................................................................. 37 Staffing ............................................................................................... 38 Quality of Care, Patient Safety and Medical records ........................... 38 Collaboration ...................................................................................... 39

4.4.1. 4.4.2. 4.4.3. 4.4.4. 4.4.5. 4.4.6. 4.5. 4.6.

Summary of Analysis ................................................................................. 40 Value Network Analysis ............................................................................. 41 Assumptions....................................................................................... 41 Network Map ...................................................................................... 42 Resilience........................................................................................... 45 Value Creation ................................................................................... 46 Brand Management Perceived Value .............................................. 47 Asset Impact ...................................................................................... 48 Reciprocity ......................................................................................... 48 Structure and Value............................................................................ 49 Agility ................................................................................................. 50

4.6.1. 4.6.2. 4.7. 4.7.1. 4.7.2. 4.7.3. 4.7.4. 4.7.5. 4.7.6. 4.7.7. 4.8. 5 6

Network Map Analysis ............................................................................... 45

Summary of Analysis ................................................................................. 50

DISCUSSION OF ANALYSIS ........................................................................... 52 RECOMMENDATIONS .................................................................................... 56 IV

CONCLUSION AND FUTURE RESEARCH ..................................................... 59 7.1. 7.2. Introduction ............................................................................................... 59 Future Research........................................................................................ 59

REFERENCES ........................................................................................................ 61 APPENDIX A: ANCC Company History Milestones ................................................. i APPENDIX B: Top Countries (Malaysia Tourist Arrivals 2002 2007) ....................... ii APPENDIX C: Value Network Analysis Input Data .................................................... iii APPENDIX D: Hospitals participating in promotion of Health Tourism ..................... viii APPENDIX E: Health Personnel: Population Ratio 2000 and 2005 ........................... ix APPENDIX F: Medical Treatment Costs (KPJ HealthCare) ....................................... x APPENDIX G: Project Submission Form ...................................................................xi

TABLE OF FIGURES
Figure 1: Medical tourism across the world ................................................................ 3 Figure 2: Porter's Five Forces framework .................................................................. 9 Figure 3: Value Network Map Illustration ................................................................. 16 Figure 4: Porter's Value-Chain diagram ................................................................... 16 Figure 5: Roles, Transactions and Deliverables....................................................... 20 Figure 6: Map of Malaysia (shown in light brown colour).......................................... 27 Figure 7: Break-up of Healthcare sector in Malaysia................................................ 28 Figure 8: Quality drives most of today's medical tourism market .............................. 33 Figure 9: Value network map for Malaysia's medical tourism industry ..................... 42 Figure 10: Movement of medical tourists globally for medical treatments ................ 43 Figure 11: Tangible & Intangible deliverables (percentage) ..................................... 45 Figure 12: Tangible & Intangible deliverables (actual numbers) ............................... 45 Figure 13: Percentage of all deliverables generated by each Role .......................... 46 Figure 14: Perceived Value by Receivers - All Transactions .................................... 47 Figure 15: Perceived Value by Senders - All Transactions ...................................... 47 Figure 16: Asset Impact - All Transactions .............................................................. 48 Figure 17: Centrality In Degree by Role - All Transactions....................................... 49 Figure 18: Centrality Out Degree by Role - All Transactions .................................... 50 Figure 19: Number of Neuro specialists and demand .............................................. 54 Figure 20: Number of Cardio specialists and demand ............................................. 54

LIST OF TABLES
Table 1: List of organizations interviewed.23 Table 2: List of organizations contacted but unavailable for interview..23 Table 3: List of Competitors of ANCC34 V

1 INTRODUCTION
1.1. What is Medical Tourism
Medical tourism can be defined as: a process of attracting foreign patients to overseas countries which can offer hospital/medical services at fees considerably less than the patients home country and usually combining an element of post operative tourism (recovery) for the patient. (Rowley, 2008) Some familiar terms coined for medical tourism are, health tourism, medical outsourcing, medical travel, wellness tourism and global healthcare.

1.2. Benefits of Medical Tourism

For Governments: Promotion of the country Stimulation of the economy flow on effect on local markets Development of world class facilities Encouragement of reversal of brain drain

For Hospital Operators: Increased revenue from high net worth patients Ability to invest in infrastructure with better returns Take up unused capacity and convert to new market Ability to create niche markets

For Doctors: Develop an international profile Increased personal income Ability to further develop surgical skills Acquire new equipment for local markets

For Entrepreneurs: Seize upon new opportunities Create medical tourism as an industry Develop medical record technology

For Patients: Access to good services Affordability and or self insured Quick access and reduced wait times

1.3. Why is medical tourism attractive

Medical tourism is attractive as it is cost effective even after considering factors like air travel, accommodation, food, insurance, transportation and vacation costs. In many countries surgery is categorized to emergency and non-emergency cases. Patients have to wait a long time to get their treatment, some can wait for years if the treatment is not considered clinically urgent or critical. Medical tourism offers the option of almost zero to zero waiting periods that can be beneficial to such patients. Moreover, many people are becoming disillusioned with an expensive system which does not provide them with the care they believe they are entitled to and in many cases fails to deliver. Thus, destinations offering medical tourism often take care to ensure that the quality of service, whether during treatment or pre and post treatment is at par with international standards. In addition, medical tourism offers an opportunity not only to access clinical care but also to recuperate in excellent tourist resorts in a warm climate as a part of a package. Elective surgery (plastics) provides as recovery period away from family, colleagues, friends until the evidence of surgery has disappeared. It provides anonymity!

1.4. Downsides of Medical Tourism

With so many positives, medical tourism does come with its downsides also. A major problem facing medical tourism in some countries is a lack of insurance to cover foreign patients. In the event of complications, the additional expenses have to be borne by the traveling patient. Since the patient gets treated on foreign land, there could be complication with postoperative care. This may not be present until the patient returns home and fall upon the doctors in the patients home country to provide follow-up care and possibly to attend to complications and side effects and emergency care if any. Some destinations have hospitals with low healthcare standards but are still offering attractive packages to lure patients from overseas. There may be little control over quality of care and credentialing of doctors and poor clinical ethics which will bring criticism from the developed countries. Finally, medical mishaps occur everywhere whether in the patients home country or overseas. Some countries that promote medial tourism dont collect data on adverse events and those that do often do not publish it or lacks clarity.

Figure 1: Medical tourism across the world (Deloitte, 2008)

1.5. Background to Research

Medical tourism though not new by itself is a relatively new area to be explored from an industry standpoint. While substantial research on other health related markets such as wellness tourism has been completed (Eg. Goodrich and Goodrich, 1987, p217), little academic research has been done on this particular niche market beyond the exploratory stage. There is an increasing availability of literature in the mainstream media i.e. print, electronic media and the Internet, illustrating the growth for this form of tourism. However, the lack of academia interest in medical tourism both necessitates and validates this study within the medical tourism market. Medical tourism is prospering in countries such as Brazil, Mexico, India, Thailand, Singapore and many more. Malaysia and Philippines are emerging markets for medical tourism. (See Figure 1) Since this project was awarded as a studentship agreement between Imperial College London and Asian Neuro Cardiac Centre, Malaysia. (ANCC), it is obvious that the market to be researched would be that in Malaysia. An initial survey of medical tourism websites on Malaysia provided very little information about the industry there. Informal talks with some health practitioners and hospital managers in Malaysia revealed that the following facts: The medical tourism industry is fragmented and rather dormant 3

Inactivity or absence of stakeholders to boost the industry No robust study on industry profitability Unclear thoughts on resources required for starting a medical tourism industry

The old private and public sector hospitals have old and sometimes obsolete equipments, non-standard medical and surgical procedures, shortage of staff and so on. Many new hospitals are coming up in Malaysia with state-of-art technology and ambience such that they are perfect candidates to enter the medical tourism industry. One of them is ANCC. Hence, the purpose of this project is to analyze the market from a new hospital perspective.

1.6. Project Aims

Medical tourism being a service-based industry, the organizations involved within it cater to both, demand and supply. Hence it is necessary to conduct the analysis using frameworks, models and methods that highlight the internal and external view of the industry.

There is a vast collection of scholarly work concerned with the description of strategy (Eg. Mintzberg, 1990); the market environment (Eg. Porter, 1980); internal resources (Eg. Barney, 1991); and efforts to develop a more integrated approach to strategic management (Eg. Farjoun, 2002). However such frameworks (eg. Value- chain) have proved useful within traditional industries, particularly manufacturing. (Peppard and Rylander, 2006) (Fjeldstad and Ketels, 2006). In todays fast moving world, organizations are becoming more globalized. In addition, customers are becoming more aware and demanding. Finally, with outsourcing, mergers & acquisitions, and partnerships occurring, organizations need to move beyond the traditional models and figure out new ways to create and capture value in the market. This project aims to apply such traditional strategy frameworks to understand the industry profitability and competitive advantage for ANCC in Malaysias medical tourism industry. Furthermore, these frameworks are criticized based on their drawbacks for a service-based industry. Finally, a new method that is applicable to this industry and which assists in identifying stakeholders and their value addition to the industry is revealed, thereby involving both, the supply and demand side orientation in the industry.

1.7. Organizational Context

Asian Neuro Cardiac Centre is a new upcoming hospital in Malaysias Selangor state and is situated near Subang Airport (See Appendix A). It is a dual specialty private hospital focusing on cardiology and neurology as its centres of excellence. This 200 bed capacity hospital is planned to open at the end of 2008. It will be a tertiary treatment and care centre. With emphasis emplaced on emergency, acute care, noninvasive interventional procedures and functional rehabilitation, ANCC will strive to become an internationally renowned institution for Neuro and Cardiac medicine and healthcare. ANCC shall be a modern 5-storey purpose built hospital with prominence given to functionality, independence and well-being, establishing a milieu fostering innovation and optimal patient outcomes. The hospital desires to enter Malaysias medical tourism market1 within the next two to three years.

1.8. Project Objectives

Knowing that medical tourism a niche market with potential opportunities is making headlines globally, what does a new hospital entering such an industry requires to know before making the plunge? In order to answer the question, Malaysias medical tourism industry is taken into consideration and the following sub questions are answered: What is the industry structure and profitability of the industry from a new entrant perspective? What resources and capabilities are required to sustain competitive advantage? Who are the major stakeholders or key players in the industry and what value do they add to the industry?

1.9. Report Structure

An outline of the report structure is as shown. (Next page)

The word market and industry have been used interchangeably

Chapter 1: Introduction and Background

Chapter 2: Literature Review

Chapter 3: Research Methodology

Chapter 4: Analysis

Chapter 5 : Discussion

Chapter 6 : Recommendations

Chapter 7: Conclusion and Future Research

1.10. Chapter Summary

This chapter has set out the background of research, project aims, provided a course map summarizing the report structure and outlined the theoretical frameworks applied in this study. In addition, a brief overview of ANCC has been provided.

2 LITERATURE REVIEW
2.1. Introduction
2.1.1. Traditional strategic management Strategic management, or the development of competitive advantage, has been dominated by two schools of thought. The first school of thought involves a more outward look at competitive advantage and has two principle paradigms (Teece et al., 1997). The competitive forces approach was first developed by Michael Porter. This approach, based on the structure conduct performance paradigm exposed by Joe Staten Bain in 1959 in his book Industrial Organization (Teece et al., 1997), spoke to the different actions that a firm can take to face the competitive forces in the industry. It was a very outward focused paradigm. The second major paradigm is called the strategic conflict approach which focuses on the different imperfections that can arise in the markets, the deterrents to market entry, and finally the different strategic interactions that occur in the market. The second school of thought looks internally at the efficiency of the firms functions, processes, and resources and then determines if these are sources of competitive advantage. One key approach that follows along these lines is called Resourcebased View (RBV) (Barney, 1991). This field of research first proposed and championed by Edith Penrose in her book, The Theory of the Growth of the Firm (1959) and Wernerfelt (1984) in A Resource-Based View of the Firm published in the Strategic Management Journal, states that sources of competitive advantage of a firm stem primarily from the internal resources they possess. . A second area to the efficiency based side (Teece et al., 1997) is the dynamic capability approach, looking at combinations of competences and resources and how they can lead to competitive advantages. 2.1.2. The services sector The services sector is undeniably a key engine of growth in today's leading global economies (Basole and Rouse, 2008). There are many reasons for the growth of the services sector: increasing competition in a global economy, pressure to innovate, and changing customer demands. This has led to more complex environments, markets, product and service offerings, and stakeholder relationships.

