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Public and Private Hospitals in Bangladesh: Service Quality and Predictors of Hospital Choice
Public and Private Hospitals in Bangladesh: Service Quality and Predictors of Hospital Choice
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HEALTH POLICY AND PLANNING; 15(1): 95–102 © Oxford University Press 2000
This study compares the quality of services provided by public and private hospitals in Bangladesh. The
premise of the paper was that the quality of hospital services would be contingent on the incentive structure
under which these institutions operate. Since private hospitals are not subsidized and depend on income
from clients (i.e. market incentives), they would be more motivated than public hospitals to provide quality
services to patients to meet their needs more effectively and efficiently. This premise was supported. Patient
perceptions of service quality and key demographic characteristics were also used to predict choice of public
or private hospitals. The model, based on discriminant analysis, demonstrated satisfactory predictive power.
Introduction private hospitals and clinics with more than 5500 beds were
designed to determine and compare the quality of services in strategy formulation; thus, very little is known about how
provided by both private and public hospitals. the ‘customers’ assess health-care service quality. Since the
recipients of health care can provide valuable, albeit partial,
The study also attempts to determine whether the service insights, and since their opinions should drive meaningful
quality ratings are reasonable predictors of the type of hospi- changes in the system, their perspective was central to this
tal chosen by patients. Demographic variables of income and paper.
education were included with service quality ratings to test
the model’s predictive capability. It was also important to establish the criteria for assessing
service quality. Some guidelines were available from
The theoretical basis of this paper is that the quality of ser- research on this topic conducted in other countries. The
vices provided by the hospitals is contingent on market incen- SERVQUAL framework, first proposed by Parasuraman et
tives: because private hospitals are not subsidized and depend al. (1985, 1991), has guided numerous studies in the service
on income from clients, they will be more inclined than public sector that focus on banks, repair and maintenance services,
hospitals to provide quality services and to meet patients’ telephone companies, physicians, hospitals, hotels, academic
needs better. By doing so, they will not only be able to build institutions and retail stores (Parasuraman et al. 1988;
satisfied and loyal clients who will revisit the same facility for Carman 1990; Boulding et al. 1993). Interestingly, while the
future needs; the clients will also serve as a source of referrals SERVQUAL framework has been applied with great
to recommend the private establishments to friends and enthusiasm, empirical support for the proposed framework
family, thereby sustaining the long-term viability of private and the measurements has not always been very strong. Not
hospitals. surprisingly, the model and its measures have been widely
debated by marketing academics. For example, Brown et al.
In public hospitals, on the other hand, there is little or no (1993) have suggested measurement problems in the use of
market incentive to motivate the staff to take extra initiative difference scores; Cronin and Taylor (1992) have suggested
or effort to improve the condition of patients and ameliorate that service quality can be predicted adequately by using per-
Historically, the establishment of quality standards has been The Bangladesh context of this study made it imperative
delegated to the medical profession and has been defined by to include additional cultural variables to establish service
clinicians in terms of technical delivery of care. More recently, quality criteria and their measures. For example, qualitative
patients’ assessment of quality care has begun to play an interviews suggested that the concepts of baksheesh
important role, especially in the advanced industrialized (facilitation payments) and discipline should be included in
countries, and their satisfaction or dissatisfaction with ser- assessing perceptions of service quality. In many service
vices has become an important area of inquiry. Thus, Don- sectors, even the most basic services are often difficult to
abedian (1988) suggests that, ‘patient satisfaction should be obtain without baksheesh. At times, a patient’s fate may be
considered to be one of the desired outcomes of care . . . determined by her ability to provide baksheesh. Discipline
information about patient satisfaction should be as indis- has also deteriorated in Bangladesh for a variety of social,
pensable to assessments of quality as to the design and political and economic reasons, and is reflected prominently
management of health care systems.’ in various service sectors. Not surprisingly, service quality
perceptions have suffered, often drastically, among ser-
Because customers or clients of hospitals and clinics have the vice seekers. Consequently, instead of limiting the concepts
most direct experiences with the services provided by these and measures of service quality to the theoretical structure
institutions, this study focuses on their perspective. On a and measures suggested by the SERVQUAL framework, a
complex issue like health care, while some feel that the cus- modified framework with its attendant measures was
tomer cannot really be considered a good judge of quality adopted in this study. Although several of the SERVQUAL
and dismiss their views as too subjective, Petersen (1988) dimensions were included in the assessment, the intro-
suggests that, ‘It really does not matter if the patient is duction of additional factors was also deemed pertinent to
right or wrong. What counts is how the patients felt even the assessment of service quality in hospitals in Bangladesh.
though the caregiver’s perception of reality may be quite The key concepts are described next. Then the research
different.’ In Bangladesh, the customer’s viewpoint is method is explained, followed by the findings and con-
neither sought, nor given any importance (as far as we know) clusions.
