Medical Tourism
83
Tanaka Business School Imperial College London An Insight into Malaysia’s 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
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Transcript of Medical Tourism
Tanaka Business School
Imperial College London
An Insight into Malaysia’s 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
I
SYNOPSIS
The overarching objective of this project is to provide an insight into Malaysia’s
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 Porter’s 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 Malaysia’s 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.
II
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 Malaysia’s 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.
III
TABLE OF CONTENTS SYNOPSIS ................................................................................................................. I ACKNOWLEDGMENTS ............................................................................................ II TABLE OF CONTENTS............................................................................................ III TABLE OF FIGURES ................................................................................................ V LIST OF TABLES ...................................................................................................... V 1 INTRODUCTION ................................................................................................ 1
1.1. What is Medical Tourism ............................................................................. 1 1.2. Benefits of Medical Tourism ........................................................................ 1 1.3. Why is medical tourism attractive ................................................................ 2 1.4. Downsides of Medical Tourism .................................................................... 2 1.5. Background to Research ............................................................................. 3 1.6. Project Aims ................................................................................................ 4 1.7. Organizational Context ................................................................................ 5 1.8. Project Objectives ....................................................................................... 5 1.9. Report Structure .......................................................................................... 5 1.10. Chapter Summary .................................................................................... 6
2 LITERATURE REVIEW ...................................................................................... 7 2.1. Introduction ................................................................................................. 7
2.1.1. Traditional strategic management ........................................................ 7 2.1.2. The services sector .............................................................................. 7
2.2. Porter’s Five Forces .................................................................................... 8 2.2.1. Criticism of Porter’s Five Forces ......................................................... 12
2.3. Resource-Based View (RBV) .................................................................... 12 2.3.1. Criticisms of Resource-Based View .................................................... 13
2.4. Value Network ........................................................................................... 14 2.4.1. Definition ............................................................................................ 14 2.4.2. Background of network study ............................................................. 15 2.4.3. About value network ........................................................................... 15 2.4.4. About value-chain............................................................................... 16 2.4.5. Value Network vs. Value-Chain .......................................................... 17 2.4.6. Value Network Analysis ...................................................................... 17 2.4.7. Value Network Analysis Methodology................................................. 18
2.2. Chapter Summary ..................................................................................... 20 3 RESEARCH METHODOLOGY ........................................................................ 22
3.1. Research Approach and Participants ........................................................ 22 3.2. Primary Research ...................................................................................... 22
3.2.1. Primary Research Coverage .............................................................. 22 3.2.2. Interviewee Profiles ............................................................................ 22
IV
3.2.3. Conduct of Interview ........................................................................... 23 3.2.4. Limitations .......................................................................................... 24
3.3. Secondary Research ................................................................................. 24 3.4. Chapter Summary ..................................................................................... 25
4 ANALYSIS ........................................................................................................ 26 4.1. Market Environment .................................................................................. 26
4.1.1. Malaysia (Country Description) ........................................................... 26 4.1.2. Tourism Destinations .......................................................................... 26 4.1.3. Healthcare system in Malaysia ........................................................... 27 4.1.4. Medical Tourism in Malaysia .............................................................. 29
4.2. Competitive Landscape Assessment ......................................................... 29 4.2.1. Assumptions ....................................................................................... 30 4.2.2. Threat of Entry (Barriers) .................................................................... 30 4.2.3. Bargaining Power of Suppliers ........................................................... 31 4.2.4. Bargaining Power of Buyers ............................................................... 32 4.2.5. Threat of substitute products or services ............................................ 33 4.2.6. Rivalry from competitors ..................................................................... 34
4.3. Summary of Analysis ................................................................................. 35 4.4. Resource-based view ................................................................................ 36
4.4.1. Hospital Building................................................................................. 36 4.4.2. Hospital Equipment ............................................................................ 36 4.4.3. Services ............................................................................................. 37 4.4.4. Staffing ............................................................................................... 38 4.4.5. Quality of Care, Patient Safety and Medical records ........................... 38 4.4.6. Collaboration ...................................................................................... 39