Researchers have typically chosen to view firms as autonomous entities, striving for competitive advantage from either external industry sources (Eg. Porter, 1980), or from internal resources and capabilities (Eg. Barney, 1991). The image of companies competing for profits against each other in an impersonal marketplace is increasingly inadequate in a world in which firms are embedded in networks of social, professional, and exchange relationships with other organizational actors

(Granovetter, 1985); (Gulati, 1998); (Galaskiewicz and Zaheer, 1999). Thus, the conduct and performance of such firms can be more fully understood by examining the network of relationships in which they are embedded.

2.2. Porters Five Forces

New firms entering a market must be concerned with finding answers to questions such as, Is there any competition in the industry I am trying to enter? What is driving competition? How is this industry evolving? Is it an attractive industry to enter? What reactive actions will the competitors take and how best can I respond to such a situation? Michael E. Porter in his book, Competitive Strategy talks about a framework that can be used to analyze the industrys structure; Porters Five Forces. It is a framework for industry analysis and business strategy development. The five forces determine the competitive intensity and therefore the attractiveness of the industry. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition". Brandenburger (2002, p58) describes Porters Five Force framework as giving us a memorable mental picture of the business landscape. Porter argues that the extent of competitiveness within the market is dependent on three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers, bargaining power of customers. (See Figure 2)

Figure 2: Porter's Five Forces framework (Porter, 2008)

The five competitive forces are: (Porter, 2008) 1. Threat of new entrants: New entrants to an industry bring new capacity and a desire to gain market share. The threat of entry puts a cap on the profit potential of an industry. The threat of entry depends on the height of entry barriers that are present and on the reaction entrants can expect from incumbents. There are 6 major sources of entry barriers in any industry which are: a. Supply-side economies of scale: refers to firms that produce at larger volumes and enjoy lower costs per unit b. Demand-side benefits of scale: refers to effects that arise where a buyers willingness to pay for a companys product increases with the number of other buyers of the same company c. Capital requirements: refers to the amount of investment required in order to deter competition d. Access to distribution channels: refers to the channels new entrants require to enter the market and sell their product or service e. Incumbency advantages independent of scale: refers to cost and quality advantages for incumbents no matter what their size is f. Restrictive government policy: refers to any regulations, licensing requirements and restrictions laid down by the government 9

2. Bargaining power of suppliers: Companies depend on a wide range of different supplier groups for input. Suppliers play a major role in final product or service cost for a company. A powerful supplier will capture most of the value for himself, thus charging higher prices, limiting quality or service, or shifting costs to industry participants. Strong supplier power can occur when: a. Few companies dominate the market of suppliers and are even more concentrated than the buyers b. There no other alternatives. The suppliers product is the only one that complies with the buyers needs. c. The industry is not an important buyer of the product. d. The product is very important for the industry e. The industrys buyers have high switching costs f. The suppliers can move to forward integration and start producing the product on their own. 3. Bargaining power of buyers: Buyers can be customers or another company which is part of a supply chain. Buyers are very important since they are the ones who purchase the products or services from a company. A powerful buyer denotes capture of more value by forcing down prices, demanding better quality or service and so on. Some of the major cases that create strong buyer power are: a. Buyer group is concentrated or purchases large volumes relative to seller sales b. Purchases represent a significant percentage of overall purchases or costs. c. Products are standard or undifferentiated d. Buyers face few switching costs and can easily move from one product to another. e. Buyers earn low profits and therefore are more price-sensitive. f. Buyers can gradually start producing the product on their own if necessary. g. The buyers products is not affected in its quality or service h. Buyers have full information (concerning quality, competitive price and so on). 4. Threat of substitute products or services: A substitute performs the same or similar function as an industrys product or service by different means. An example would be videoconferencing as a substitute for travel. Substitutes can be easily overlooked if no proper market survey is conducted regularly. A 10

substitute product or service limits an industrys profit potential either by placing a ceiling on prices or by affecting the market share. 5. Rivalry among existing competitors: Competition is always going to be present in an industry unless it is a totally new industry. Rivalry can be in many forms such as price discounting, new product introductions and so on. The degree to which rivalry drives down an industrys profit potential depends upon the intensity with which companies compete and on the basis on which they compete. The factors that usually lead to intense rivalry are: a. Numerous or equally balanced competitors, generally, in both cases rivalry is more intense and the force is stronger. b. Slow industry growth, which leads to a fierce battle for market share and decreases profits. c. High fixed or storage costs, which leads to strong competition for increasing capacity and price cuts. d. Lack of differentiation or switching costs, which means that the buyers priorities are price and service. e. Capacity augmented in large increments; in these cases the industry may face periods of overcapacity and again price cuts. f. Diverse Competitors, which refers to the case where competitors are following different strategies and have difficulty in identifying others future moves, thus increasing uncertainty. g. High strategic stakes have a negative effect on an industrys attractiveness when for example some diversified firms particularly need to achieve their targets in the specific industry. h. High exit barriers which usually derive from: the inability to sell assets, strategic interrelationships, emotional barriers and governmental restrictions. All forces jointly determine the intensity of industry competition and profitability. More intense the forces less are the chances for a company to earn attractive returns on investment, and less intense the forces means that a company can be well profitable. While doing a competitive analysis, a firm must avoid the inclination to focus on only one aspect of the industry structure because it would not be able to capture the richness and complexity of industry competition. Moreover, one should keep in mind that the Five Force Analysis Model analyzes an industry and not a particular firm in the industry.

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2.2.1. Criticism of Porters Five Forces Teece, Pisano and Shuen (1997) state that Porters approach stems in part from the structure-conduct performance paradigm. In particular, the paradigm puts more emphasis on structure (meaning context) than on conduct (meaning strategy), and more on the implications for public policy than for strategies of companies (Mintzberg, 1990). In the world, where digitalization, globalization, and deregulation have become powerful forces, Porters model rarely takes them into consideration. A close analysis of Porters work and subsequent developments provides considerable fuel for critical theorists concerned with the reproduction of hierarchical economic relations, since it highlights the contradictions between idealized myths of perfect competition and the more grounded concepts of market power explored by business school strategists. Grundy (2006) noted that Porters framework is only recognised by an estimated 15% - 20% of managers. He notes that the framework is abstract, somewhat rigid, meaning that it is quite prescriptive which does not encourage using it flexibly, and highly analytical amongst other things. Although formulaic, Porters approach does help to identify the key profitability drivers in an industry. By focusing on these, companies are better equipped to determine a suitable strategy. Porter focused on external factors (OT of SWOT) in 1979 with his five forces framework which analyses the structure and dynamics of the industry, followed by work on competitive advantage in 1980, looking at cost advantage versus differentiation advantage.

2.3. Resource-Based View (RBV)

Porters concept of external industry analysis and market positioning dominated thinking and practice on strategy in the 1980s and early 1990s. However, its dominance was challenged by the emergence of the RBV of strategy. RBV is an economic tool used to determine the strategic resources available to a firm. The fundamental principle of the RBV is that the basis for a competitive advantage of a firm lies primarily in the application of the bundle of valuable resources at the firms disposal (Wernerfelt, 1984)

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RBV is the dominant perspective for strategic management studies today, (Wernerfelt, 1984), (Barney, 1991), (Peteraf, 1993), Garnsey (1998), (Srivastava, 2001), Pitelis (2002), (Acedo et al., 2006), (Ketchen et al., 2007). RBV was led by Prahalad and Hamel (1990) and Grant (1991). It differed strongly with Porter by its emphasis on an internal analysis of the firm as opposed to the external industry environment. According to the supporters of RBV, competitive advantage came from looking within. Andrews (1971) emphasized on a thorough understanding of the internal strengths and weaknesses of a firm. RBV holds that organisations are comprised of a series of different resources which need to be aligned with managements strategic aims. The 1990s were dominated by RBV which looks inward to develop an understanding of characteristics value, rareness, inimitability, and non-substitutability a companys resources must possess in order to produce an enduring competitive advantage (Barney, 1991). While defining what constituted a resource, Barney outlined three broad type of assets that could be used to conceive and implement value creating strategies: physical capital resources, human capital resources, and organizational capital resources. Barney (1991) challenged two prevailing assumptions of traditional strategy research; first, that firms in an industry were identical in terms of strategic assets; and second, that should any resource heterogeneity arise it would be very short lived due to limitation or acquisition by competitors. Thus, RBV sets out a strong case for heterogeneity between firms, even though external industry dynamics as defined by Porters five forces apply equally on all firms. Leadership and the role of individual managers in respect of the resources available to them within the firm are therefore key to an understanding of the RBV. RBV provides an approach with which to understand sources of competitive advantage at the firm level and serves to complement other perspectives such as the competitive landscape (Peteraf and Bergen, 2003) (Rindova and Fombrun, 1999), customer focus (Priem, 2007) (Zander and Zander, 2005) and many more. 2.3.1. Criticisms of Resource-Based View Despite the extensive diffusion of the RBV and its rapid theoretical evolution the approach has received robust criticism. Peteraf (2003) disregards the RBV for being overly focused on the internal perspective of a firm. It does not consider the use of strategic alliances that allow the combining of resources across organizational boundaries in pursuit of competitive advantage. 13

RBV is essentially tautological (Priem and Butler, 2001). Competitive advantage is achieved when implementing a value creating strategy not simultaneously being implemented by any current or potential competitors (Barney, 1991). This may be true, however, it is difficult to identify which assets are valuable until success has been achieved. Hence, the critics of RBV assert that the theory can only be warranted ex post. Moreover, the process by which firms create value-generating resources has not been given much attention in the RBV literature. It has generally been assumed that firms somehow develop such resources internally. The idea that the search for the source of value-creating resources and capabilities should extend beyond the boundaries of the firm presents a novel perspective for the RBV and answers an important question emanating from the literature as to the origin of value-generating resources (Gulati, 1999) (McEvily and Zaheer, 1999). Gibbert (2006a, 2006b) argues that because the RBV is based on idiosyncratic resources, it cannot be generalized and is therefore difficult to validate. Besides, various opponents of RBV have suggested that there is insufficient empirical evidence to judge on the existence and sustainability of resource advantages (eg. Levitas and Chi, 2002). The complex nature of resource networks within an firm renders this a formidable challenge and implies that the operational value of the RBV is limited (Conner, 2007). These criticisms are echoed by a number of other authors (eg. Lado et al., 2006);(Levitas and Ndofor, 2006). RBV underestimates the role of external industry forces and overestimates the ability of industries to successfully leverage resources to create competitive advantage. Further, it also falls short in estimating the role of customers needs in forming strategy. Finally, like Porters five forces, the RBV provides a generic approach to strategy.

2.4. Value Network

2.4.1. Definition "The value network models transaction services where firms act as intermediaries creating value by providing services that support exchanges within a network of people, organizations or locations." (Fjeldstad and Ketels, 2006)

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2.4.2. Background of network study The study of networks and network phenomena have been used by biologists (Eg. Cohen et al., 1990, Kauffman, 1969, Newman, 2003), neuroscientists (Eg. Arbib, 1995), engineers and computer scientists (Eg. Broder et al., 2000, Strogatz, 2001, Wasserman and Faust, 1994), and sociologists (Eg. Valente, 1995). It is a subject of increasing attention in the management and marketing literature. For example, networks have been used to explore the economic behavior and connectedness of business and industrial networks (Dyer and Singh, 1998, Eg. Nohria and Eccles, 1992, Anderson et al., 1994, Hakansson and Snehota, 1995, Jarillo, 1988), to study the concepts of resource allocation (Eg. Frels et al., 2003), collaborative advantage (Eg. Kanter, 1994), and the role and importance of alliances (Eg. Hamel et al., 1989), joint ventures and cooperative strategies (Eg. Gulati, 1998). 2.4.3. About value network Value networks are complex sets of social and technical resources which work together to create economic value. (Caswell et al., 2008) Different authors have coined different terms to describe the value network. Cartwright and Oliver (2000) call it as the value web, Tapscott et al. (2000) use the term b-web, Bovet and Martha (2000a) call it value net, whereas Hamel (2000) calls this network as value network. (See Figure 3) Early discussions of value networks were usually focused on supply chain, using frameworks, scorecards, and variations of supply chain models to describe supply chain networks (Parolini, 1999); (Bovet and Martha, 2000b). Others took a more extended view of the value network to include customers and strategic alliances (Normann and Ramirez, 1993); (Christensen et al., 1995); (Christensen, 1997); (Stabell and Fjeldstad, 1998). Most discussions of value networks confines the definition and perspective to the relationships between the firm and various external stakeholder groups.

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Figure 3: Value Network Map Illustration (Source: ValueNetworks.com)

2.4.4. About value-chain Porter conceived the value-chain (See Figure 4) concept for considering key activities that an organization can perform or manage with the intention of adding value for the customer as product or services move from conception to delivery to the customer (Porter, 1980). He had espoused the concept of value-chain to assess the competitive landscape of a firm. Value- chain analysis has been very popular among strategy practitioners in the last two decades. Value-chains were very suitable for analysing twentieth century industries that relied on industrial production principles to deliver products and services to the customer.

