Determinants Of Patients’ Choice Of Healthcare Facilities In The Private Sector In Kenya: Optimizing Hospital Strategic Positioning

Strategic positioning is about how a company positions itself to create value different from that of competition. Therefore, strategic positioning is defined as a firm’s relative position in the industry. It must lead to one of two outcomes – lower cost or higher premium. Higher premium can be charged when there is unique focus on either a product/ service or the unique needs of a few exclusive customers (niche market). Lower cost on the other hand implies a high production efficiency. One may then choose to either retain the benefits or pass them on to the customers (price competitiveness). The lower cost model is associated with mass marketing. Accordingly, Michael Porter defined strategic positioning as delivering value through cost leadership, differentiation and focus. The core value is what then the customer consumes. In the health industry, it is healthcare. This healthcare can be measured and identified customer needs can be met or exceeded. This presupposes that customers’ needs are known. There must be a process of identifying and evaluating the customers’ needs – their expectations and their experiences. This expectationexperience gap is the basis of customer perception of quality.  Hospital quality comprises both technical as well as functional components. Technical quality is about the value that is delivered to the patients (the “what”) whereas functional quality is the process of delivering that value (the “how”). What is in the purview of the patient is the functional quality. The patient makes a choice of hospital depending on this functional quality. On the other hand, hospitals leadership and doctors have access to data on technical (clinical) outcomes. The hospital leadership’s basis of competition tends to be technical quality.

This may cause a misalignment between patients’ expectations and the basis of competition. Further, patients are influenced by doctors and Medical Insurance Providers. Medical Insurance Providers are the primary payers in the private health sector. 

Patients’ perception of quality was evaluated using a modified version of the SERVQUAL tool that is based on the identification of the expectation-experience gap. This study then looked at the doctor and the Medical Insurance Provider perception of quality and their influence on the patient. In factoring in all the three key players, that is, the patients, doctors and Medical Insurance Providers, the study defined an optimal strategic position. The study used a post-positivism approach, collecting data using a questionnaire requiring participants to answer paired questions of their expectation and their experience using a five point Likert scale. After pilot testing and validating the data collection tool, data was collected from patients in the 12 out of the 14 (86% response rate) eligible level five and six private hospitals across Kenya. Thereafter data was also collected from the doctors who treated the recruited patients, the Medical Insurance Providers (for those that were insured) and from the hospitals’ leadership. Tests for reliability and validity were initially carried out. Factors analyses were done to extract, aggregate and reduce the relevant factors. The original six factors – Interpersonal, Environment of Care, Administrative, Access, Clinical Outcomes and Medical Equipment – were reduced to four where clinical outcomes collapsed into interpersonal dimension and medical equipment was dropped altogether. These factors were regressed against future behavioral intention (intention to return should the need arise and intention to refer others to the institution). The influence of the Doctor and Medical Insurance Provider were then discerned. Regional variation as well as the alignment of the administrator to the customers’ needs was ascertained. Results showed a clear hierarchical quality dimension determinants in the following diminishing order of influencing patients’ future behavioral intentions - Interpersonal, Environment of Care, Administrative and Access. This study showed that doctors and Medical Insurance Providers significantly influence patients’ perception of quality. Whereas the hospitals’ leadership appear well aligned to the customers’ perception of quality, there is incongruity between Doctors and Medical Insurance Providers understanding of patients’ expectation and experience from actual patients’ expectation and experience. There is a statistically significant regional variation of patients’ perception of quality. Even then, in each region, the perception of quality dimensions still significantly affected patients’ future behavioral intention. In conclusion, currently many of the hospitals are perceived to be strategically positioned based on product leadership. It is recommended to either maintain the product leadership or change to cost leadership and transferring the benefit back to the patients (price leadership) are the most sustainable strategic positioning. In understanding that the patients’ perception of quality is affected in a hierarchical manner by the dimensions of quality, it is recommended that regional factors such as market structure and competition, affordability by the population and within-country cultural variances should be taken into consideration.