12 Andaleeb (jl/d) 11/2/00 3:17 pm Page 97
Conceptual framework The above constructs represent the initial set of factors along
which hospital services in Bangladesh were compared; they
The important components of hospital services in the context
were also used to model the type of hospital that patients
of Bangladesh, as derived from theoretical considerations
would select. The research method is explained next.
and the data structure, are as follows.
Responsiveness
Methodology
In the absence of lists from which a random sample could be the value of 0.8, which exceeds the 0.7 value recommended by
drawn, stage-wise area sampling was combined with system- Nunnally (1978).
atic sampling so that every hospital user in Dhaka city had an
equal chance of being selected. Firstly, 17 residential areas To compare the quality of services between private and public
were randomly selected from a generated list of all major resi- hospitals, multiple analysis of variance (MANOVA) was used
dential areas in Dhaka. The selected areas included Moti- to test for significant group differences because of multiple
jheel, Purana Paltan, Kamlapur, Lalbagh, Gopibagh, correlated dependent variables (i.e. service quality factors).
Imamganj, Dhanmandi, Mohammadpur, Lalmatia, Mirpur, This procedure is used to control for the inflated Type I error
Gulshan, Banani, D.O.H.S, Uttora, Mohakhali, Rampura and rate that can arise from using a series of t-tests by providing a
Malibagh. There was general consensus that these areas single overall test of group differences across all dependent
included different socioeconomic groups of hospital users. variables at a specified a level.
From each area, streets were randomly selected. Residential Finally, two-group discriminant analysis (DA) was used to
homes were chosen next using systematic sampling. Inter- determine the following: whether service quality ratings
viewers were also given a letter of introduction from a well- (along with education and income) predicted choice of hos-
recognized private university so residents could see that the pitals; which of the factors accounted most for the differences
study was authentic. Finally, a telephone number was pro- in the average score profiles of the two groups; and how reli-
vided for respondents with questions or concerns. ably could individuals be grouped as users of public or private
hospitals on the basis of the service quality ratings and
Several difficulties were encountered during data collection. selected demographic factors. It may be noted that combin-
For example, not all of the selected households had a member ing MANOVA and DA is useful because if the overall test of
who was hospitalized in the past 12 months. Other house- group differences using MANOVA is significant, DA can help
holds did not grant interviews because, being unfamiliar with determine the direction and intensity of each criterion vari-
research, they were suspicious about the purpose of the study. able’s impact on the overall group differences (Darden and
Table 2. MANOVA tests of group differences between public and private hospitals, Dhaka, Bangladesh: multivariate and univariate tests
results of MANOVA are provided in Table 2 and indicate that communicating with their patients to earn their confidence
the multivariate F-ratio is significant (p < 0.001), rejecting the and patronage. However, we also note that while the differ-
null hypothesis of equal group centroids. In other words, ence between private and public hospitals is statistically sig-
there are significant overall group differences in the service nificant on these three service quality measures, the mean
Table 3. Discriminant analysis results: use of public or private hospitals, Dhaka, Bangladesh
Table 4. Classification results: use of public or private hospitals, hospitals to market incentives. It is important, especially for
Dhaka, Bangladesh public hospitals and regulatory agencies, to understood how
market incentives work. With better understanding and over
Actual group Cases Predicted group time, public hospitals may be gradually weaned from their
––––––––––––––––––––––––– present survival guarantees that do not seem to motivate
Public Private them to enhance service quality; such guarantees are also not
available to private hospitals.
Public 91 58 (63.7%) 33 (36.3%)
Private 100 24 (24.0%) 76 (76.0%) It is apparent from the results that private hospitals are
playing a meaningful role in Bangladesh, justifying their exist-
Percentage of ‘grouped’ cases correctly classified: 70.16%. ence, continuation and growth. However, before unleashing
the forces of privatization in this sector more widely, it must
In non-statistical terms, MANOVA results supported the be noted that private hospitals have been known to reduce
premise that service quality will be rated better at private hos- quality by reducing inputs, to disregard social pricing con-
pitals than in public hospitals. This support was evident for siderations or, worse, to try to increase their profits by pro-
three of the five service factors. The discriminant function viding services that are unnecessary or even harmful (Van der
identified discipline, responsiveness, and income as the three Gaag 1995). This therefore needs careful consideration.
most important factors that accounted for the type of hospi-
tal chosen. Finally, the model’s hit ratio indicated satisfactory The results suggest that quality perceptions are driving many
validity by being able to classify 70.16% of the grouped cases patients to private hospitals (e.g. the sample of this study
correctly. shows that a greater proportion of patients are seeking
private care). It is disquieting to note, however, that because
quality levels are still not where patients would like them to
Conclusions
be, many patients who can afford it are seeking treatment
The premise of this paper was that market incentives would alternatives in other countries. Not only does this burden the
explain differences in the perceived quality of services pro- nation’s foreign exchange resources; customers seeking
vided by public and private hospitals. This contention was health care abroad have also been known to suffer collateral
reasonably supported: private hospitals were evaluated miseries that are associated with travel, accommodation,
better on responsiveness, communication, and discipline. By meals and related needs. For any major mishap necessitating
responding to these needs, hospitals in Bangladesh can a longer stay than originally planned, these inconveniences
improve their image and be perceived more favourably. could easily be magnified several-fold.