Figure 4: Porter's Value-Chain diagram (Source: Porter, M.E. Competitive Advantage: Creating and sustaining superior performance, 1985)

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2.4.5. Value Network vs. Value-Chain The notion that organizations exist in networks is based on the argument that firms do not merely operate in dyadic relationships, but are deeply rooted in complex economic systems consisting of numerous interorganizational relationships (Easton, 1992). Such an argument replaces Porters view of value-chain, which assumes a linear value flow and where resources flow in dyadic relationships from raw material providers to manufacturers to suppliers to customers. The value-chain is designed around the activities required to produce the end product. Such linear models do not account for the nature of alliances, competitors, complementors and other members in the business networks. Furthermore, critics such as Bovet and Martha (2000b), Normann and Ramirez (1993), and Stabell and Fjeldstad (1998) found that Porters approach did not adequately describe the multidirectional nature and complexities of the potential myriad of business-tobusiness (B2B), business-to-consumer (B2C), and emerging consumer-to-consumer (C2C) relationships observed in business environments today. As products and services become dematerialized and the value-chain itself no longer having a physical dimension, the value-chain concept becomes an inappropriate device with which to analyze many industries today and uncover sources of value (Normann and Ramirez, 1993); (Parolini, 1999); (Tapscott et al., 2000); (Hakansson and Snehota, 2006); (Campbell and Wilson, 1996). Fjeldstad and Ketels (2006) observed that using value-chain system for a company that works on a value network logic would cause missing or misjudging the importance of key element of a value networks value creation process. In a value-chain, value creation is derived from products, and the extent to which the products match customer needs defines the source of competitive advantage. The value network creates value by enabling exchanges and the competitive advantage accrues according to the extent to which the network within which such exchanges are enabled matches the needs of its members. 2.4.6. Value Network Analysis Earlier, services were differentiated from products on the basis of four characteristics, namely intangibility, heterogeneity, inseparability, and perishability (Zeithaml et al., 1985). However, as the study of services has progressed and many of todays offerings are characterized by bundled solutions consisting products and services, the differentiation between products and services is increasingly blurring (Vargo and Lusch, 2004). Such studies have demonstrated that the impact of organizational (or 17

purposeful network) interventions and actions must be understood in both tangible and intangible terms (Sveiby, 1997); (Edvinsson and Malone, 1997); (Wallman and Blair, 2000); (Lev, 2001); (Eccles et al., 2001). Value network analysis (VNA) allows the application of the value network perspective to internal value creating activities as well as external facing networks. It is a method that provides the answer to a companys problem of sustaining in the market financially and non-financially. VNA essentially provide a firm with access to information, resources, markets, and technologies which in turn generate advantages for the firm such as learning, scale, and scope of economies. It allows firms to share risks, outsource value-chain stages and organizational functions. (Allee, 2008a) Using VNA, organizations focus not only on the company or the industry but also the value creating system itself, within which different economic actors supplier, partners, allies, and customers work together to co-produce value (Stabell and Fjeldstad, 1998, Allee, 2000b, Brandenburger and Nalebuff, 1997). Dyer (2000) argues that value networks represent extended enterprises. Thus, the VNA approach views the activities of a firm in a holistic, rather than a fragmented, manner. Consequently, the network perspective shifts the focus of a RBV of the firm to a perspective in which examination of resource dependency, transaction costs, and actor-network relationships is critical. (Basole and Rouse, 2008) 2.4.7. Value Network Analysis Methodology The value network mapping works for a ground-level view, a rooftop view, or a helicopter view. Step1: Define the network To keep the level of detail manageable it is important to define the boundaries of the mapping activity. The level of detail depends on what the focus question is. Some questions are at the workgroup level, others address managerial-level relationships and other might look strategically at the whole business (Eg. In this project it is Malaysias medical tourism industry). The network focal should be the organization or business unit whose business model relies on the network under consideration (Eg. ANCC). Step2: Identify and define network entities Identify network participants with network focal as a standpoint. i.e. identify all actors (Peppard and Rylander, 2006) or roles (Allee, 2000b) (See Figure 5) that influence the value the network focal delivers to its end-customers. Identify roles that have a 18

direct influence on, or affected by, its value propositions towards customers. Roles can also be filled by real people or groups who can generate transactions, send messages, add value and make decisions. Step3: Define the value of each entity perceives from being a network member Planning a value delivery strategy by identifying the value for all participants is important (Woodruff, 1997). The objective is to capture the perceived value of the different participants in regard to being part of the network. Peppard and Rylander (2006) state that identifying the value dimensions of the network participants involves asking, What are they getting out of the network? As opposed to traditional activity analyses of firms and behavioural analyses concerning individuals, investigating the perceived positive and negative value dimensions of network participants proves to be more advantageous when studying opportunity networks. Perceived value (Peppard and Rylander, 2006) is a key driver of activities which in turn is a key force of network development. In a way, perceived values envisage a network members highest level of steering toward influencing network development it is the perceived values that steer what people and firms are willing to do and not do. Step4: Identify and map the network This step involves identifying the linkages between the members of the network. These linkages are called network influences (Peppard and Rylander, 2006) or transactions (Allee, 2000b). Transactions are represented by a one-directional arrow that originates at one role and ends at another. They are transitory in nature have a start, middle, and completion. Every transaction carries information in the form of a deliverable (Allee, 2000b) (See Figure 5). A deliverable can be physical (Eg. Documents) or non-physical (Eg. Verbal Request). Although there are different ways to identify deliverables (Eg. Tichy and Fombrun, 1979), for the purpose of this project, deliverables are of two basic types: tangible and intangible. It is easy to confuse tangible with physical and intangible with non-physical. However, the distinction between physical and nonphysical forms of capital, products, and services is becoming irrelevant (Normann and Ramirez, 1993). Tangible Deliverables: They are all those that directly support production and delivery of goods, services, and revenue or funding. In short, tangible deliverables are those that are contractual or mandated. Tangibles include all transactions involving contracts and invoices, return receipt of orders, request for proposals, confirmations, or payment. They would also include the business transactions required to deliver or execute core goods and services. Knowledge products or 19

services that generate revenue or are expected as part of service (such as reports or package inserts) are part of the tangible value flow of goods, services, and revenue. (Allee, 2008b) Intangible Deliverables: They are all the little extras such as certain kinds of knowledge exchanges, favors, and benefits that build relationships and keep things running smoothly. No one pays for these intangibles directly and they are almost never contractual, but they are still critical to support the business transactions and processes. (Allee, 2008b)

Figure 5: Roles, Transactions and Deliverables (Source: ValueNetworks.com)

Step5: Analyze and shape Draw the value network (See Figure 3 and 9). Allows some quick conclusions to be drawn as it relates to the roles of the different participants in the network and analyse scenarios in terms of effects on the network of discrete events. The key to this analysis is a thorough understanding of the value dimensions of all participants and how they are influenced by other participants. End customers are typically the key to value creation in this network. This project has made use of Value Network Analysis software developed by Valuenetwork.com a part of the Value Networks Consortium. (http://www.valuenetworks.com)

2.2. Chapter Summary

Porters five forces framework provides an easy and yet a robust snapshot of an industrys structure and profitability options. It assists in analyzing an industry from external environment perspective. However, among other limitations, the framework has been criticized for not looking inwardly. The RBV emphasizes sources of competitive advantage that are derived from controlling valuable, rare, inimitable and non-substitutable resources. However, RBV has been criticized for its inability to assess success (i.e. to capture value) before the application of the model. Finally, the 20

value network approach is used to capture value in true essence of a servicebased industry. A value network analysis methodology is explained. The analysis developed in this chapter leads to the following propositions: Proposition 1: The traditional frameworks and models provide the external and internal view of the industry/organization which aids in building a new organizations strategy business model. Proposition 2: The value network approach helps the new organization learn about its close environment and the value addition the network provides. Proposition 3: The traditional models and the network approach together form the basis to capture value for a new services oriented firm. The analysis presented in this report explores these propositions.

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3 RESEARCH METHODOLOGY
3.1. Research Approach and Participants
Research methodology guidance has been obtained from the work of Saunders et al. (2003). They define two kinds of research approaches - the deductive approach and the inductive approach. In the deductive approach, the researcher first identifies relevant variables and then develops a hypothesis regarding the causal relationship between the variables. The hypothesis is then tested and findings are reported (Saunders et al., 2003). A general criticism about the deductive approach is that it may not allow for alternative explanations. In the inductive approach, the researcher first collects primary and secondary research data, performs analysis on the data and then develops a theory based on the analysis. The inductive approach is more flexible and useful where the analysis is based on qualitative data. (Saunders et al., 2003)

As the data analysis in this project is primarily based on qualitative data, this project follows an inductive approach to meet the research objectives.

3.2. Primary Research

3.2.1. Primary Research Coverage Major stakeholders in Malaysias medical tourism industry were contacted. Some of them are: 1. Private Associations 2. Health Tourism Agencies 3. Medical Tourism Hospitals (Incumbents) 4. Upcoming Hospitals 5. Medical Associations 6. Hotels The government was not contacted due to non-availability of a research permit. 3.2.2. Interviewee Profiles The mode of contact to the organizations were phone, email and/or face-to-face. The meetings were either held at corporate offices, exhibition stalls or a caf. The organization list is as follows:

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No. 1 2 3 4 5 6 7 8

Organization Sunway Medical Centre Prince Court Medical Centre Sri Kota Specialist Medical Centre KPJ Group of Hospitals Malaysiahealthcare.com Medical Tourism Association ValueNetworks.com ANCC

Position contacted Medical Triage and Corporate Care Manager International Help Desk Chief Executive Officer Head of Marketing and Corporate Affairs Corporate Executive

President, and Chief Operating Officer

Director of Corporate Development, and Assistant Marketing Manager Table 1: List of organizations interviewed

The following are the organizations that were contacted but were unable to produce any suitable quantitative or qualitative data for the project: No. 1 2 3 4 5 6 7 Organization MedRetreat Subang Jaya Medical Centre Mahkota Medical Centre Gleneagles Intan Medical Centre Association of Private Hospitals of Malaysia (APHM) Department of Statistics, Malaysia Immigration Department, Malaysia Reason Too many interviews conducted on the topic Does not entertain interviews No response No response No response No data available on the topic No response

Table 2: List of organizations contacted but unavailable for interview 3.2.3. Conduct of Interview Primary research was conducted as mentioned below: Exploratory discussions with the staff at ANCC. These early discussions were open ended in order to develop a strategic understanding of the firm. They also acted as a means of getting an insight into other organizations that contribute to medical tourism in Malaysia. Informal discussion with the business development head at ANCC to agree the scope and focus of the project 23

Semi-structured interviews with key decision-makers (Eg. CEO, COO) and senior managers in various organizations in Malaysia. These interviews gave an understanding of the structure and operation of these organizations, their resources and capabilities and their network linkage within the industry.

Semi-structured interviews were held with the staff at ANCC to explore their resource and capabilities, understand their goals and objectives and to gain knowledge about their network linkage with respect to the medical tourism industry.

Prior to interviews and discussions, participants were provided with background to the project and objectives of the interviews. 3.2.4. Limitations According to Saunders et al. (2003), there are several potential limitations to the use of interviews as a data source. Here is a brief explanation of the limitations and the steps taken to reduce their effects: 1. Interviewer bias and interviewee bias were addressed by thorough preparation before interviews in order to ensure integrity and establish trust with interviewees. During the interview, a neutral approach to questioning was taken, open-ended questions were used and interviewees were occasionally allowed to talk openly about their perceptions of the industry in question. Most interviewees received a brief introduction to the research in advance so that they can arrive better prepared for the interview. 2. Regardless of the level of trust established, an unavoidable limitation was that interviewees may have been reluctant to reveal sensitive information that could be considered as a source of competitive advantage for their organizations. 3. Generalisability of findings can be an issue when using a small number of interviews. To overcome this, the research aimed to include as many relevant and experienced interviewees as possible given the time constraints of the project. Furthermore, interviewees were intentionally selected so that they represent a varied range of backgrounds.

3.3. Secondary Research

Literature was sourced through searches on EBSCO, Zetoc, and Google scholar as well as searches through reputed journals deemed most likely to yield results. The literature review helped to identify the key themes and issues in this research area.

