Customer retention in the medical tourism industry: Impact of quality, satisfaction, trust, and price reasonableness

Tourism Management 46 (2015) 20e29

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Tourism Management journal homepage: www.elsevier.com/locate/tourman

Customer retention in the medical tourism industry: Impact of quality, satisfaction, trust, and price reasonableness Heesup Han a, 1, Sunghyup Sean Hyun b, * a b

College of Hospitality and Tourism Management, Sejong University, 98 Gunja-Dong, Gwanjin-Gu, Seoul 143-747, Republic of Korea Department of Tourism and Convention, Pusan National University, Jangjeon-Dong, San 30, Kumjung-Gu, Busan 609-735, Republic of Korea

h i g h l i g h t s

g r a p h i c a l a b s t r a c t


We developed a model explaining medical travelers' intention formation.
Price reasonableness had a significant moderating role.
The critical role of medical and service quality, satisfaction, and trust was identified.

a r t i c l e i n f o

a b s t r a c t

Article history: Received 1 December 2013 Accepted 10 June 2014 Available online

Repeat business is critical to the success of medical clinics in the competitive medical tourism market. This study develops a model explaining international medical travelers' intention formation by considering the impact of quality, satisfaction, trust, and price reasonableness. A field survey was conducted at medical clinics. Findings from structural analysis indicate a good fit for the proposed model; perceived quality, satisfaction, and trust in the staff and clinic have significant associations affecting intentions to revisit clinics and the destination country; and satisfaction and trust acted as significant mediators. In general, support for the hypothesized moderating impact of price reasonableness in the proposed theoretical model was evident in the results of the metric-invariance test. Implications for theory and practice are discussed. © 2014 Elsevier Ltd. All rights reserved.

Keywords: Medical tourism Medical clinic Quality Satisfaction Trust Price reasonableness

1. Introduction Medical tourism and its related businesses have been regarded as one of the most lucrative hospitality sectors for many destination countries, particularly developing ones (Han, 2013; Heung, Kucukusta, & Song, 2011). The market is rapidly expanding (Connell, 2013; Snyder, Crooks, Adams, Kingsbury, & Johnston, 2011), and competition in the international medical tourism

* Corresponding author. Tel.: þ82 51 510 1856; fax: þ82 51 512 1853. E-mail addresses: [email protected] (H. Han), [email protected] (S.S. Hyun). 1 Tel.: þ82 2 3408 4462; fax: þ82 2 3408 4314. http://dx.doi.org/10.1016/j.tourman.2014.06.003 0261-5177/© 2014 Elsevier Ltd. All rights reserved.

marketplace is becoming intense. In such an increasingly competitive environment, the main concern for practitioners is attracting new medical travelers through marketing and motivating them to make repeat purchases through service efforts/strategies (Han, 2013). According to recent reports, keeping existing customers is about five times more profitable than attracting new customers (Chiu, Hsu, Lai, & Chang, 2012; Kim & Gupta, 2009) as increased customer retention is likely to improve any business's profitability (Jiang & Rosenbloom, 2005). Thus, in the medical tourism market, recognizing vital factors in medical travelers' repurchase decisionmaking processes and understanding their specific role are becoming more and more important for any destination country and its attendant medical clinics.