These results also suggest that service quality can be
improved in the health care sector by gradually exposing the To alleviate these problems, it is imperative that the quality
12 Andaleeb (jl/d) 11/2/00 3:17 pm Page 101
challenge is addressed vigorously and methodically in be compensated on the basis of performance. Where com-
Bangladesh to better meet the needs of patients. To do so, in pensation adjustments cannot be legally made in the short
addition to market incentives, it is proposed that four other run, other benefits including promotions, transfers, training,
incentives be considered to promote higher quality in hospi- study leaves, etc., could be tied to performance evaluation
tals in Bangladesh. These include competitive, social, internal mechanisms that need to be tightened and fine-tuned. It may
and regulatory incentives. also be important to completely bar public health-care per-
sonnel from involvement with the private sector. Those who
Competitive incentives may be introduced by the Govern- pledge their allegiance to the incentives of the private sector
ment by encouraging controlled growth of the private sector should not have to be cushioned by the taxpayer.
and by inviting foreign capital and expertise so that new tech-
nology and modern managerial practices with their attendant Finally, regulatory incentives can be designed to reward
efficiencies are introduced in the country. Local hospitals and (through lower taxes; substantive grants for infrastructure,
health care professionals would be better off emulating these research, and other developmental activities; or allocations to
practices to ensure their viability, thereby upgrading the hospitals from a resource pool on the basis of performance)
quality of health care services in the country. or punish (through fines, negligence laws, foreclosure, etc.)
hospitals that are benchmarked and compared periodically
Social incentives can also enhance and upgrade service on the basis of established criteria and standards. Such incen-
quality. For example, some form of public dissemination of tives should also be carefully thought through in the overall
information must be envisaged to focus on the extent to which context of the evolution of health care delivery in
service quality standards are being met by the hospitals. In Bangladesh, and revised and upgraded over time.
developed countries, evaluation systems have evolved that
rank or rate organizations (such as banks, mutual funds, At any stage of the process, when the appropriate combi-
insurance companies, etc.) as well as a variety of products and nation of incentives are designed and applied, we believe it
services (through Consumer Reports etc.). Similar ranking or will encourage a variety of activities including training, CQI
1, Health Economics Unit, Ministry of Health and Family Van der Gaag J. 1995. Private and Public Initiatives: Working Together
Welfare, Government of Bangladesh (July). for Health and Education. Washington, DC: World Bank.
Khan MM. 1996. Development of Private Healthcare Facilities in World Bank. 1987. Bangladesh: Promoting Higher Growth and
Dhaka City: Impacts on Cost, Access, and Quality. Seminar Human Development. A World Bank Country Study. Washing-
Paper, Center for Development Research, Bangladesh. ton, DC.
Lafond AK. 1995. Improving the quality of investment in health:
lessons on sustainability. Health Policy and Planning 10(Sup-
plement): 63–76. Acknowledgements
Malhotra NK. 1996. Marketing Research: An Applied Orientation.
The author acknowledges the encouragement and support of Dr A
2nd edition. New Jersey: Prentice Hall.
Majeed Khan, President, Independent University, Bangladesh
Nunnally JC. 1978. Psychometric Theory. 2nd edition. New York:
(IUB). The assistance provided by Nuzhat Zaman, Sohel Shams, and
McGraw-Hill.
Imtiaz Karim during data collection, data entry, and preliminary
Parasuraman A, Zeithaml VA, Berry LL. 1985. A conceptual model
analysis, and the contributions of other individuals associated with
of service quality and its implications for future research.
IUB are also gratefully acknowledged.
Journal of Marketing 49(4): 41–50.
Parasuraman A, Zeithaml VA, Berry LL. 1988. SERVQUAL: A
multiple-item scale for measuring customer perceptions of Biography
service quality. Journal of Retailing 64(Spring): 12–40.
Parasuraman A, Berry LL, Zeithaml VA. 1991. Refinement and Syed Saad Andaleeb obtained his PhD in Business Administration
reassessment of the SERVQUAL scale. Journal of Retailing at the University of Illinois. He is an Associate Professor of Market-
67(4): 420–50. ing at the School of Business, Pennsylvania State University at Erie,
Petersen MBH. 1988. Measuring patient satisfaction: collecting USA. His research interests include the relationship between mar-
useful data. Journal of Nursing Quality Assurance 2(3): 25–35. keting and service quality with recent studies focusing on the deliv-
Reidenbach RE, Sandifer-Smallwood B. 1990. Explaining percep- ery and quality of health care and education in the developing world.
tions of hospital operations by a modified SERVQUAL He teaches in research methods, service marketing and global mar-
approach. Journal of Health Care Marketing 10(4): 47–55. keting.
Sen B, Acharya S. 1997. Health and poverty in Bangladesh. World