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The following reputed academic, industry publications and newspaper articles were referred to: Journals The Academy of Management Review Strategic management journal Journal of Business Strategy Journal of service research Journal of management Journal of Consumer Marketing Journal of Intellectual Capital Journal of theoretical biology Journal of the academy of marketing science Journal of interactive marketing Journal of information technology Harvard business review Scandinavian journal of management European management journal

Industry journals IBM systems journal Industrial and Corporate Change Telecommunications policy

Newspaper: New Strait Times

3.4. Chapter Summary

The following methodology is used to conduct the project research: 1. Critical review of existing academic literature was conducted, mainly focusing on areas of strategy and marketing 2. Semi-structured interviews were conducted either face to face or by telephone with decision makers and influencers in various organizations 3. Discussions via email responses were also taken into consideration 4. Secondary data was collected from different websites and magazine articles Throughout this report, the study is presented using the style most appropriate to maintain the overall narrative. Verbatim quotes from personal dialogues are used throughout the report to express commonly held viewpoints and to add colour.

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4 ANALYSIS
4.1. Market Environment
4.1.1. Malaysia (Country Description) Malaysia is a constitutional monarchy with an elected federal parliamentary government. The country is comprised of 13 states, 11 on the Malay Peninsula and two, Sabah and Sarawak, on the island of Borneo (See Figure 6). There is also a federally administered set of territories: the capital city of Kuala Lumpur, the administrative center of Putrajaya, and the island of Labuan. Malaysia is a multiethnic country of 27 million people. Malays form the predominant ethnic group. The two other large ethnic groups in Malaysia are Chinese and Indians. Islam is the official religion and is practiced by some 60 percent of the population. Bahasa Malaysia is the official language, although English is widely spoken. 4.1.2. Tourism Destinations As per Malaysias official tourism website, following are some of the destinations considered to be tourist attraction spots: Kuala Lumpur: The 88-storey Petronas Twin Towers is the main attraction in this capital city. Penang: It is a popular beach spot in Malaysia, lined up with a string of international-standard resorts. Wind surfing, canoeing, and parasailing are some of the activities that can be enjoyed here. Also, Penang is a favorite spot among medical tourists. Malacca: This place is famous from historic point of view due to the Portuguese colonization here from 1511 to 1641. Malacca, is another city well-known among tourists for medical procedures. Kedah: A cluster of 99 islands with the best of many worlds, beautiful beaches, world-class infrastructure, rich flora and fauna, and duty-free shopping make this place a haven for travelers. Langkawi beach is a wellknown place among tourists.

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Figure 6: Map of Malaysia (shown in light brown colour) (Source: Google Images)

4.1.3. Healthcare system in Malaysia Healthcare in Malaysia is mainly under the charge of Malaysian governments Ministry of Health. It has an efficient and widespread system of healthcare. Healthcare has been divided into private and public sectors (See Figure 7). As per medical act 1971 (Act 50), every practitioner is required to perform three years of service with public hospitals to overcome the shortage of medical practitioners in the country. However, Malaysian medical officers and specialists above the age of 45 and working abroad have been exempted from this rule as an incentive to attract more them to return back and serve the country. Foreign doctors are encouraged to apply for employment in Malaysia, especially if they are qualified to a higher level. Still, hospitals such as Sunway Medical Centre (SMC) prohibit foreign doctors from working on its premises. As per the CEO of Prince Court Medical Centre (PCMC) the medical registration policy, the Malaysian salary and the thoughts of settling down in Malaysia have hindered the entry of foreign doctors. The Malaysian government has allocated RM 10,276 million for health services according to the Ninth Malaysia Plan report (9MP), a 7% increase over the previous plan. It has plans to improve the condition of its existing hospitals in order to cope up 27

with the rising and aging population. Over the last couple of years they have increased their efforts to overhaul the systems and attract more foreign investment. There is still a shortage in the medical workforce, especially of highly trained specialists.(Ninth Malaysia Plan, Chapter 20, p442). As a result certain medical care and treatment is available only in large cities. Moreover, the Malaysian ambulance attendants lack training equivalent to international (viz. U.S.) standards. Majority of private hospital facilities are in urban areas and, unlike many of the public hospitals, are equipped with the latest diagnostic and imaging facilities. Western trained doctors are generally to be found here. Currently, there are more than 210 private hospitals with greater than 10,000 beds. This is a commendable figure compared to 50 private hospitals with 2,000 beds in 1980. On last count (2007), there were 18,246 doctors and 68,349 nurses working in private hospitals. (Cruez, 2008) Private hospitals have not generally been seen as an ideal investment it has often taken up to 10 years before companies have seen any profits. However, with the advent of medical tourism, the situation has now changed and hospitals are looking forward to lure foreigners coming to Malaysia for medical care.

Figure 7: Break-up of Healthcare sector in Malaysia (Source: ANCC)

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4.1.4. Medical Tourism in Malaysia Malaysia has gained reputation as one of the preferred locations for medical tourism by virtue of its highly efficient medical staff and modern healthcare facilities. A survey conducted by APHM shows that in 2005, 232,161 foreign patients were treated in Malaysian private hospitals, generating over RM 150.9 million in revenue. The year 2006 has attracted over 295,000 medical tourists to Malaysia. This figure has risen to 341,288 in 2007. (Cruez, 2008) These figures may look attractive, but there is a different side to it. Approximately 70% of the patients are from Indonesia and Singapore (See Appendix B). The rest belong to Australia, Bangladesh, China, New Zealand and Saudi Arabia (above The European market is attracted to Malaysia from wellness tourism perspective (spa treatments) There are no break-up of these numbers from surgical, or health screening standpoint Not all private hospitals in Malaysia publish reports on medical tourism in public bullet points have been extracted from interviews with Malaysiahealthcare.com and Prince Court Medical Centre) The top medical tourism earners Malacca and Penang garner more than 70% of the medical tourism revenue for Malaysia followed by the Klang Valley (23%) and Johor (3%) (Lek, 2004). Mahkota Medical Centre (MMC), Malacca and Gleneagels Medical Centre (GMC) and Puteri Adventist Hospital (PAH), Penang are the main hospitals attracting medical tourists from Indonesia. These places are near to the west coast of Indonesia and traveling there is faster and cheaper than to travel to Jakarta. The Malaysian government has zero exit tax policy for Indonesians coming from Medan. Due to this high influx of Indonesians, many agencies have sprung up in Malacca and Penang to cater to the patients. These agencies act as intermediaries between the patient and the hospital.

4.2. Competitive Landscape Assessment

Porters classic Five Forces provides a means to assess the competitive forces at work within an industry providing a view of the attractiveness in terms of profit potential of firms in the industry. The model is useful to help a firm decide how it can position itself and from which it can best defend itself against competitive forces or influence them in its favour, (Porter, 1980, p4)

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4.2.1. Assumptions Before proceeding with the analysis, the following assumptions have been made: 1. Malaysias medical tourism industry (internal) is taken into consideration 2. Only private hospitals have been accounted for 3. The analysis is done from a new entrant standpoint 4. The new entrant is ANCC 5. Suppliers are the health tourism agents 6. Buyers are the medical tourists 7. Competitors are hospitals specialized in cardiology and neurology 4.2.2. Threat of Entry (Barriers) Based on the 6 major sources of entry barriers mentioned in the literature review, the analysis is as shown below. Economy of Scale and other incumbent advantages: ANCC has a 200 bed capacity. There are five incumbents in ANCCs vicinity that are able to match the latters capacity. Apart from economy of scale, hospitals such as MMC, GMC and PAH have created good-will based on experience, staff quality, strategic location and ease of access for neighbouring Indonesians. Hospitals in Kuala Lumpur are steadily trying to improve their image through trade shows and advertising. Restrictive Government Policy: Strict regulations set by the government on quality of care and patient safety have ensured that no compromise occurs in providing healthcare to its locals. This has proved beneficial to medical tourists also. However, the government pricing policy for treatment of locals and foreigners at the same rate has put some brakes on the growth of the industry. The government has not set any guidelines for starting a medical tourism business in a hospital. Neither the Ninth Malaysia plan nor the concerned ministries websites talk in length about this industry. Still, through interviews it is now known that Malaysian hospitals are working together with the government to plan a road map to success. In return, the government is planning to provide tax benefits to them. Capital Requirements: Medical tourism business means a huge initial investment, especially in facilities and equipment. State-of-art technology, visually appealing exteriors and interiors, add-on facilities such as restaurants, prayer rooms, kids play area and so on, have become a norm to attract medical tourists. User-friendly software to present a globally accepted output format of electronic medical records adds up to the sunk costs. Switching vendors at an early stage would be devastating. Hospitals in Kuala Lumpur 30

such as PCMC, SJMC and SMC have created an ambiance that can only be matched with star hotels. They provide personal services such as concierge, private nurse, baby sitters, translators and so on to their patients, whether local or foreign. Nevertheless, ANCC has procured medical equipments that are at par with international standards and requirements, and rightly balanced them between technology and usability for different treatments that the hospital plans to provide to its patients. Moreover, the equipments are superior in quality and technology than those with incumbents specialized in the same field of surgery as ANCC. The building structure is already created bearing medical tourism in mind as a future addition to its primary business. Hence, the amount of capital invested by ANCC is smart and adequate to sustain in the medical tourism industry. Distribution Channels: Although, there are no distribution channels in this service industry, health tourism agencies do act as a channeling partners to promote the hospital, especially in Malacca and Penang. RESULT: The threat of entry for ANCC is low. The only threat could be likely changes in government policy in the coming future. 4.2.3. Bargaining Power of Suppliers Since most of the HTAs operate through their online websites, and there being countless websites promoting medical tourism in Malaysia, the number of HTAs are far greater than the number of hospitals promoting medical tourism. In Malacca, many HTA have setup businesses to cater to the Indonesian market, On the other hand, the Malaysian capital has fewer HTAs. Thus, there is a tough competition among suppliers to provide the lowest price packages to their customers. The present situation of HTAs is not good. An interview with Malaysiahealthcare.com an HTA located in Kuala Lumpur stated that the number of medical tourists approaching them and opting Malaysia for medical treatment is low (70-75 patients per month). This has compelled this HTA to pursue business in other medical tourism markets too. Another interview with the CEO of PCMC stated that most of these agencies do not have a proper base i.e. Most of them are two dollar websites. He adds, Every second person wants to be a health tourism agent. HTAs neither publish their financial position nor have ISO certifications, both of which can build the reputation of

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an almost virtual firm. Thus, switching costs are low for hospitals, unless they are bound by an exclusive contract with the HTA. Nonetheless, a good reputed supplier, that not only can provide medical tourists but also lobby for the hospital in other markets or is able to provide good contacts for research and development or other medical services can have a higher bargaining power in the industry. RESULT: Currently, Malaysian hospitals hold an upper hand while deciding the commission with the HTA. Thus, the overall bargaining power of a supplier is low to medium. 4.2.4. Bargaining Power of Buyers In todays world, the customer is the king they say. This is apt for the medical tourism industry. Hospitals and HTAs all try their best to woo medical travelers. Tourists are pampered a lot. On the other hand, medical tourists have access through different channels and media to retrieve information about HTAs, hospitals and their medical packages, and country health statistics. Though word-of-mouth is the best mode of communication in this industry, access to internet, media presentations and trade shows have empowered the customers with sufficient knowledge about medical tourism. Indonesians and Singaporeans comprise of the majority of medical tourists in Malaysia. Switching cost is low as there is no upfront payment for getting advice from an intermediary. The cost of treatment in Singapore is more than Malaysia and thus Singaporeans expect costs to be lower than those in Singapore. Indonesians being a major revenue generator for Malaysian hospitals have to be treated in a similar manner. (See Appendix F for Malaysian treatment costs) Since this is a one-time purchase rather than a commodity, such medical travelers are price sensitive. Although initial advice does not cost too much, switching hospitals after signing a contract may incur additional costs to the consumer. Conversely, cash-rich consumers will go any length to get quality service and treatment. However, a recent McKinsey report states the medical tourists are more quality focused than money-minded. (See figure 8)

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Figure 8: Quality drives most of today's medical tourism market (McKinsey&Company, 2008)

PCMC has created a niche where prices match with the quality of care and ambiance provided. Wealthy patients are more likely to visits PCMC. On the contrary, SMC treats patient from middle-class origin as it has sacrificed on ambiance over quality of care. ANCC has an ambiance like SMC but technology and quality of care procedure that are at par with PCMC. Unfortunately, at the time of writing this project, ANCC has still not set its pricing policy for medical treatments. Hence, it would be incorrect to comment on the class of population it shall tackle. RESULT: The buyer is a winner in the medical tourism industry with a high bargaining power. 4.2.5. Threat of substitute products or services Malaysia is well-known for massage parlours, spa treatments and Chinese medicine. These act as alternative medicine/healing for locals as well as foreigners. Similarly, India is famous for Ayurveda and Homeopathy which operate as oriental treatments. Apart from the above, there are of course the grandmother recipes that people use to recuperate from certain sicknesses. Since, treatments by ANCC deal with internal body organs such as heart, lungs and brain, the chances for the aforementioned treatments to limit the industrys profit potential is weak.