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Product and service quality, satisfaction, and trust have long been regarded as key concepts in explaining customer postpurchase behavior. Researchers generally agree that these variables contribute to creating favorable intentions toward a firm and affecting retention and loyalty (Bowen & Chen, 2001; Han, 2013; Han & Ryu, 2006). Recognizing the importance of such variables, every firm in the hospitality and tourism industry is becoming ever more concerned about effectively managing and improving quality, satisfaction, and trust. Hence, how to ensure customers experience better quality with a product or service, reach greater levels of satisfaction, and amass higher levels of confidence in product/service performance are some of the important questions faced by today's hospitality and tourism marketers. Price perception (e.g., expensive or cheap, reasonable or unreasonable) plays an important role in customers' decision-making processes (Jiang & Rosenbloom, 2005; Oh, 2000; Ryu & Han, 2010). Empirical evidence supports the notion that customers' perceptions of a firm's price reasonableness in comparison to its competitors' prices is central in building favorable intentions and loyalty toward a firm (Han & Kim, 2009; Oh, 2000). Researchers agree that to comprehend customers' buying behaviors clearly, the levels of price reasonableness they perceive should be examined as price reasonableness is a critical product/service cue affecting consumer decision-making (e.g., Helegeson & Beatty, 1985; Watchravesringkan, Yan, & Yurchisin, 2008). Customers tend to utilize price information/reasonableness when evaluating their experiences with a product or service (Ryu & Han, 2010; Watchravesringkan et al., 2008). Despite the criticality of product/service quality, satisfaction, and trust, no medical tourism research has yet examined their associations with medical and service quality and with feelings of trust for medical clinics and their staffs, nor investigated the impact of such relationships on behavioral intentions in a medical tourism context. In addition, while price and its importance have been repeatedly emphasized in the existing literature, to date little research has been conducted on the moderating role of perceived price reasonableness in the hospitality and tourism industry. The present study was designed to shed light on these issues. In particular, the objectives of this study were to: 1) investigate relationships among perceived medical and service quality, satisfaction, trust in staff and clinic, and intentions to revisit the clinic and destination country for medical care by proposing and testing a theoretical model; 2) examine the moderating impact of perceived price reasonableness on proposed associations within the model; 3) uncover the relative importance of quality components and trust factors in generating behavioral intentions; and 4) test the mediating impact of satisfaction and trust components. 2. Literature review 2.1. Medical clinics in the competitive medical tourism market The connection between the healthcare industry and tourism has resulted in what is, for many countries, one of the largest service industries, with medical tourism producing significant monetary benefits for many destination countries. In fact, medical tourism is considered to be one of the fastest-growing tourism sectors in the world (Bookman & Bookman, 2007; Han & Hwang, 2013; Heung et al., 2011). To gain a greater market share in an increasingly competitive medical tourism industry, a growing number of medical clinics in destination countries has been improving their amenities and services such that they resemble those found in many excellent hotels (Bernstein, 2012; Hume & DeMicco, 2007; Sheehan-Smith, 2006). These operations commonly offer not only quality medical care but also a superior

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level of services to their international customers. Some possible difficulties or inconveniences frequently faced by overseas patienttravelers (e.g., language barriers, inefficient communication, lowquality medical care, uncomfortable atmospherics, low-quality services, unkind staff) (Gan & Frederick, 2011; Han & Hwang, 2013; Snyder et al., 2011) are significantly reduced in dedicated medical tourism clinics (Han, 2013). In the case of South Korea, to minimize these difficulties and inconveniences, many clinics have made enhancements to the quality of medical care (e.g., more capable medical professionals, wider availability of medical/ healthcare/aesthetic products, greater continuity of care, lower nurseepatient ratio, more modern medical facilities) as well as service performance (e.g., hotel-style service training to provide genuine courtesies and improve provider competence, increased numbers of well-trained service employees, more efficient communication via same-language staff with excellent medical knowledge) to attract a greater number of international travelers, mainly from China and Japan (Han, 2013; Han & Hwang, 2013; Lee, Han, & Lockyer, 2012). Acting as facilitators, these efforts help patientecustomers have pleasant medical tourism experiences and increasingly contribute to the numbers of international tourists arriving at Korean clinics for medical treatment/healthcare/ aesthetic services (Han, 2013; Han & Hwang, 2013; Lee et al., 2012). 2.2. Quality and satisfaction Conceptualizations of the perceived quality of products and services differ little in the extant literature, but an essential aspect of this concept is the process of evaluating the products and services offered by a particular company for excellence against alternatives provided by competitors (Han & Ryu, 2006; Taylor & Baker, 1994). Such quality generally involves two major facets, namely core-product and service-product performances (Bitner, Booms, & Tetreault, 1990). Quality of core product indicates the performance of the basic product relative to its value (Clemmer, 1990) while service-product quality suggests the performances derived from interactions with service personnel (Price, Arnould, & Deibler, 1995). In the present study, perceived medical quality refers to an individual's evaluation of core medical product performance (e.g., excellence of medical care, surgical/medical skills, wider availability of medical/healthcare products, continuity of care, modernity of medical facilities); and perceived service quality indicates the assessment of the service performance of medical professionals and staff (e.g., service delivery skills and competencies, efficient/ comfortable communication, kindness). In addition, while diverse conceptualizations of satisfaction have evolved over the past few decades, the general consensus among researchers is that individual satisfaction is an assessment of the overall experience of consumption (Johnson, Anderson, & Fornell, 1995; Oliver, 1997). If customers evaluate their overall consumption experiences favorably, it is likely that their satisfaction levels and willingness/readiness to repurchase will increase (Chiu et al., 2012; Jani & Han, 2013). Many studies across diverse fields have offered support for the significant role of quality and satisfaction in intention formation (e.g., Cronin & Taylor, 1992; Han & Ryu, 2006; Lee, Lee, & Yoo, 2000; Ryu & Han, 2010; Ting, 2004). The extant literature indicates that while the intricate nature of the relationship between quality and satisfaction exists, quality in general acts as a significant predictor of satisfaction; and this relationship is fundamental in generating behavioral intentions (Cronin & Taylor, 1992; Han & Ryu, 2006; Ryu & Han, 2010; Ting, 2004). In particular, Cronin and Taylor (1992) verified that service/product quality affects satisfaction and these constructs contribute to building customers' behavioral intentions. In the service sector, Ting (2004) indicated that the

