Role of Multiple Stakeholders in Value Co-creation and Effects on Medical Tourism

Abstract

Medical tourism is a continuously growing industry, and hospitals of the home country are the service providers for the foreign patients. Hospitals are focusing on quality improvement, infrastructure development, networking, and cost minimizations to attract foreign patients due to stiff competitions. Prahalad and Ramaswamy (2004) explained value co-creation, which ultimately achieved through Dialogue, Access, Risk, Transparency) DART concept. Another seminal research in this arena is the development of “service-dominant logic” concept by Vargo and Lusch (2004). The purpose of this article is to understand the collaboration of multiple stakeholders in co-creation process in the context of healthcare sector, which ultimately effects medical tourism. Our study also suggests a model that demonstrates the relationship between the factors responsible for brand co-creation in medical tourism and patient retention in multispecialty hospitals.

We took help from past literatures to frame the model. Our study conceptualizes the collaboration of multiple stakeholders for value co-creation in the healthcare sector which ultimately affects Medical Tourism and proposes a framework. This study also examines role of patients and multiple stakeholders in value co-creation process and model we proposed where we explained the factors responsible for brand co-creation in medical tourism and patients’ retention. The result of the study—in line with the study performed by Dijk, Antonides, and Schillewaertz (2014), we may conclude that “co-creation has an element in marketing and branding strategies of an organization.”

Keywords

Medical tourism co-creation multiple stake holders multispecialty hospitals

Introduction

Medical Tourism is a continuously growing industry, and hospitals of the home country are the service providers for the foreign patients. Hospitals are focusing on quality improvement, infrastructure development, networking, and cost minimizations to attract foreign patients due to stiff competitions. In medical tourism, apart from hospitals and patients, other stakeholders are also playing an important role such as government, medical travel facilitators, vendors (who actually supply medicines, equipment, other materials to hospitals), and community (the surroundings of the patients). All these stakeholders are contributing to create values—which is vital. Value creation ultimately leads to the framing of the concept—value co-creation. According to the theory of Prahalad and Ramaswamy (2004), co-creation has sidelined all traditional concepts. Prahalad and Ramaswamy (2004) explained value co-creation, which was ultimately achieved through Dialogue, Access, Risk, and Transparency (DART) concept. Another seminal research in this arena is the development of “service-dominant logic” concept by Vargo and Lusch (2004). “Goods-dominant logic” to “service-dominant logic” gave birth to the idea that value is not created but co-created joint value co-creation (Vargo & Lusch, 2004). Boom of information technology has shifted the power from company to customers (Prahalad & Ramaswamy, 2004).

Objective of the Study

The purpose of this study is to understand the collaboration of multiple stake holders in co-creation process in the context of healthcare sector, which ultimately effects medical tourism.

Our study also suggests a model that demonstrates the relationship between the factors responsible for brand co-creation in medical tourism and patient retention in multispecialty hospitals

Survey of Literature (Medical Tourism and Co-creation)

There are many factors for medical tourism—various researchers have given various reasons. Cost benefit is one of the key reasons (Burkett, 2007; Connell, 2006; Ramirez de Arellano, 2007; Turner, 2007). Cost of transportation also play an important role (Connell, 2006) here. Similarly, a popular tourist destination also influences global medical tourism (Connell, 2006; Turner, 2007). However, procedures that are absent or illegal in some countries—drug rehabilitation, stem cell therapy, and sex change procedure—are also an important factor (Horowitz, Rosensweig, & Jones, 2007). Treatment or procedure that is not provided by health insurance is also a contributing factor for medical tourism (Mattoo & Rathindran, 2006). Geographical closeness, specialized medical facilities, reputation, cultural proximity, and health insurance are also very important factors for medical tourists according to Bookman and Bookman (2007). Chanda (2013) opined that “geography, culture and language” play an important role for India’s position as a global hub for medical destination. Deficiency of superior technology, expertise in medical sector, and service quality (Blyth & Farrano, 2005; Derckx, 2006; Howze, 2007; Pennings, 2002; Shenfield et al., 2010) are also contributing factors for medical tourism. Currency fluctuations can also significantly influence medical tourism (Connell, 2006). As per the view of Heung, Kucukusta, and Song (2010), the medical tourism industry requires strategic planning and co-ordination among the major players—these are medical travel agencies, hotels, hospitals, and the medical tourists. Gan and Frederick (2011) opined that these agents try to satisfy the medical tourists and add value to their services during both pre- and post-travel—any gap of specific services or poor quality of services will be perceived negatively (Laws, 2000). According to Carrera and Lunt (2010), these medical travel facilitators now act as moderators. Due to an increase in the number of player, the strategic differentiation among this group is also observed. Now, the services they provide include medical visa arrangement, initial medical screening, consultations even before travel, liaison between local doctors with the target country doctors, provide medical records, air travel, move along with patients, and arranging accommodation and follow-up after their return to their home country.

