Foreign patients’ perceptions of healthcare services in a private hospital in Thailand: Development of an integrative model Manassanan Lyn Prajitmutita Thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy Faculty of Business and Enterprise Swinburne University of Technology 2014 i Integrative model of foreign patients’ perceptions of healthcare services in Thailand ABSTRACT The hospital industry is a lucrative business, especially when it involves foreign patients as customers. Millions of foreigners receive medical treatment outside of their home country each year, and foreign patients have become a valuable market segment of the hospital industry, as they generate huge revenue for the industry worldwide. The competitive environment of the industry is not only local but has also expanded to include international clients. Hospital marketers are therefore, forced to adapt strategies to gain a significant advantage over competitors. Factors such as Service Quality (SQ), Customer Satisfaction (SAT) and Customer Value (CV) are identified as predictors of Behavioural Intentions (BI) that enhance competitive advantage in the services literature. A number of researchers have studied the perception of patients to SQ, CV, SAT and BI; however, research focusing on foreign patients’ perceptions is rare. ‘Foreign patients’ is chosen as a sample of the study because they are an important market segment of healthcare consumers and there is little research available on foreign patients’ perception of healthcare services. The proposed integrative model was examined by collecting data from foreign patients in one of the leading private hospitals in Thailand. The use of Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA) for the same data set, as is the case in this thesis, has been debated in the literature. In this thesis we provide sufficient rationale for the use of EFA followed by CFA. In the main, EFA has served to refine theory while CFA was used to confirm the hypotheses about the data. SPSS AMOS version 20 was applied to test the measurement models and the structural model proposed in this thesis. The proposed integrative model is an addition to the healthcare service literature and provides a comprehensive view of the relationships among the key constructs (SQ, CV, SAT and BI). The findings have identified determinants of Service Quality and Customer Value as perceived by foreign patients. Eight out of nine hypotheses proposed to study the direct and indirect relationships between constructs were confirmed. The hypothesis that was rejected was the direct effect of Service Quality on ii Behavioural Intentions. Particularly, the findings highlighted the importance of Customer Value on Behavioural Intentions. In addition, between the two antecedents of Customer Satisfaction (Service Quality and Customer Value), Customer Value also has a stronger direct effect than Service Quality. Furthermore, the findings suggested that the inclusion of Service Quality did not increase the support for Behavioural Intentions. However, the inclusion of Service Quality provided an insight into the relationships in a holistic manner and demonstrated that Service Quality had a substantive direct impact on Customer Value. Another major finding was that foreign patients are value-conscious oriented customers. To the novelty of the study, this is the only study in the healthcare service literature that: (1) utilised the SERVQUAL dimensions in the integrative model consisting of these four constructs (SQ, CV, SAT and BI), (2) conceptualised Customer Value as a multidimensional construct in the integrative model consisting of these four constructs (SQ, CV, SAT and BI) and (3) investigated the perceptions of specific market segment of healthcare consumers such as foreign patients. The theoretical contribution of this thesis is the development of a comprehensiveness model of service quality in the healthcare industry in Thailand as perceived by foreign patients. The model development incorporates studies from various service industry contexts and this has provided a holistic understanding of the relationships between constructs (SQ, CV, SAT and BI) and their effect on consumer behaviour such as Behavioural Intentions. The practical contributions of this thesis are that the findings provide valuable understandings for healthcare practitioners with regard to the antecedents and the determinants of Service Quality and Customer Value as perceived by foreign patients. The study also provides an understanding of the relationships perceived by foreign patients of the four key constructs related to the enhancement of competitive advantage of the hospital industry. iii ACKNOWLEDGEMENTS I am excited to write an acknowledgement because that means I am reaching the last stage of my Ph.D. journey. As I reach the end of this journey, I recall memories of those who have provided educational and emotional support. Firstly, I would like to thank my sister, Tick. She was the only person who inspired me to embark on this journey. Personally, the Ph.D. thing was too far-fetched for me to imagine. Without her, this thesis would have never started. I also would like to thank my mom and dad. Thanks for your love and care. Thanks for always being there. All my effort and success are dedicated to you. I would like to thank my supervisor, Professor Christopher Selvarajah, for his support and guidance throughout my candidature. His belief in me is a great motivator in my progression. Dr Aron Perenyi is my second supervisor and he was my Ph.D. friend on my first year of candidacy. He is more than a supervisor; he is part of my academic family. He is always there for me and trusts in my ability even more than I do. Without Aron, I would have not come this far. Chris and Aron; your support, encouragement, patience and belief in me are the main drives for my success. I am deeply appreciative. Thank you so much. I would also like to thank Everarda Cunningham for her assistance in checking the data analysis before submission. A special thanks to my best friends Melissa Ngatiman and Sean Healy. Thank you for always being there during the difficult time that I have been through. Thank you for your true love. I am a lucky person to have you in my life. Finally, I am indebted to you, Van Tran. Without your full support, I would not be able to carry on my study. Thank you so much. Thank you to each of you from the bottom of my heart. You are all meaningful people in my life. iv v DECLARATION This is to certify that: This thesis contains no material which has been accepted for the award to the candidate of any other degree or diploma, except where due reference is made in the text of the examinable outcome; To the best of the candidate’s knowledge, contains no material previously published or written by another person, except where due reference is made in the text of the examinable outcome; Where the work is based on joint research or publications, discloses the relative contributions of the respective workers or authors; The content of this thesis is the result of work which has been carried out since the official commencement date of the approved research program; This thesis is less than 100,000 words in length exclusive of bibliography and appendices; David Hudson edited this thesis. The editing addressed only style and grammar and not its substantive content; This thesis has met all the requirements of the Ethics Approval from the Swinburne University of Technology under SUHREC Project 2012/025 (see Appendix 2). Manassanan Lyn Prajitmutita Faculty of Business and Enterprise Swinburne University of Technology 4 May 2014 vi vii TABLE OF CONTENTS ABSTRACT ............................................................................................................. i ACKNOWLEDGEMENTS .................................................................................. iii DECLARATION .................................................................................................... v TABLE OF CONTENTS ..................................................................................... vii LIST OF TABLES ............................................................................................... xiii LIST OF FIGURES .............................................................................................. xv PART ONE: INTRODUCTION ........................................................................... 1 CHAPTER 1: INTRODUCTION ......................................................................... 3 1.1 Research environment: Foreign patients in Thailand and their importance to the healthcare service industry ............................................................................ 3 1.1.1 Overview of Thailand’s economic performance ................................... 4 1.1.2 Thailand’s healthcare industry .............................................................. 5 1.1.3 Industry outlook: Thailand’s private hospital industry and the importance of foreign patients to the Thai private hospital industry and economy ......................................................................................................... 6 1.1.4 The importance of foreign patients to the global economy ................. 12 1.2 Research background and justification ........................................................ 13 1.2.1 Research on perceptions of foreign patients ........................................ 13 1.2.2 Foreign patients