The drawbacks of the massage parlours and spa in Malaysia are: Most of them are provided in commericial establishments such as malls

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They are promoted more as an entertainment service rather than serious medical treatments Many places promote illegal activities in the name of medical miracles

RESULT: The threat from substitute products and services is low for the cardiology and neurology industry firms at present. 4.2.6. Rivalry from competitors ANCC has a few competitors in the fields of cardiology and neurology. It has identified potential competitors, using the following parameters: Private hospitals within one hours drive (market reach) Minimum 100 patient bed facility (capacity) Provides comprehensive neuro and/or cardiac services i.e. outpatient and inpatient (market share) As per the APHM website, and using the above parameters, there are 9 hospitals near ANCC with a bed capacity greater than 100 and specialized in both, neuro and/or cardiac services. Sr. No. 1 2 3 4 5 6 7 8 9 Name of Hospital Ampang Puteri Specialist Hospital (KPJ Group) Assunta Hospital Damansara Specialist Hospital (KPJ Group) Gleneagels Intan Medical Centre Pantai Medical Centre (Pantai Group of Hospitals) Prince Court Medical Centre (PCMC) Selangor Medical Centre Subang Jaya Medical Centre Sunway Medical Centre Table 3: List of Competitors of ANCC Location Selangor Selangor Selangor Kuala Lumpur Kuala Lumpur Kuala Lumpur Selangor Selangor Selangor

Certain quotes from interviews are reflected below: It is all about turn-over than quality Sunway Medical Centre We are still figuring out how to market medical tourism in our hospitals KPJ Healthcare. PCMC, one of ANCC competitors has a strong business model that identifies its areas of excellence. Though it can cater to many problems it is has concentrated itself on 5 centres of excellence viz. Women and Children; Heart and Lung; Plastic Surgery, Cosmetology and Burns; Urology, Nephrology and Mens Health; and Oncology.

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On the other hand, SMC confirmed that though they have cardiology as their centre of excellence, they are unable to provide full services due to lack of experience by the Malaysian doctors present there. Moreover, certain wings of the hospital are still under construction, which is likely to hamper the provision of full services. Thus, complete cardiac treatments are still not available. The KPJ and Pantai Group have various hospitals under their belt, each specialized in some type of medical treatment along with the provision of outpatient care facilities. Thus, the group itself promotes all treatments as their centres of excellence. Conversely, ANCC has positioned itself to capture the unmet demand and referred patients requiring sub-specialist services. For example, strokologist, neuroradiologist. In addition, ANCC will be the only dedicated neuro and cardiac emergency and acute facility (dedicated ICU). RESULT: Although, having so many competitors, ANNC feels that its impressionable size and being the largest dual specialty hospital in Malaysia will create an immediate and positive market presence and perception. 4.3. Summary of Analysis The analysis states that Malaysias medical tourism industry is profitable. Some of the outcomes from the analysis are as follows: Lack of government restrictive policies for medical tourism and

simultaneously the presence of a bad pricing policy that hinders the growth of the industry Very few hospitals that match the scale of ANCC Only a few areas in Malaysia attracting medical tourists Lack of reputation and credibility creating a low bargaining power among suppliers Good knowledge and lower switching costs creating a high bargaining power among buyers Low threat from substitute products and services Few competitors for ANCC but each one is excellent in its own way Old style of functioning, old or obsolete equipments and non-fancy ambiance among incumbents resulting in slow growth of medical tourism Lack of government policy restrictions Low number of hospitals competing with ANCC Few specialized and centre of excellence concentrated hospitals 35

Low bargaining power of HTA High number of medical tourists from Indonesia and Singapore Low risk from substitute products and services

4.4. Resource-based view

Early contributors to the RBV often used the terms resource and capability interchangeably. More recently, a distinction has been made between resources as individual firm assets (both tangible and intangible) that either are acquired or developed, and capabilities as useful combinations of resources that can be deployed to create value (e.g. Sirmon et al 2007). Applying these definitions to ANCC, the following can be considered as its resources: 4.4.1. Hospital Building Smaller hospitals in town are located in shop lot buildings restricting growth, capacity and functionality. Larger hospitals have not taken into consideration the patient journey within the building and therefore are cumbersome and inconvenient for patients i.e. having to go to different levels for different outpatient services. On the contrary, ANCC is a modern 5-storey purpose built hospital with prominence given to functionality, independence and well being, establishing an environment fostering innovation and optimal patient outcomes. As a purpose built building, ANCC has ensured that its internal and external environment is both patient centric and efficient in design. Natural light has been used to optimize a natural environment. This has direct positive impact on patients and staff. Equally important, its surrounding landscape (with mature trees) renders tranquility. RESULT: Only new hospitals that are being built can replicate ANCCs structure. However, there is no way another hospital can copy ANCCs location factors unless it is built next to ANCC. 4.4.2. Hospital Equipment ANCCs equipments are latest and most appropriate for diagnosis and treatment for neuro and cardiac cases. The list of equipments is as follows: 64 slice CT 3.0 tesla fMRI Coronary Angiography Trans-cranial Doppler Echocardiograph 36

Image guided neuro surgical software Picture Archiving Communications System (PACS)

New hospitals in Kuala Lumpur ANCC do have similar or better equipments than those with ANCC. However, ANCC has procured its machinery based on the actual requirement from the various treatments it will provide. It understands that having better technology is unnecessary. The scenario can be compared to a television having a technology to view video in high-definition format but most channels being broadcasted in a low format. RESULT: ANCC has made a smart move in procuring its equipments than its competitors. 4.4.3. Services ANCC has divided its services into 4 sections: Clinically Driven Services: These include neurology, cardiology, neurosurgery, neuro & cardio pathology, neuro-oncology, cardiothoracic surgery, rehabilitation, advanced diagnostics and imaging, telemedicine, palliative care and so on. Sub-specialties: As a dual specialty hospital, ANCC recognizes the need to provide super sub-specialty care. Some of the super sub-specialists ANCC will recruit are Strokologists, Intensivists, Neuro/Cardio-radiologists and specialist nurses. These professionals will be able to provide evidence based treatments through established Integrated Care Pathways, resulting in optimal patient outcomes. ACE Programmes: To ensure a healthy community, ANCC have earmarked to develop and implement as part of its early phase strategy; two Advanced Clinically Effective (ACE) programs. They are Stroke Prevention Management and Healthy Heart Management. Reach Out Programme (ROPe): As part of ANCCs continuum of care practice Reach-Out programmes shall be developed. These programmes shall be community based, aimed at improving health for the greater community. ANCCs clinical staff shall provide post-discharge services in the community. Staff shall also be involved in various initiatives whereby optimal patient outcomes can be striven for, thru treatment, care and education. Other hospitals, do have such formats, but not all have programmes that benefit the community. RESULT: The services provided by ANCC are valuable, inimitable but certainly substitutable and less uncommon. 37

4.4.4. Staffing ANCC is currently in the midst of recruiting their clinical staff. Under no circumstances does ANCC compromise on the following factors while hiring a suitable candidate for its hospital: Values: Refers to the candidates ethics being congruent to ANCCs vision, mission and core values Experience : Refers to the number of years worked in a specific medical field Knowledge: Refers to education acquired through academic learning and on the job training Motivation: Highly self-motivated and innovative vis--vis start-ups Leadership Skills: Refers to the ability to lead and mentor clinical teams Team: Refers to the ability to work as a team during training and on the job Other skills and language: Refers to the ability to use hospital equipments (i.e. utilizing clinical software, E-patient records, E-prescription, scheduling & reports, etc) independently and converse fluently in English or the language required for the job The staffing requirements at present are cardiologists, radiologists, neurosurgeons, medical officers, pharmacists, staff nurses and many more. Conversely, PCMC has specialists at their hospital and also have access to subspecialists in Vienna (through their agreement with Medical University of Vienna). This situation not only solves staff shortage problems but also provides precise diagnostics in diseases not commonly diagnosed by specialists in Malaysia. A 15member team of foreign doctors visits Malaysia from Vienna on a temporary basis. These doctors work as a team with the Malaysia doctors. This bonding leads to knowledge exchanges that increases the overall experience and knowledge of the staff. RESULT: ANCC needs to prove that it has a quality staff that can be differentiated from staff present at its competitors premises. At the moment, nothing more can be commented about ANCCs staff. 4.4.5. Quality of Care, Patient Safety and Medical records ANCC utilizes comprehensive and integrated ICT systems to deliver patient care in line with the highest needs for patient safety. These systems facilitate operational efficiencies and effectiveness.

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One of the gravest and highest medical errors in hospitals is due to wrong medication. To overcome this, ANCC is investing in the on-line pharmaceutical database from USA and appropriate ICT security protocols thereby reducing medical errors. In return, it reduces ANCCs exposure to liabilities and ultimately increases patient satisfaction. ANCC has developed a High Patient Satisfaction Index (HiPaS), which shall be implemented across the entire organization. Each department shall be responsible to proactively measure and monitor the outcomes experienced by patients and their caregivers based on critical parameters. ANCC shall develop and fully utilize a digital nervous system to catapult itself as a market leader in specialist medicine especially when its teleradiology services are commissioned. Its ICT investments will enable amongst other outcomes, electronic patient records which her patients can obtain thru secured emails. This also enables the patients to view and receive updates on their medical conditions etc. Through this connectivity, patients can seek second opinions globally more easily, thereby ensuring our clinicians maintain the highest standards. On the other hand, Malaysiahealthcare.com and PCMC have tied up together to bring in easy electronic medical record transfer facility to Malaysia. PCMC has a risk management unit that looks at adverse events, staff, and patient issues. The procedures followed at PCMC are at par with international standard present in European countries. RESULT: Currently, the capability of ANCC to provide top quality care looks in-line with the requirements for attracting medical tourists. The competitors are moving in the same direction too. However, quality of care and patient safety purely depends on the experience of the recruited staff and the strict procedure adherence. Although the staff and policies are tangible, the service provided by them is intangible. It is this intangible component that can be differentiated to achieve competitive advantage. 4.4.6. Collaboration ANCCs collaboration with Imperial College London enables knowledge transfer between the two institutions. It also promotes ANCC through Imperials international alumni networks. The hospital also acts as a potential recruiter for the colleges Masters and Business students.

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ANCC wishes to establish itself as experts by using the following modalities: Biennial Neuro & Cardiac Conferences hosted by ANCC GP/ANCC joint patient management programs Participation in local and international health exhibitions Stroke & Heart Attack Prevention Workshops Radio/TV interviews Educational visits/tours of ANCC Publishing Research undertaken at ANCC in international peer reviewed healthcare / medical journals Reach Out Programmes (ROPe) - focuses on prevention and post hospital care at the community level Strategic Alliances with Internationally reputable organizations International Medical Tourism

Dynamic capabilities for ANCC include best practices in management of resources, strategic decision-making, standard organizational and surgical procedures or routines, and organizational learning. The vision of ANCC is to always create an innovative environment, to enable medical advancements and optimal patient outcomes. Their mission is to be experts in field of cardiology and neurology. Thus, ANCC differentiates itself from others in terms of incremental knowledge absorption (innovative), procurement of state-of-art technology (medical advancements) and provision of quality of care and patient safety (optimal patient outcomes).

4.5. Summary of Analysis

From RBV, ANCCs resources and capabilities satisfy the four RBV criteria valuable, rare, inimitable, non-substitutable.

The summary of outcomes are as follows: ANCC is better off than other hospitals in Malaysia in terms of strategic location and physical assets such as hospital building and equipments ANCC has a strong services structure that contains a mixture of both, business and community service Staffing is one of the key intangible factor where ANCC can differentiate against its competitors in terms of knowledge, experience, training and responsibility

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Capabilities such as quality of care, patient safety are equally important to promote medical tourism. ANCC is working towards achieving high standards of care and so are other upcoming hospitals in Malaysia

4.6. Value Network Analysis

4.6.1. Assumptions The following assumptions have been made to analyze the value network of Malaysias medical tourism industry: 1. The value network is a snapshot of the market place in Malaysia 2. The network covers the most important stakeholders in the industry 3. The medical tourism hospital is the network focal 4. Information to create the network has been gathered through interviews and secondary data (websites, presentations and so on) 5. Value network analysis software present at www.valuenetworkanalysis.com has been used to generate the report

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4.6.2. Network Map The following is the medical tourism value network for Malaysia (See Figure 9).