Co-creation

Today, power balance has now switched from product- and firm-centric view to personal experience. Value and value extraction are the primary objectives and continuous process between the firm and the consumer. Value creation can be achieved through “Dialogue, access, transparency and risk understanding” (Prahalad & Ramaswamy, 2004). The traditional concept of firm-centric market has been sidelined by this new idea called “co-create” value (Prahalad & Ramaswamy, 2004). Vargo and Lusch (2008) opined that value is co-created through combined efforts of consumers and firms. According to the concept of (Lusch & Vargo, 2006) S–D logic, both the firm and the consumer are always value co-creators. Grönroos and Voima (2013) opined that value co-creation is a constant process. Yi and Gong (2012) mentioned that co-creation has two primary dimensions—Customer participation and Citizenship behavior. Monetary and non-monetary costs are associated in co-creation process which consumers always compare with the actual benefits if they are engaged (Hoyer, Chandy, Dorotic, Krafft, & Singh, 2010). Importance of value co-creation in healthcare involves Micro-system level (individual practices), Meso-system (healthcare organizations), Entire Macro-system (overall health system and government policy) (Dunston, Lee, Boud, Brodie, & Chiarella, 2009). According to Janamian, Crossland, and Wells (2016), Australian healthcare has started to recognize consumers as an important factor for value co-creation, and co-creation models are spreading at the micro-, meso-, and macro-system levels.

Conceptual Model and Propositions by the Authors

Figure 1.

Collaboration of Multiple Stakeholders in Value Co-creation and Hospital Performance Improvement and Patients’ Retention

Collaborative innovation is the main concept of co-creation and emerging areas in Co-creation (Bugshan, 2015). Due to internet engagement of stakeholders are possible in co-creation process (Hoyer et al., 2010). Previous literatures shows that in healthcare industry multiple collaboration leads to value addition, enhancement of satisfactions among patients and better compliance.

Development of Proposal

We have identified from past literatures (based on secondary research) that apart from hospitals and patients, medical travel facilitators, government, and community also play a crucial role in medical tourism. Hospitals provide services through doctors, nurses, and staff to its customers in addition to facilities and invest money on infrastructure development to provide value to customers. According to Ramaswamy and Gouillart (2010), firms need to adhere to the following points: (a) need to be of value for the employees to participate, (b) All stakeholders need to be focused, and (c) direct communication between employees. However, co-creation includes different methods, and one of the most effective methods is collaborative innovation (Bugshan, 2015)—which is enhanced greatly by the Internet (Hoyer et al., 2010). Consumers settle on value based on their individual experiences. As a result, healthcare efficiencies are also increased (Grondahl, Karlsson, Hall-Lord, & Wilde-Larsson, 2011) and improved health outcomes (Gallan, Jarvis, Brown, & Bitner, 2012), increase in the trust on the healthcare team, and reducing healthcare costs to patients and health system, leads to an increase in value and in medical research, patients satisfactions increase, and compliance with treatment regimens (Frow, Nenonen, Payne, & Storbacka, 2015; Merz, Czerwinski, & Merz, 2013; Michie, Miles, & Weinman, 2003). As per Merz et al. (2013) “value can be co-created for the individual, clinical practices, healthcare organizations and providers and government.”

Proposition 1: Hospital acts as stimulator and has a significant positive effect on multiple stakeholders’ engagement.