4.5. Summary of Analysis ................................................................................. 40 4.6. Value Network Analysis ............................................................................. 41
4.6.1. Assumptions ....................................................................................... 41 4.6.2. Network Map ...................................................................................... 42
4.7. Network Map Analysis ............................................................................... 45 4.7.1. Resilience........................................................................................... 45 4.7.2. Value Creation ................................................................................... 46 4.7.3. Brand Management – Perceived Value .............................................. 47 4.7.4. Asset Impact ...................................................................................... 48 4.7.5. Reciprocity ......................................................................................... 48 4.7.6. Structure and Value ............................................................................ 49 4.7.7. Agility ................................................................................................. 50
4.8. Summary of Analysis ................................................................................. 50 5 DISCUSSION OF ANALYSIS ........................................................................... 52 6 RECOMMENDATIONS .................................................................................... 56
V
7 CONCLUSION AND FUTURE RESEARCH ..................................................... 59 7.1. Introduction ............................................................................................... 59 7.2. 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 ANCC……………………………………………………34
1
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 patient’s 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
2
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 post-
operative 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 don’t collect data on adverse
events and those that do often do not publish it or lacks clarity.
3
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
4
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 today’s 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 Malaysia’s 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.
5
1.7. Organizational Context Asian Neuro Cardiac Centre is a new upcoming hospital in Malaysia’s 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, non-
invasive 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 Malaysia’s 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, Malaysia’s 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)
1 The word ‘market’ and ‘industry’ have been used interchangeably
6
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.
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
7
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 Resource-
based 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.
8
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. Porter’s 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 industry’s structure; Porter’s 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 Porter’s 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)
9
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
buyer’s willingness to pay for a company’s 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
10
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 buyer’s needs.
c. The industry is not an important buyer of the product.
d. The product is very important for the industry
e. The industry’s 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 buyer’s 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 industry’s 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
11
substitute product or service limits an industry’s 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 industry’s 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 industry’s
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.
12
2.2.1. Criticism of Porter’s Five Forces
Teece, Pisano and Shuen (1997) state that Porter’s 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, Porter’s model rarely takes them into consideration.
A close analysis of Porter’s 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 Porter’s 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, Porter’s 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) Porter’s 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 firm’s disposal (Wernerfelt, 1984)
13
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 management’s strategic aims.
The 1990s were dominated by RBV which looks inward to develop an understanding
of characteristics – value, rareness, inimitability, and non-substitutability – a
company’s 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
Porter’s 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.
14
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 customer’s needs in forming
strategy.
Finally, like Porter’s 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)
15
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.
16
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)
17
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 Porter’s 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 Porter’s approach did not adequately describe the
multidirectional nature and complexities of the potential myriad of business-to-
business (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
network’s 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 today’s
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
18
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 company’s 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
Malaysia’s 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
19
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 member’s
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 non-
physical 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
20
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 Porter’s five forces framework provides an easy and yet a robust snapshot of an
industry’s 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
21
value network approach is used to capture value – in true essence – of a service-
based 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 organization’s
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 Malaysia’s 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 café.
The organization list is as follows:
23
No. Organization Position contacted
1 Sunway Medical Centre Medical Triage and Corporate Care Manager – International Help Desk
2 Prince Court Medical Centre Chief Executive Officer
3 Sri Kota Specialist Medical Centre Head of Marketing and Corporate Affairs
4 KPJ Group of Hospitals Corporate Executive
5 Malaysiahealthcare.com
6 Medical Tourism Association President, and Chief Operating Officer
7 ValueNetworks.com
8 ANCC 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. Organization Reason
1 MedRetreat Too many interviews conducted on the topic
2 Subang Jaya Medical Centre Does not entertain interviews
3 Mahkota Medical Centre No response
4 Gleneagles Intan Medical Centre No response
5 Association of Private Hospitals of Malaysia (APHM) No response
6 Department of Statistics, Malaysia No data available on the topic
7 Immigration Department, Malaysia 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
24
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.