Figure 9: Value network map for Malaysia's medical tourism industry

Note: Please see Appendix C for input data for Value Network Analysis The roles can be broadly grouped into three areas: Consumers Medical Tourists

Service Providers Medical tourism hospitals Health tourism agent

Enablers Private Associations Government Accreditation firms Hotel Airlines 42

Foreign hospital Media

The above classification is done for ease of explanation in the latter part of the project. However, roles can change frequently depending on the requirements. For example, the private association can act as a service provider by providing valuable services to the medical tourists in the form of hospital information, complaint registration and so on. A brief explanantion of some of the roles have been given below. Medical tourists: They typically are 50 plus in age, need elective surgical service or specialty medicine, are unable to pay for or access healthcare in their home country but can pay for overseas care and travel, and they are on a lookout for cheaper but quality healthcare options.

Figure 10: Movement of medical tourists globally for medical treatments(McKinsey&Company, 2008)

Medical tourism hospital: Most of the value provided by hospitals are benefits such as quality of care, privacy, patient safety, rehabilitation, follow-up and so on. ANCC has built rooms and has created standard procedures that can provide such benefits to its patients. In addition, the resources and capabilities section of this project sums up that ANCC would be in a position to provide certain services required for medical tourism. The Malaysian government hospitals neither have the necessary resources nor a strong marketing plan to attract medical tourists. Other private hospitals in Malaysia are concentrating on risk management to ensure best delivery of care. Health tourism agents (HTA): They add value by connecting different firms such as hospitals, hotels, airlines and insurance companies to create a healthy medical tourism package for the medical traveler. Health tourism agencies take the burden off 43

the hospitals from administration standpoint. Malaysiahealthcare.com a health tourism agency provides medical packages for different medical treatments along with tourism packages for the patient as well as his/her companions. Medical packages could be from a simple health screening to an invasive surgery such as cardiac artery bypass graft. It has a well-connected network that provides them with medical tourists from places such as United Kingdom, Middle East, Bangladesh, Burma, Vietnam, Indonesia, China, Japan, New Zealand and Australia. Another HTA called GorgeousGetaways provides medical tourists with cosmetic surgery packages. This firm is well-known among Australian medical travelers. Private Associations: The role of a private association is to act as a link between the hospital and the government. Its role is to co-ordinate the activities of private hospitals in Malaysia and facilitate the delivery of high standard of healthcare to the public. It also promotes co-operation amongst private hospitals and other providers of healthcare. It also acts as an informant by providing information about the different services available in the private hospitals. Some of the known private associations in Malaysia are APHM and Malaysian Medical Association. These associations make representation to and co-operate with the MoH and other agencies concerning delivery of healthcare, preservation of health and prevention of diseases. Accreditation Firms: The most common query among medical tourists is, will I receive the same quality of care I would receive in an American hospital? Accreditation partly solves the query for them. Joint Commission International (JCI), Malaysia Society for Quality in Health (MSQH) and International Society for Quality in Healthcare (ISQua) are some of the accreditation firms well-known in Malaysia of which JCI is renowned all over the world. Some of the reasons to be JCI accredited are: JCI fulfills ISQua requirements JCI follows a common international standard to ensure patient safety and quality of care Heightened standards for isolation procedures in case of a disease outbreak such as SARS that affected Malaysia in 2003 JCI requires that every patient is spoken to in a language and manner they can understand and that patients are involved in their care decisions It also promotes the protection of patients rights including confidentiality and privacy However, there have been complaints that JCI standards are less stringent than those of the Joint Commission. A report in the American Medical Association states: 44

The JCI has accredited over 100 foreign facilities but given the significant differences between the JCIs international and US standards, does that mean that the quality of care in those hospitals is truly comparable? This statement is counter argued by, In a field where experience is as important as technology, Escorts Heart Institute and Research Center in Delhi and Faridabad, India performs nearly 15,000 heart operations every year and the death rate among patients during surgery is only 0.8 percent, less than half the rate of most hospitals in the U.S. Government: The government mainly consists of the Ministry of Health and Ministry of Tourism. The role of MoH is to develop while the MoT promotes medical tourism in the country. Along with private associations, it identifies key hospitals in Malaysia that have the ability to promote medical tourism. It scrutinizes the hospitals reports on the basis of quality of care, patient safety, adverse events, occupational hazards, and finances. The immigration department of Malaysia has recently extended the stay on medical visas from thirty days to six months.

4.7. Network Map Analysis

SEE APPENDIX C FOR INPUT DATA FOR VNA 4.7.1. Resilience Resilience in a network is critical for the network to respond to changing conditions. Resilience requires the right balance of formal structure to informal knowledge sharing. Therefore, the Ratio of Intangible/Tangible transactions is helpful as an indicator of the Resilience of the network.

Figure 11: Tangible & Intangible deliverables (percentage)

Figure 12: Tangible & Intangible deliverables (actual numbers)

The above charts (See Figure 11 and 12) shows the percentage of tangible (43%) and intangible (57%) transactions and the number of tangible (43) and intangible (54) transactions generated by Malaysias medical tourism network. The ratio of intangible/tangible transactions is 1.32.

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There are more intangibles than tangibles. It states that Malaysias medical tourism business is still an emerging industry. Communication among roles is more informal. A clear industry structure is not present at the moment. Such as scenario leads to chaos, misunderstanding and misreporting. This is evident by the lack of support from the government, inactivity of APHM, lack of publication of information by the hospitals and so on. Where tasks or relationships are complex there are usually more intangible than tangible transactions. This is true with the medical tourism industry as there is no clear upstream and/or downstream value-chain. Every player has a role to play in the industry to either promote itself and/or to attract the medical tourist. There are more knowledge exchanges among the roles. Such situation calls for high level of flexibility, collaboration and trust a must in medical tourism. The high percentage of intangible deliverables also shows that the network is largely social in nature and has reduced formal and financial relationships. 4.7.2. Value Creation The active agents for value creation are the roles in the network. It is useful to look at the capacity for each Role to generate both tangible and intangible value. A decrease over time in value outputs can be an indicator that resource availability or productivity has declined. An increase in value outputs with minimal additional resource demands is an indicator that value productivity is improving. The capacity of a network to generate value depends on good asset utilization - in both financial and non-financial terms.

Figure 13: Percentage of all deliverables generated by each Role

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The above pie-chart (See Figure 13) indicates that most transactions are generated by hospitals, HTAs and private associations. At present, the average number of deliverables per role is 9.50. Any downward trend in this number would be a sign of loss in capturing value for a firm and the industry as a whole. 4.7.3. Brand Management Perceived Value Brand management has a lot to do with how valuable people perceive offerings to be. Perceived value assess the level of value roles feel they receive from individual deliverables, from other roles, and from the network as a whole. Perceived Value indicators - often unspoken or unconscious positive and negative value that is being created. Perceived value is especially useful when applied to intangible deliverables, as it is often difficult to gauge their value with a number or financial measure.

Figure 14: Perceived Value by Receivers - All Transactions

Figure 15: Perceived Value by Senders - All Transactions

The above graphs (See Figure 14 and 15) show that the receivers in the medical tourism industry accept transactions on a more positive note than senders. Most of the receipts are in the form of benefits. For example, a hospital providing a 24/7 contact centre for medical tourists helps the traveler to call in anytime to enquire about his/her needs. The hospital is the sender and the tourist, the receiver. For the 47

hospital, providing a contact centre means additional man power, extra salary for night duties and IT infrastructure. Thus for the sender the perceived value is more neutral to negative in terms of finance. However, for the receiver it is pure benefit in terms of assistance and care. This example even explains why perceived values can be positive or negative. Overall, the perceived value for both, sender and receiver is above neutral (more medium to high). This tells us that the industry is attractive to work in. Whatever transactions that are occurring are likely to produce positive responses. This promotes a win-win situation in most scenarios. 4.7.4. Asset Impact The pie chart below shows the asset impact for all transactions.

Figure 16: Asset Impact - All Transactions

Though medical tourism is a money making business, it is obvious from the chart (See Figure 16) that relationships and human resources play a major role in the operation of the medical tourism industry rather than finance. A good relation between the hospital and the health tourism agent, health tourism agent and hotels/airlines, government and private associations and so on are absolutely necessary to make medical tourism a success. Man power is needed to assist in patient queries, file medical records and databases, create reports for various organizations and so on. The finance in medical tourism pertains to payment of fees for surgeries, membership, accreditation and so on. 4.7.5. Reciprocity It is the extent to which ties are reciprocated between roles or participants. In Malaysias medical tourism industry, 78.57% of the pairs have a reciprocated connection. It means that most of the roles are talking to each other by some means. 48

This is very good for the industry. A lower percentage would have indicated either a more hierarchical structure or lack of communication opportunities. 4.7.6. Structure and Value The indicators that assist in seeing value from a structural standpoint are centrality indicators. Centrality is a classic network indicator that shows which roles have the most ties. Roles with more ties are said to be more central to the network and hold important structural positions. Roles that have more ties to other roles may have advantaged positions. Because they have many ties, they may have alternative pathways to satisfy their needs, and less dependency on other individuals. Roles or participants that have many ties may have access to more of the resources of the network as a whole. However, just because a role has a strong position structurally does not mean it is providing the most value to the network. From a value creation perspective, outgoing deliverables or transactions show the kind of value a role is providing to the network. Incoming deliverables show value that is being gained from the network to the advantage of a particular role. The centrality indicators can be used in the following way: Centrality In Degree = the value a Role gains from the network Centrality Out Degree = the value a Role provides to the network

Figure 17: Centrality In Degree by Role - All Transactions

From the above pie chart (See Figure 17), it is apparent that the medical tourist gains the most value from the network and this is precisely the aim of medical tourism. Moreover, the hospital is the next highest value provider followed by the health tourism agent. This chart confirms that these three are the major role players in the medical tourism industry.

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Figure 18: Centrality Out Degree by Role - All Transactions

From both the pie charts (See Figure 17 and 18), it is obvious that medical tourists are not only value receivers, but also co-producers, or prosumers, of value. (Parolini, 1999, Ramaswamy and Prahalad, 2000). Medical tourists not only contribute to the industry, but in fact drive and determine all activities in the value network. In short, without medical tourists, the existence and necessity of actors and value network activities would likely be irrelevant. Thus, it is critical for consumers to value products and services and in turn, value network actors must provide this value to consumers. 4.7.7. Agility It can be measured using degrees of separation. Technically referred to as distance in a network, degrees of separations is a measure of how quickly information can spread out across the network to reach all members. The average degrees of separation in Malaysias medical tourism industry is 1.93. This means that information has to pass on through more than one organization before reaching the destined organization. If this number were greater, it would take more time for information to reach its destination. One of the reasons could be a hierarchical structure.

4.8. Summary of Analysis

It is apparent from VNA that ANCC has a major role to play in the medical tourism industry. Without supporting members such as HTAs, accreditation firms, private associations and government, the industry structure will not be strong enough to sustain business and thereby lead to losses. The summary of outcomes are as follows: Malaysias medical tourism industry is still in its emerging phase The industry structure isnt strong 50

Perceived value figures show that the industry is attractive and vibrant to work in. The receiver gets more benefits than losses Major asset impact is on business relationships and manpower rather than finance Medical tourists are both prosumers in the medical tourism industry whereas, hospitals are the major value senders in the industry

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5 DISCUSSION OF ANALYSIS
The Porter' five force analysis predicts that Malaysia's medical tourism industry is attractive to enter and make profits. The outcomes were mentioned at the end of the analysis. However, there were certain assumptions that were made before the analysis began. Firstly, the HTA was considered as the supplier. Still, there are hospitals in Malaysia which circumvent HTA and directly attract medical tourists. (Eg. SMC). Secondly, if one looks at the industry from a financial transaction standpoint, the HTA then becomes the buyer as it purchases the medical packages from the hospital and sells it to the medical tourist. This contradicts to the assumption that the medical tourist is the buyer. Apart from the suppliers and buyers terms common with product-oriented industry there are enablers in service-oriented industries. Private associations, accreditation firms, hotels, airlines are just some of the enablers that play a role in the medical tourism industry. Unfortunately, Porter has not allocated a space for enablers in his framework. The weakness of the framework is its inability to support dynamic industries in the world of globalization and outsourcing. Nevertheless, Porter's analysis provides simple and yet a robust external scenario of the industry. The resource-based view predicts that ANCC has resources and capabilities that are valuable, inimitable, rare and non-substitutable. However, from a medical tourism standpoint it is difficult to say how valuable some of these resources would be. For example, ACE programmes may be of great value to the local population but of less value to a medical tourist. Thus, the RBV provides a structured framework, which partly assists to unravel the complex collection of resources that ANCC controls. But, are these resources and capabilities enough to provide competitive advantage? Again, this can only be answered once ANCC sets its foot into the medical tourism business. In common with other studies (e.g. Adner & Zemsky 2006; Priem 2007; Zander & Zander, 2005), the conclusion drawn from this internal perspective on ANCC is that the RBV is inadequate to answer this question ex ante. The VNA approach, asserts that the industry is young and attractive and that a hospital creates and captures the most value in the industry. However, in a dynamic

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industry, roles can appear and disappear or even consolidate. Thus, VNA captures the snapshot of the market at a certain time. The individual analysis provides ANCC with an external, internal and complete industry perspective. This information is valuable while creating a business model before entering the medical tourism market. Porter's five forces and the RBV provide ANCC with information that can assist the hospital in seeing the gaps in the industry and thereby filling those gaps and achieving a competitive advantage against its competitors. The VNA approach shows which role creates value in the industry and to what extent. Moreover, it tells which roles have greater importance and thus which roles should take precedence while forming close relationships. The approach also shows not finance but manpower and business relationships play an important role in the medical tourism industry. Unfortunately, there are several facts about Malaysia and the medical industry that need to be accounted for in the project for ANCC to realize and make decisions. The percentage GDP spent by Malaysia on healthcare services is 5%. This figure is well below developed countries percentages. For example, the USA spends more than 14% of its GDP on healthcare services. Though, this could be due to different healthcare provision systems, such low percentage shows the inadequacy of the government towards building up a strong healthcare system in Malaysia. There is a big staff shortage in Malaysia. Moreover the physician to patient ratio is inadequate (See Appendix E). As of 2006, there were only 41 registered neurosurgeons and 47 neurologists in Malaysia. According to the MoH, Malaysia requires at least 123 neurosurgeons and 269 neurologists to cope with the current demand (See Figure 19). Similarly, there are 140 cardiologists and 30 cardiothoracic surgeons in Malaysia. The requirements are 500 and 100 respectively (See Figure 20). Such large gaps in numbers indicate the slow growth rate of the industry. Similarly there are shortage of nurses and nurse specialists. This situation would lead to movement of foreign patients to other countries which have a stronger workforce than that Malaysia.