Firm stimulators have a role in engaging multiple stakeholders. Here, in medical tourism, multiple stakeholders include patients, hospital as service provider, hospital employees, vendors, medical travel facilitators, and the government. According to Hoyer et al. (2010), firms have two options to stimulate co-creation—(a) they can provide consumers by increasing benefits and (b) by lowering down the cost. Based on this concept, here, we are proposing that if any hospital is providing these two benefits to the customers (patients), it will be helpful for other stakeholders also. It will be helpful for the employees as the benefits are more for the patients, and it is available at lower cost which attracts more patients and satisfies them. As a result, more number of patients will be interested. This will also be helpful for the medical travel facilitators to convince their clients (patients). More number of patients will ensure improved financial status of the hospital. Vendors or suppliers will be assured to get timely payment and will supply materials timely. When more number of patients apply for the visa, the government will provide assistance by offering quick visa thereby leading to foreign currency collection. This leads to an increase in the country’s reputation.

Proposition 2: Multiple stakeholders’ engagement through hospital initiatives has a significant positive effect on multiple stakeholders’ collaboration.

According to Janamian et al. (2016) “today due to many co-creation opportunities where consumer can engage with the health system, health professionals and other stake holders to co-create value.” However, Sawhney, Verona, and Prandelli (2005), opined that “engagement platforms vary in type (such as cognitive, emotional and behavioural engagement; in level (from non engaged to highly engaged individuals); and in duration (one-off, recurring and continuous engagement).” In a co-creative business, multiple stakeholders include “customers, employees and distributors who are participating in management decision making process to increase revenue and cut down the costs” (Terblanche, 2014).

Engagements of multiple stakeholders are important here. Here, multiple stakeholders mean patients, hospital as service provider, hospital employees, vendors, medical travel facilitators, and the government. Without engagement, they cannot move for multiple stakeholders’ collaboration directly. According to Vargo, Maglio, and Akaka (2008) suppliers (vendors) and clients both create value based on their experience, knowledge and skills, and clients through their knowledge and experience. Co-creation deals with both “monetary” and “non-monetary costs” and everyone evaluates the costs with the benefits that are available with engagement in the co-creation activities (Hoyer et al., 2010). According to Janamian et al. (2016), healthcare in Australia has initiated consumers as integral to value co-creation, and the models of co-creation are shaping at micro-, meso- and macro-system levels there.

Proposition 3: Multiple stakeholder collaborations have important positive impact on value co-creation.

Actually, value co-creation is not only restricted to customers only but also different stakeholders are engaged in co-creation to create value for them, have impact in society. Due to technological advancement this has been accelerated (Particularly by internet).

According to Ramaswamy and Gouillart (2010), firms need to adhere to four important aspects—need to be of value for the employees to participate. Focus is required for all the stakeholders. Not only the customers but also employees must be able to communicate with all the stakeholders. Firms must interact with stakeholders.

Randall, Gravier, and Prybutok (2011) opined that actual interaction in co-creation takes place between customer and supplier when there is emotional attachment and increases the “trust and commitment on future intentions in customers to co-create value.” Galvagno and Dalli (2014) define co-creation as “the joint, concurrent, peer like process of producing new value, both materially and symbolically.” According to Merz et al. (2013), co-created value is applicable for the individuals, clinical practices, healthcare organizations and healthcare service providers, and government. According to Janamian et al. (2016), many co-creation opportunities actually lead to consumer engagement with other stakeholders to co-create value. Collaboration of multiple stakeholders leads to increase of efficiency and effectiveness of hospitals. This process will lead to better understanding among stakeholders. Hospitals through doctors, nurses, and staff focus on its patients, improve service, arrest dissatisfaction, avoid prolonged stay in hospitals, offer prompt service, handle queries of the patients, provide time-to-time feedback to the patients and their families regarding the condition of the patients, and fix appointments with doctors. This leads to improvements in the financial condition of hospitals, vendors will be ready to provide delivery as per requirements(as no financial crisis means assurance of regular payments without delay), issues regarding shortage of stock, medical travel facilitators also feel happy as customers’ grievances will be negligible, and they get their benefits. Government also provides quick medical visas for the foreign patients. The community also provides positive feedback if the services and benefits to the patients are really good and refer other patients to the hospital. Value co-creation should favorably improve performance of the hospital. Thus, the next proposition is:

Proposition 4: Hospital performance improvement is significantly influenced by Value co-creation.