25
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.
26
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 multi-
ethnic 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 Malaysia’s 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 well-
known place among tourists.
27
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
28
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)
29
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
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
(above 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 Porter’s 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)
30
4.2.1. Assumptions
Before proceeding with the analysis, the following assumptions have been made:
1. Malaysia’s 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 latter’s 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
31
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
32
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 today’s 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 industry’s 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 hour’s 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. Name of Hospital Location 1 Ampang Puteri Specialist Hospital (KPJ Group) Selangor 2 Assunta Hospital Selangor 3 Damansara Specialist Hospital (KPJ Group) Selangor 4 Gleneagels Intan Medical Centre Kuala Lumpur 5 Pantai Medical Centre (Pantai Group of Hospitals) Kuala Lumpur 6 Prince Court Medical Centre (PCMC) Kuala Lumpur 7 Selangor Medical Centre Selangor 8 Subang Jaya Medical Centre Selangor 9 Sunway Medical Centre Selangor
Table 3: List of Competitors of ANCC
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 Men’s 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 Malaysia’s 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
36
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
ANCC’s 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
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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 ANCC’s continuum of care practice
Reach-Out programmes shall be developed. These programmes shall be community
based, aimed at improving health for the greater community. ANCC’s 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.
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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-à-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 sub-
specialists 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 15-
member 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 ANCC’s 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 Imperial’s international
alumni networks. The hospital also acts as a potential recruiter for the college’s
Masters and Business students.
40
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
Malaysia’s 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
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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
44
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 patient’s 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:
45
“The JCI has accredited over 100 foreign facilities but given the significant
differences between the JCI’s 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 Malaysia’s medical tourism network. The ratio of
intangible/tangible transactions is 1.32.
46
There are more intangibles than tangibles. It states that Malaysia’s 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
47
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
48
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
Malaysia’s 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.
49
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 Malaysia’s 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:
Malaysia’s medical tourism industry is still in its emerging phase
The industry structure isn’t strong
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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
53
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.
54
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 Malaysia’s 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
55
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)
56
6 RECOMMENDATIONS The Porter’s five force analysis predicts that Malaysia’s 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
Malaysia’s 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