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Figure 19: Number of Neuro specialists and demand

Figure 20: Number of Cardio specialists and demand

Private associations in Malaysia along with the government are showing lack of interest in promoting medical tourism. For example, the APHM website has information that has not been updated for three to four years. Statements such as Malaysia has successfully contained SARS prove the point, since SARS occurred in Malaysia in 2003. Similarly, the MoT website states that the MoH is responsible for the development of medical tourism whereas the former is responsible in promoting the industry. However, there is no information on MoH website about medical tourism and the MoT website lists "Health tourism" under the section "Other programmes". This evidence is enough to drive home the point that both the ministries have bothered much to boost medical tourism. Furthermore, lack of politicians with medical background or knowledge in Malaysias assembly and corruption hamper the political proceedings while taking decisions for the medical field. There are few rigid regulations created by the government that are hindering the growth of medical tourism. Compulsory medical registration under Malaysian medical act is causing trouble for foreign doctors. Approval procedures for permanent resident status to foreign doctors has not worked well. Unnecessary red tapes and no special priority given to skilled immigrants in granting of PR status have forced many doctors to look elsewhere. Recently, the government has come up with guidelines to encourage the return of Malaysian doctors working in foreign countries. JCI accreditations is well-known globally and being accredited by this association is a positive sign to attract foreign tourists especially from Europe and America. Unfortunately, there is only one JCI accredited hospital in Malaysia, whereas there are 78 hospital that are MSQH accredited. Although, MSQH now fulfills JCI accreditation, it is not as renowned as JCI. Moreover, the accreditation figures are very low compared to the 233 private hospitals in Malaysia (as of year ending 2006). Similarly, 16 hospitals are IS0 9002 certified and 1 hospital certified OHSAS 54

18001:1999; numbers that show the lack of awareness among hospitals for certifications. These numbers contradict with the statement, Most private medical

centres have certifications for internationally recognized quality standards such as MS ISO 9002 or have been given accreditation by the Malaysian Society for Quality of Health issued by Advertising and Publicity Division, Tourism Malaysia. (dtd. 5th November 2007)
The MATRADE organization has led missions in the past to Saudi Arabia to attract visitors to Malaysia for medical treatment. However, most of the population still prefers Thailand due to the extensive marketing strategy of the hospitals there. The tourist turnover at most of the 35 listed hospitals (See Appendix D) is not worth noting. One such hospital Sri Kota Medical Centre, Selangor confirmed that though they are on the APHM list, they receive only thirty to forty patient requests a month. They relate the cause to the lack of interest shown by the government towards medical tourism. From resource point of view, certain resources required to attract medical tourists are currently not present with ANCC or with few other hospitals. These are as follows:

A signed contract with a HTA that has good connectivity with hotels and airlines and is able to provide medical and tourism packages at attractive rates

Collaboration with foreign hospitals to encourage knowledge exchanges Translators that can translate medical terminologies without changing its meaning during translation

Affiliation with associations and organizations promoting medical tourism in Malaysia

Good connectivity within the government

At present, these resources are unavailable with ANCC as it is at the tail end of the development phase and would now be entering the operational phase. Once, the ANCC staff targets the local market through corporate, public, GP referrals and government it will be able to build up on the above mentioned resources. To significantly increase the medical tourism traffic, Malaysia must get serious about marketing itself. If it does, Malaysia truly will have great potential to become one of the most attractive treatment destinations in the world. The nature of its appeal can be summed up in just seven words: Singapore-type patient experience at Thai prices. (Elsham, 2008) 55

6 RECOMMENDATIONS
The Porters five force analysis predicts that Malaysias medical tourism industry is attractive for a new entrant and there is an opportunity to make profits there. The resource-based view approach provides information about ANCCs resources and capabilities and compares them with its competitors. However, it is unable to state whether ANCC will succeed in the industry or not. Finally, the value network approach provides information about the enablers in the industry which play a crucial role in capturing value for themselves and also for ANCC. It even reveals the true picture about the industry from structure, value creation, asset impact and perceived value perspectives. Although the above mentioned frameworks individually provide some information about the industry or the organization, it is very important to view all of them together. Only then the accurate situation will be realized. A consolidated approach will ensure that ANCC does not miss out on any important points while making its strategic decisions. Thus, the approach will provide ANCC a robust base to create its business model for its medical tourism business. Two questions the managers at ANCC must be able to answer are: 1. What customers will we serve (target market)? ANCC must first decide who it will serve. Trying to serve all customers may result in poor customer service and thereby incur losses. Using market segmentation approach and then selecting the right segment (i.e. target market) will give rise to profits and customer loyalty. At present the Indonesian and Singaporean markets look the best to attract consumers. Some of the reasons being: People are already coming to Malaysia from these places and know of Malaysias medical treatment There are HTA already in place to cater to this population Common language and cultural behaviour can ensure that same type of staff can be used to handle both types of patients They are the nearest countries to Malaysia Government regulations for medical visas for these countries are almost negligible 2. How can we serve these customers best (value proposition)? ANCC must also decide how it will serve the targeted customers i.e. how it will differentiate itself in the marketplace. It needs to identify what target customers 56

expect concerning service quality. ANCC can differentiate along the lines of services, people and image. Through services: Best quality of care that meets international standards Patient safety, privacy and comfort Personal consultation and care before, during and after treatment

Through people: Better training of staff in terms of knowledge More friendly and upbeat in terms of attitude towards customers More competent staff to take up individual responsibilities

Through image: Creating brand equity a strong distinctive image Generating publicity through advertisements, trade shows, conferences and meetings Transparency in operation and management of the hospital Specializing and concentrating on the specialized fields only

Delivering consistently higher quality than its competitors can be advantageous for ANCC to attract customers. However, this rises overhead costs at times. ANCC must find out a way to balance between cost and quality. After differentiating itself, ANCC must concentrate on the internal resources and capabilities it has to gain competitive advantage. It may be easier for other hospitals to copy physical assets such as buildings and equipment, but may prove difficult to copy intangibles such as knowledge and skill-set of staff (unless poaching occurs), processes and standards, and the overall service quality experience. Medical Specialists: If ANCC is to attract patients, it must have pool of medical specialists who are well known for their expertise. It should increase its pool of medical specialists with internationally recognised qualifications so that it will gain patients confidence to come to the country and seek treatment. ANCC could also work with the government to encourage Malaysian doctors practicing in foreign countries to return to Malaysia. Service Quality: ANCC is already working on HiPAS. However, for medical tourism it would require to meet international standards and follow a standard pattern of procedures. ISO certification would ensure that the hospital is well organizes in terms of administration and operations. JCI accreditation would provide the benefit of being internationally recognized as a hospital following international healthcare guidelines that more or less match with United States standards. 57

Malaysia is a World Health Organization (WHO) Regional Office in the Western Pacific. It has pledged support towards Clean Care is Safer Care initiative, a part of the global patient safety challenge. ANCC could take active interest in such initiatives and consequently build up on its own patient safety standards. Through such initiatives ANCC could collaborate with other foreign hospitals in countries such as Australia, Canada, New Zealand, United Kingdom and the United States of America. In order to be a successful service oriented hospital, ANCC must focus both on customers as well as employees. Reaching service profits and growth goals always begins with taking care of those who take care of customers. Lastly, ANCC must be cautious in its approach towards medical tourism. There are many pitfalls in medical tourism as discussed in chapter 1 and ANCC must find ways to get around it.

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7 CONCLUSION AND FUTURE RESEARCH

7.1. Introduction
This dissertation began by introducing the concepts of competitive advantage and value creation. Two alternative theories on sources of competitive advantage the external industry view (Porters Five Forces) and the internal organization view (Resource-based view) were described through a general literature review. This resulted in a critique of their relative merits and shortcomings. The value network approach provided information that could not be captured by the traditional strategy frameworks. It even presented an analysis of the industry from value creation perspective. The critical analysis and synthesis of the literature resulted in three propositions being advanced: Proposition 1: The traditional frameworks and models provide the external and internal view of the industry/organization which aids in building a new organizations strategy business model. Proposition 2: The value network approach helps the new organization learn about its close environment and the value addition the network provides. Proposition 3: The traditional models and the network approach together form the basis to capture value for a new services oriented firm. These propositions have been evaluated and appraised using primary and secondary research methods, with organisational context achieved by applying these frameworks to ANCC. The outcomes of the analysis were presented in the discussion section of the project. Finally a few recommendations were provided to ANCC about gaining competitive advantage in this industry.

7.2. Future Research

Academic research into strategy and competitive advantage is evolutionary. The utility of some fundamental believes of traditional strategic management, as adopted in the majority of business text books, is called into question by the research presented here. A firm cannot claim to know the market environment simply by conducting a Five Forces Analysis; or through its internal capabilities simply by identifying what idiosyncratic resources it controls. The markets of the 21st century are dynamic and interrelated, information is transferred between enterprises and consumers; and the external environment is characterised by uncertainty and change. The conclusions presented here indicate that internal and external perspectives provide different insights into potential sources of competitive advantage. 59

This project has performed an analysis on a new upcoming hospital, which is still in its development phase. The hospital has neither started to cater to local population nor does it intend to establish itself in the medical tourism business for the next two to three years. Thus, within this time frame there it is more likely for the external environment to change completely. Moreover, new regulations, technologies and competition may even force organizations to reshuffle their resources and capabilities. Finally, unstable economies and low turn-over may push many organizations towards the edge of extinction. Hence, this research can be taken forward in the following manner: 1. An in-depth analysis could be achieved using DEPLSET (Demographic, economic, political, legal, social, environment, technology) model.

Furthermore, Porters diamond could be used to analyze medical tourism industry across nations (eg. Compare Malaysia with Thailand, Singapore and India). 2. Expand research by interviewing politicians in Malaysias ministry 3. Conduct interviews in other towns and cities in Malaysia, especially Penang and Malacca 4. Carry out customer surveys to expand on customer expectations in the medical tourism industry 5. Creating a marketing survey for market entry based on marketing mix approach for service-oriented industry .