According to Chakraborty, Bhattacharya, and Dobrzykowski (2014), clinical and financial performance of a firm is influenced by value co-creation. Hospitals engage different stakeholders through sharing of information, regular interaction, and collaborative linkages. This helps in reducing risks and improving transparency. As a result, overall service improvement is observed—which helps in customer satisfaction. The Competitive advantages that the firm gains after successful implementation of co-creation—(Hull, 2004; Payne, Storbacka, & Frow, 2008; Prahalad & Ramaswamy, 2000)—increase efficiency and effectiveness. These outcomes ultimately improve hospital performance, operational efficiency, product/service turnover, satisfaction among employees, profitability, and revenues (Ostrom et al., 2010). Co-created product or service may develop consumers’ positive attitude and increase purchase intention. As a result customers will not hesitate to pay even more, and finally through referral or word-of–mouth, it could be circulated (Franke, Peter, & Christoph, 2009; Mathwick, Caroline, & Ruyter, 2007).

Proposition 5: The relationship between value co-creation and hospital performance improvement is moderated by firm stimulators.

According to (Hoyer et al., 2010), firm-level stimulators are moderators between consumer motivators of co-creation. Based on this concept, we may say that it ultimately leads to overall improvement of service of the hospital. Once the services are improved, customers will also be satisfied.

Proposition 6: Hospital performance improvement positively affects positive attitude.

Previous research suggested that consumers develop positive attitude toward a product when they co-created with the company (Brodie, Ilic, Juric, & Hollebeek, 2013). Fuchs and Schreier (2011) showed that “non-participative consumers” also had positive intentions toward products of companies that support empowering value to consumers. When the hospital performance improves, it improves positive attitudes of the patients as the average length of the stay is expected to be less, service quality improves, and footfall of patients increases.

Proposition 7: Positive attitudes have positive effects on Purchase Intentions.

Familiarity with the brand influenced “consumers’ product attitudes and purchase intentions” (Paasovaara, Luomala, Pohjanheimo, & Sandell, 2012). Co-creation is also meaningful in terms of strengthening overall brand associations for established as well as non-established brands and big as well as small brands. The study conducted by Dijk et al. (2014) also showed that “co-creation influences consumer perceptions of a well-known and existing brand”. The study conducted by Fuchs and Schreier (2011) and the study by Dijk et al. (2014) revealed that a “product is positively evaluated more when it is offered as co-created with consumers.”

Proposition 8: Purchase intentions positively affect Brand Loyalty.

Previous researchers highlighted multiple effects of co-creation on consumers if they take part in the process of co-creation. They showed that loyalty is increased in favor of the company (Sawhney et al., 2005), which ultimately develops stronger customer relationship with the firm (Füller, 2010), trust increases, brand image improves (Füller, 2010), and communication is done through positive word of mouth (Bilgram, Bartl, & Biel, 2011; Piller & Ihl, 2010). This leads to brand loyalty.

Proposition 9: Brand Loyalty has positive effects on retention of patients.

Brand loyalty means that customers using the same brand will not switch to other brands. This is a recurring action that consumer repeats purchasing services from the same company. The brand loyal customers definitely go for repurchasing or continuing to support the brand as they are satisfied with the service of the hospital, and the company works to retain them. If hospitals are able to keep the customers, they can ultimately generate higher sales and profits.

Conclusion

Our study conceptualizes the collaboration of multiple stakeholders for value co-creation in the healthcare sector, which ultimately affects Medical Tourism and proposes a framework using service-dominant logic concept. This study also examines the role of patients and multiple stakeholders in value co-creation process and model we proposed where we explained the factors responsible for brand co-creation in medical tourism and patients’ retention. This study also tries to explain firm stimulators’ role as a mediator in the relationship between Multiple stakeholders’ collaboration (MSC) and hospital performance improvement. The contribution of this study also tries to develop conceptual construct of customers’ engagement and attempts to explain its impact on the framework of relationships. Hospital performance improvement develops positive attitude toward the hospital and purchase intention that finally leads to brand loyalty which is again helpful in retaining customers. The results of the study conducted by Dijk et al., 2014) shows strong evidence of “co-creation have an element in marketing and branding strategies of an organization.”

Ideas for Future Research

Future research should aim at converting the propositions into testable hypotheses and empirical study.

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.

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