57
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.
58
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.
59
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 (Porter’s 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 organization’s
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.
60
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, Porter’s 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 Malaysia’s 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
.
61
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i
APPENDIX A: ANCC Company History – Milestones
Company History: Milestones21st Jan, 2003Bio Science
Capital Incorporation
2004BSC owns Asian
Neuro Centre (single-specialty)
21st Oct 2005,Site possession
27th Oct 2005,Soft Launch -
ANC
7th Dec 2005,Ground Breaking
Oct 2006,Cardiac Services included -
Asian Neuro & Cardiac Centre (dual-specialty)
April 2008,Handover of building
December 2008Opening of
ANCC
(Source: ANCC)
ii
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)
iii
APPENDIX C: Value Network Analysis Input Data Standard Value Network (Role Based) Asset Management Brand Management
From Role (required)
To Role (required)
Deliverable
(required)
Nature of Deliverabl
e (required)
Asset Type
Asset Impact (for Receiver)
Perceived Value of
Deliverable for
Sender
Perceived Value of
Deliverable for
Receiver
Accreditation Firms Hospital
Respond to hospital queries
Intangible Business
relationships
Benefit Neutral Medium
Accreditation Firms
Medical Tourist
Respond to Patient queries
Intangible Business
relationships
Benefit Neutral Low
Accreditation Firms
Medical Tourist
Educate patient on
international standards
Intangible Business
relationships
Benefit Neutral Neutral
Foreign Hospital
Medical Tourist
Consultation on
overseas treatment
Tangible Business
relationships
Benefit Negative High
Government Hospital
Respond to hospital queries
Intangible Business
relationships
Benefit Neutral Low
Government Hospital
Provide information on foreign
missions or collaboratio
ns
Tangible Business
relationships
Benefit Low Medium
Government
Medical Tourist
Provide shelter in case of
emergency
Tangible Business
relationships
Benefit Negative Medium
Government Media
Resources on Medical
Tourism Intangible
Business relationship
s Benefit Medium Medium
Health Tourism Agent
Hospital Patient or
HTA queries
Intangible Business
relationships
Benefit Neutral Neutral
Health Tourism Agent
Hospital
Provide medical
tourists and patient
database
Tangible Business
relationships
Benefit Medium High
Health Tourism Agent
Hospital
Provide contacts to
foreign hospitals or consultanci
es
Intangible Business
relationships
Benefit Negative High
Health Tourism Agent
Medical Tourist
Respond to Patient queries
Intangible Business
relationships
Benefit Medium High
Health Tourism Agent
Hotel Sign
Exclusivity Contract
Tangible Business
relationships
Benefit High High
Hospital Medical Tourist
Respond to Patient queries
Intangible Business
relationships
Benefit Low High
Hospital Medical Tourist
Provide data
privacy Intangible
Business relationship
s Benefit Neutral High
Hospital Medical Tourist
Provide medicines Tangible
Business relationship
s Benefit Neutral High
Hospital Medical Tourist
Provide hospital
information Intangible
Business relationship
s Benefit Neutral Medium
iv
Hospital Medical Tourist
Provide concierge services, customer relations officer
Intangible Business
relationships
Benefit Neutral Medium
Hospital Medical Tourist
Provide luxury
accommodation,
individual care and
entertainment systems
Intangible Business
relationships
Benefit Negative High
Hospital Medical Tourist
Provide 24hour contact center
Intangible Business
relationships
Benefit Neutral High
Hospital Health
Tourism Agent
Respond to queries Intangible
Business relationship
s Benefit Neutral Medium
Hospital Accreditation Firms
Hospital queries Intangible
Business relationship
s Benefit Medium Medium
Hospital Private
Associations
Hospital queries Intangible
Business relationship
s Benefit High Medium
Hospital Government
Respond to government
queries Intangible
Business relationship
s Benefit Medium High
Hotel Health
Tourism Agent
Long term contract Tangible
Business relationship
s Benefit High High
Media Government
News about Medical Tourism
Intangible Business
relationships
Benefit Neutral Medium
Media Government
Publicity of medical Tourism
Intangible Business