60

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66

APPENDIX A: ANCC Company History Milestones

Company History: Milestones

21st Jan, 2003 Bio Science Capital Incorporation 7th Dec 2005, Ground Breaking April 2008, Handover of building 21st Oct 2005, Site possession

2004 BSC owns Asian Neuro Centre (singlespecialty)

Oct 2006, Cardiac Services included Asian Neuro & Cardiac December 2008 Centre (dual-specialty) Opening of

27th Oct 2005, Soft Launch ANC

ANCC

(Source: ANCC)

APPENDIX B: Top Countries (Malaysia Tourist Arrivals 2002 2007)

(Source: Tourism Malaysia Corporate Website, http://www.tourism.gov.my/corporate/research.asp?page=facts_figures)

ii

APPENDIX C: Value Network Analysis Input Data

Standard Value Network (Role Based) From Role (required) To Role (required) Deliverabl e (required) Respond to hospital queries Respond to Patient queries Educate patient on internationa l standards Consultatio n on overseas treatment Respond to hospital queries Provide information on foreign missions or collaboratio ns Provide shelter in case of emergency Resources on Medical Tourism Patient or HTA queries Provide medical tourists and patient database Provide contacts to foreign hospitals or consultanci es Respond to Patient queries Sign Exclusivity Contract Respond to Patient queries Provide data privacy Provide medicines Provide hospital information Asset Management Nature of Deliverabl e (required) Intangible Asset Type Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Asset Impact (for Receiver) Brand Management Perceived Perceived Value of Value of Deliverabl Deliverabl e for e for Sender Receiver Neutral Medium

Accreditatio n Firms Accreditatio n Firms Accreditatio n Firms

Hospital Medical Tourist Medical Tourist

Benefit

Intangible

Benefit

Neutral

Low

Intangible

Benefit

Neutral

Neutral

Foreign Hospital Governmen t

Medical Tourist

Tangible

Benefit

Negative

High

Hospital

Intangible

Benefit

Neutral

Low

Governmen t

Hospital

Tangible

Benefit

Low

Medium

Governmen t Governmen t Health Tourism Agent Health Tourism Agent

Medical Tourist

Tangible

Business relationship s Business relationship s Business relationship s Business relationship s

Benefit

Negative

Medium

Media

Intangible

Benefit

Medium

Medium

Hospital

Intangible

Benefit

Neutral

Neutral

Hospital

Tangible

Benefit

Medium

High

Health Tourism Agent Health Tourism Agent Health Tourism Agent Hospital

Hospital

Intangible

Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s

Benefit

Negative

High

Medical Tourist Hotel Medical Tourist Medical Tourist Medical Tourist Medical Tourist

Intangible

Benefit

Medium

High

Tangible

Benefit

High

High

Intangible

Benefit

Low

High

Hospital

Intangible

Benefit

Neutral

High

Hospital

Tangible

Benefit

Neutral

High

Hospital

Intangible

Benefit

Neutral

Medium

iii

Hospital

Medical Tourist

Hospital

Medical Tourist

Hospital

Medical Tourist Health Tourism Agent Accreditatio n Firms Private Association s Governmen t Health Tourism Agent Governmen t Governmen t Health Tourism Agent

Provide concierge services, customer relations officer Provide luxury accommod ation, individual care and entertainme nt systems Provide 24hour contact center Respond to queries Hospital queries Hospital queries Respond to government queries Long term contract News about Medical Tourism Publicity of medical Tourism Provide patient medical records and other data Respond to hospital queries Access to affiliated association s if any Provide competitor information Respond to Patient queries Provide hospital information Provide healthcare system information Case Studies on medical tourism Access to affiliations, resource materials, consultants Continuous education and training

Intangible

Business relationship s

Benefit

Neutral

Medium

Intangible

Business relationship s

Benefit

Negative

High

Intangible

Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s Business relationship s

Benefit

Neutral

High

Hospital

Intangible

Benefit

Neutral

Medium

Hospital

Intangible

Benefit

Medium

Medium

Hospital

Intangible

Benefit

High

Medium

Hospital

Intangible

Benefit

Medium

High

Hotel

Tangible

Benefit

High

High

Media

Intangible

Benefit

Neutral

Medium

Media

Intangible

Benefit

Neutral

High

Medical Tourist Private Association s Private Association s Private Association s Private Association s Private Association s Private Association s Private Association s

Intangible

Benefit

Neutral

High

Hospital

Intangible

Benefit

Medium

High

Hospital

Intangible

Benefit

Negative

High

Hospital Medical Tourist Medical Tourist Medical Tourist

Intangible

Benefit

Negative

High

Intangible

Benefit

Neutral

High

Intangible

Benefit

Neutral

High

Intangible

Benefit

Neutral

Medium

Medical Tourist

Tangible

Benefit

Neutral

Medium

Accreditatio n Firms

Hospital

Intangible

Competenc e

Benefit

Neutral

Medium

Accreditatio n Firms

Hospital

Tangible

Competenc e

Benefit

Neutral

Medium

iv

Health Tourism Agent Health Tourism Agent Health Tourism Agent

Hospital

Hospital

Hospital

Health Tourism Agent

Medical Tourist

Health Tourism Agent

Medical Tourist

Health Tourism Agent

Medical Tourist

Health Tourism Agent Health Tourism Agent Health Tourism Agent Hospital

Medical Tourist

Medical Tourist

Medical Tourist Medical Tourist Medical Tourist Medical Tourist Medical Tourist

Hospital

Hospital

Hospital

Hospital

Health Tourism Agent

Hospital

Health Tourism Agent

Hospital

Health Tourism Agent Health Tourism Agent

Hospital

Provide trend analysis Provide competitor information Provide new technology information eg iPher Assistance to medical and vacation planning Provide contacts to specialists for consultatio n Provide preliminary report based on patient medical records Provide luxuryservic es Provide new technology information eg iPher Provide Companion bookings Pre, Current and Post Treatment Provide Quality of Care Provide Patient Safety Provide medical Reports Provide preliminary report based on patient medical records Provide specialists for consultatio n Share IT system to receive medical records Provide hospital information

Intangible

Competenc e Competenc e

Benefit

Neutral

Medium

Intangible

Benefit

Medium

High

Tangible

Competenc e

Benefit

Medium

Neutral

Tangible

Competenc e

Benefit

High

High

Tangible

Competenc e

Benefit

High

High

Tangible

Competenc e

Benefit

High

High

Intangible

Competenc e

Benefit

Medium

Medium

Intangible

Competenc e

Benefit

Medium

Medium

Intangible

Competenc e Competenc e Competenc e Competenc e Competenc e

Cost

Neutral

Medium

Tangible

Benefit

High

High

Intangible

Benefit

High

High

Intangible

Benefit

High

High

Tangible

Benefit

Neutral

High

Tangible

Competenc e

Benefit

Neutral

Medium

Intangible

Competenc e

Benefit

Neutral

High

Intangible

Competenc e

Benefit

Neutral

Low

Intangible

Competenc e

Benefit

Medium

High

Hospital

Health Tourism Agent

Hospital

Accreditatio n Firms

Hospital

Accreditatio n Firms

Hospital

Private Association s Private Association s Private Association s Governmen t Private Association s Health Tourism Agent Accreditatio n Firms Hospital Foreign Hospital Hospital

Hospital

Hospital

Hospital Medical Tourist Medical Tourist Medical Tourist Medical Tourist Medical Tourist Private Association s Private Association s Foreign Hospital Governmen t Governmen t Governmen t Health Tourism Agent Health Tourism Agent Health Tourism Agent

Provide procedure knowledge, medical terminology , and educate on disease Audit Reports Adverse Event Report Facts and Figures Provide process and technical know-how to improve standards Medical Tourism Information Technial and process know-how Disease manageme nt knowledge Hospital queries Patient queries Patient queries Patient queries Patient queries Patient queries Conduct meetings and seminars Access to resource materials Secondary Treatment if required Provide tax reliefs if any Provide Medical Visas Provide immigration aid Make payments Payment for Rooms Provide Medical Tourists

Intangible

Competenc e

Benefit

Low

Medium

Tangible

Competenc e

Benefit

Low

Medium

Intangible

Competenc e

Benefit

Medium

Medium

Tangible

Competenc e Competenc e

Benefit

Medium

High

Intangible

Benefit

Medium

High

Intangible

Competenc e Competenc e Competenc e Competenc e Competenc e Competenc e Competenc e Competenc e Competenc e Financial

Benefit

Medium

High

Intangible Intangible

Cost Cost

High High

Low Low

Intangible Intangible Intangible Intangible

Cost Cost Cost Cost

High Medium High High

Medium Low Low Low

Intangible

Benefit

Neutral

Medium

Hospital Medical Tourist Hospital Medical Tourist Medical Tourist Hospital

Intangible

Benefit

Neutral

Medium

Tangible

Cost

Low

High

Tangible

Financial

Benefit

Negative

High

Tangible

Financial

Cost

High

High

Tangible

Financial

Cost

Neutral

Medium

Tangible

Financial

Benefit

Negative

High

Hotel

Tangible

Financial

Benefit

Negative

High

Hotel

Tangible

Financial

Benefit

High

High

vi

Health Tourism Agent Hospital Hospital Hospital

Airlines Health Tourism Agent Accreditatio n Firms Private Association s Private Association s Private Association s

Payment for Tickets Provide single point of contact Payment of fees Payment of fees Yearly Audit Reports Adverse Events Reports and other facts and figures Audit Reports Adverse Event Report Facts and Figures Upgraded facilities for local population Provide accommod ation Provide inroom entertainme nt Provide meal packages Provide access to spa Payment of fees Payment of fees if any Provide Membershi p Certification as medical tourism hospital Inspection, Certification and periodic review Provide bedding Allocate beds for medical tourists

Tangible

Financial

Benefit

Negative

High

Tangible Tangible Tangible

Financial Financial Financial

Cost Benefit Benefit

Low Medium Medium

Medium High High

Hospital

Tangible

Financial

Benefit

Low

Medium

Hospital

Intangible

Financial

Benefit

Low

Medium

Hospital

Governmen t

Tangible

Financial

Benefit

Negative

High

Hospital

Governmen t Medical Tourist Medical Tourist Medical Tourist Medical Tourist Health Tourism Agent Foreign Hospital Hospital

Intangible

Financial

Benefit

Negative

High

Hotel

Tangible

Financial

Benefit

High

High

Hotel

Tangible

Financial

Benefit

High

High

Hotel

Intangible

Financial

Benefit

High

Medium

Hotel Medical Tourist Medical Tourist Private Association s Private Association s

Intangible

Financial

Benefit

High

Medium

Tangible Tangible Tangible

Financial Financial Financial

Benefit Benefit Benefit

Negative Neutral High

High High High

Hospital

Tangible

Financial

Benefit

High

High

Accreditatio n Firms

Hospital

Tangible

Structure

Benefit

High

High

Hospital

Medical Tourist Health Tourism Agent

Tangible

Structure

Benefit

Neutral

Medium

Hospital

Tangible

Structure

Benefit

Medium

Medium

vii

APPENDIX D: Hospitals participating in promotion of Health Tourism

Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Assunta Hospital Columbia Asia Medical Center Damansara Fertility Centre Damansara Specialist Hospital Fatimah Hospital Gleneagles Intan Medical Centre Gleneagles Medical Centre Hospital Pantai Putri Ipoh Specialist Hospital Island Hospital Johor Specialist Hospital Lam Wah Ee Hospital Loh Guan Lye Specialist Centre Mahkota Medical Centre Metro Specialist Hospital Mount Miriam Hospital National Heart Institute (IJN) NCI Cancer Hospital Normah Medical Specialist Centre Pantai Ayer Keroh Hospital Pantai Medical Centre Pantai Mutiara Hospital Penang Adventist Hospital Sabah Medical Centre Selangor Medical Centre Sentosa Medical Centre Subang Jaya Medical Centre Sunway Medical Centre Taman Desa Medical Centre Tawakal Hospital The Southern Hospital Timberland Medical Centre Tun Hussein Onn National Eye Hospital Tung Shin Hospital Name of Hospital Ampang Puteri Specialist Hospital

(Source: APHM Website) viii

APPENDIX E: Health Personnel: Population Ratio 2000 and 2005

(Source: Ninth Malaysia Plan)

ix

APPENDIX F: Medical Treatment Costs (KPJ HealthCare)

(Source: KPJ Healthcare Website)

APPENDIX G: Project Submission Form

Student Name: Home/Permanent Address: Bhavin J. Shah Flat 6, Abinger Court, 8 Elmwood Road, Croydon, CR02SG, United Kingdom 02086840302 07925522992 leobhavin@yahoo.co.uk

Telephone Number: Mobile Number: Non-Imperial e-mail:

PROJECT DETAILS
Project Title: Word Count*: Project Supervisor: Company Name: (if applicable) Company Address: Company Contact Name: Company Contact Telephone number: Company Contact email: Was this project an international project? If so, how many days did you spend abroad working on your project and where? Yes. Worked 26 business days. Asian Neuro Cardiac Centre, Malaysia. An Insight into Malaysias Medical Tourism Industry from a New Entrant Perspective 19,614 Dr. Timothy Heymann

* word count to include everything except the appendices The College will electronically submit the work of all students to a database for use in the detection of Plagiarism. This database will be searched for the purpose of comparison with other students work within the College and other academic institutions may also search it. The database is managed by JISC (Joint Information Systems Council) and has been established with the support of the Higher Education Funding Council for England (HEFCE). Plagiarism: the presentation of another persons words, ideas, judgment or data as though they were your own. I have read the above definition of plagiarism. I am fully aware of what it means and I hereby certify that the above Project is entirely my own work, except where indicated. Signed: Bhavin J. Shah Date: 8th September 2008

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