relationships
Benefit Neutral High
Medical Tourist
Health Tourism Agent
Provide patient medical
records and other data
Intangible Business
relationships
Benefit Neutral High
Private Association
s Hospital
Respond to hospital queries
Intangible Business
relationships
Benefit Medium High
Private Association
s Hospital
Access to affiliated
associations if any
Intangible Business
relationships
Benefit Negative High
Private Association
s Hospital
Provide competitor information
Intangible Business
relationships
Benefit Negative High
Private Association
s
Medical Tourist
Respond to Patient queries
Intangible Business
relationships
Benefit Neutral High
Private Association
s
Medical Tourist
Provide hospital
information Intangible
Business relationship
s Benefit Neutral High
Private Association
s
Medical Tourist
Provide healthcare
system information
Intangible Business
relationships
Benefit Neutral Medium
Private Association
s
Medical Tourist
Case Studies on
medical tourism
Tangible Business
relationships
Benefit Neutral Medium
Accreditation Firms Hospital
Access to affiliations, resource materials,
consultants
Intangible Competence Benefit Neutral Medium
Accreditation Firms Hospital
Continuous education
and training Tangible Competenc
e Benefit Neutral Medium
v
Health Tourism Agent
Hospital Provide
trend analysis
Intangible Competence Benefit Neutral Medium
Health Tourism Agent
Hospital Provide
competitor information
Intangible Competence Benefit Medium High
Health Tourism Agent
Hospital
Provide new
technology information
eg iPher
Tangible Competence Benefit Medium Neutral
Health Tourism Agent
Medical Tourist
Assistance to medical
and vacation planning
Tangible Competence Benefit High High
Health Tourism Agent
Medical Tourist
Provide contacts to specialists
for consultatio
n
Tangible Competence Benefit High High
Health Tourism Agent
Medical Tourist
Provide preliminary
report based on
patient medical records
Tangible Competence Benefit High High
Health Tourism Agent
Medical Tourist
Provide luxuryservic
es Intangible Competenc
e Benefit Medium Medium
Health Tourism Agent
Medical Tourist
Provide new
technology information
eg iPher
Intangible Competence Benefit Medium Medium
Health Tourism Agent
Medical Tourist
Provide Companion
bookings Intangible Competenc
e Cost Neutral Medium
Hospital Medical Tourist
Pre, Current and
Post Treatment
Tangible Competence Benefit High High
Hospital Medical Tourist
Provide Quality of
Care Intangible Competenc
e Benefit High High
Hospital Medical Tourist
Provide Patient Safety
Intangible Competence Benefit High High
Hospital Medical Tourist
Provide medical Reports
Tangible Competence Benefit Neutral High
Hospital Health
Tourism Agent
Provide preliminary
report based on
patient medical records
Tangible Competence Benefit Neutral Medium
Hospital Health
Tourism Agent
Provide specialists
for consultatio
n
Intangible Competence Benefit Neutral High
Hospital Health
Tourism Agent
Share IT system to receive medical records
Intangible Competence Benefit Neutral Low
Hospital Health
Tourism Agent
Provide hospital
information Intangible Competenc
e Benefit Medium High
vi
Hospital Health
Tourism Agent
Provide procedure
knowledge, medical
terminology, and
educate on disease
Intangible Competence Benefit Low Medium
Hospital Accreditation Firms
Audit Reports Adverse
Event Report
Facts and Figures
Tangible Competence Benefit Low Medium
Hospital Accreditation Firms
Provide process
and technical know-how to improve standards
Intangible Competence Benefit Medium Medium
Hospital Private
Associations
Medical Tourism
Information Tangible Competenc
e Benefit Medium High
Hospital Private
Associations
Technial and
process know-how
Intangible Competence Benefit Medium High
Hospital Private
Associations
Disease manageme
nt knowledge
Intangible Competence Benefit Medium High
Hospital Government
Hospital queries Intangible Competenc
e Cost High Low
Medical Tourist
Private Association
s
Patient queries Intangible Competenc
e Cost High Low
Medical Tourist
Health Tourism Agent
Patient queries Intangible Competenc
e Cost High Medium
Medical Tourist
Accreditation Firms
Patient queries Intangible Competenc
e Cost Medium Low
Medical Tourist Hospital Patient
queries Intangible Competence Cost High Low
Medical Tourist
Foreign Hospital
Patient queries Intangible Competenc
e Cost High Low
Private Association
s Hospital
Conduct meetings
and seminars
Intangible Competence Benefit Neutral Medium
Private Association
s Hospital
Access to resource materials
Intangible Competence Benefit Neutral Medium
Foreign Hospital
Medical Tourist
Secondary Treatment if required
Tangible Financial Cost Low High
Government Hospital
Provide tax reliefs if
any Tangible Financial Benefit Negative High
Government
Medical Tourist
Provide Medical Visas
Tangible Financial Cost High High
Government
Medical Tourist
Provide immigration
aid Tangible Financial Cost Neutral Medium
Health Tourism Agent
Hospital Make payments Tangible Financial Benefit Negative High
Health Tourism Agent
Hotel Payment for Rooms Tangible Financial Benefit Negative High
Health Tourism Agent
Hotel Provide Medical Tourists
Tangible Financial Benefit High High
vii
Health Tourism Agent
Airlines Payment for Tickets Tangible Financial Benefit Negative High
Hospital Health
Tourism Agent
Provide single point of contact
Tangible Financial Cost Low Medium
Hospital Accreditation Firms
Payment of fees Tangible Financial Benefit Medium High
Hospital Private
Associations
Payment of fees Tangible Financial Benefit Medium High
Hospital Private
Associations
Yearly Audit
Reports Tangible Financial Benefit Low Medium
Hospital Private
Associations
Adverse Events Reports
and other facts and figures
Intangible Financial Benefit Low Medium
Hospital Government
Audit Reports Adverse
Event Report
Facts and Figures
Tangible Financial Benefit Negative High
Hospital Government
Upgraded facilities for
local population
Intangible Financial Benefit Negative High
Hotel Medical Tourist
Provide accommod
ation Tangible Financial Benefit High High
Hotel Medical Tourist
Provide in-room
entertainment
Tangible Financial Benefit High High
Hotel Medical Tourist
Provide meal
packages Intangible Financial Benefit High Medium
Hotel Medical Tourist
Provide access to
spa Intangible Financial Benefit High Medium
Medical Tourist
Health Tourism Agent
Payment of fees Tangible Financial Benefit Negative High
Medical Tourist
Foreign Hospital
Payment of fees if any Tangible Financial Benefit Neutral High
Private Association
s Hospital
Provide Membershi
p Tangible Financial Benefit High High
Private Association
s Hospital
Certification as medical
tourism hospital
Tangible Financial Benefit High High
Accreditation Firms Hospital
Inspection, Certification
and periodic review
Tangible Structure Benefit High High
Hospital Medical Tourist
Provide bedding Tangible Structure Benefit Neutral Medium
Hospital Health
Tourism Agent
Allocate beds for medical tourists
Tangible Structure Benefit Medium Medium
viii
APPENDIX D: Hospitals participating in promotion of Health Tourism
Sr. No. Name of Hospital 1 Ampang Puteri Specialist Hospital 2 Assunta Hospital 3 Columbia Asia Medical Center 4 Damansara Fertility Centre 5 Damansara Specialist Hospital 6 Fatimah Hospital 7 Gleneagles Intan Medical Centre 8 Gleneagles Medical Centre 9 Hospital Pantai Putri
10 Ipoh Specialist Hospital 11 Island Hospital 12 Johor Specialist Hospital 13 Lam Wah Ee Hospital 14 Loh Guan Lye Specialist Centre 15 Mahkota Medical Centre 16 Metro Specialist Hospital 17 Mount Miriam Hospital 18 National Heart Institute (IJN) 19 NCI Cancer Hospital 20 Normah Medical Specialist Centre 21 Pantai Ayer Keroh Hospital 22 Pantai Medical Centre 23 Pantai Mutiara Hospital 24 Penang Adventist Hospital 25 Sabah Medical Centre 26 Selangor Medical Centre 27 Sentosa Medical Centre 28 Subang Jaya Medical Centre 29 Sunway Medical Centre 30 Taman Desa Medical Centre 31 Tawakal Hospital 32 The Southern Hospital 33 Timberland Medical Centre 34 Tun Hussein Onn National Eye Hospital 35 Tung Shin Hospital
(Source: APHM Website)
ix
APPENDIX E: Health Personnel: Population Ratio 2000 and 2005
(Source: Ninth Malaysia Plan)
x
APPENDIX F: Medical Treatment Costs (KPJ HealthCare)
(Source: KPJ Healthcare Website)
xi
APPENDIX G: Project Submission Form Student Name: Bhavin J. Shah Home/Permanent Address:
Flat 6, Abinger Court, 8 Elmwood Road, Croydon, CR02SG, United Kingdom
Telephone Number: 02086840302 Mobile Number: 07925522992 Non-Imperial e-mail: [email protected]
PROJECT DETAILS Project Title: An Insight into Malaysia’s Medical Tourism Industry from a New
Entrant Perspective Word Count*: 19,614 Project Supervisor: Dr. Timothy Heymann 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.
* 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 person’s 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