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qualityesatisfaction relationship is essential in forming one's intention. Han and Ryu (2006) also found that quality is a main driver of satisfaction; and patrons' behavioral intention is a function of these variables. In their recent research on diners' decisionmaking processes, Ryu and Han (2010) consistently showed that quality components comprising quality of food, atmospherics, and service significantly affect satisfaction, and such relationships successfully explained the formation of intention. Overall, these recent empirical evidences indicated that the qualityesatisfaction relationship has a pivotal role in individuals' decision-making process. 2.3. Trust Trust is regarded as an essential key to maintaining continuity in the customereprovider relationship (Chiu et al., 2012; Han & Hyun, 2013). Sirdeshmukh, Singh, and Sabol (2002) described trust as “expectations held by the consumer that the service provider is dependable and can be relied on to deliver on its promises” (p. 17). There is quite a broad consensus among researchers that trust serves as an effective means for minimizing uncertainty or extenuating the sources of uncertainty (Pavlou, Liang, & Xue, 2007). Trust comprises two aspects, namely, trust in employees/staff and trust in a firm's policies/practices (Sirdeshmukh et al., 2002). The first facet of trust relates to customers' perceptions of staff behavior/ performances in a service encounter situation; the second facet is mainly based on company performance, including its policies and practices (Santos & Basso, 2012). According to agency theory, trust likely leads to loyalty, irrespective of the magnitude of the level of the relationship between the company and its customers (Agustin & Singh, 2005). For example, Santos and Basso (2012) examined the impact of service recovery in a banking context. Their empirical findings indicated that clientecompany relation type had a moderating impact on intention formation, and trust formed in both the employees and the company based on clients' satisfaction with the methods used to handle complaints. In turn, this trust played a vital role in determining clients' intentions to spread positive word-of-mouth and to repurchase. In examining the impact of trust on online repeat-purchase behavior, Chiu et al. (2012) verified that customers' levels of trust significantly affected their intentions to repurchase an online product. Their finding also showed that customer satisfaction with the experiences of purchasing a product from an online shopping mall builds trust with that vendor. In general, customers' satisfaction with excellent product performances enhances their level of confidence in the provider's reliability and integrity; trust based on such satisfactory experiences acts as a significant determinant of repeat-purchase intention (Lankton, Wilson, & Mao, 2010). Han (2013) indicated that trust is particularly significant in a medical tourism context in that poor continuity of care, low-quality medical care, malpractice, and medical accidents are increasingly fretted-over risks in the rapidly expanding international medical industry. Overall, these previous studies have empirically supported the notion that patientecustomer satisfaction is a significant driving force of trust, and this trust plays an essential role in the formation of behavioral intentions regarding medical care. 2.4. Perceived price reasonableness Price is an increasingly vital topic in the hospitality/tourism industry. For many types of businesses, including those in hospitality and tourism, it is extremely important to know whether customers perceive prices and price changes to be adequate or inadequate (Ryu & Han, 2010). Customers' concerns about price

fairness affect their product/service-choice behavior (Ryu & Han, 2010). Customers often use the reasonableness of price as a cue when appraising their product and service experiences and forming their attitudes toward the provider (Han & Kim, 2009; Varki & Colgate, 2001). Individuals' judgments about whether a firm's price is reasonable or unreasonable often result in unfavorable decisions regarding that firm (e.g., deciding to spread negative word-ofmouth or switching) and often increase price sensitivity (Oliver & Swan, 1989). According to Zeithaml (1983), the term ‘price’ has both monetary and non-monetary aspects. The monetary facet is the objective price (i.e., actual price) of a product or service, while the non-monetary facet is the price as perceived by consumers (i.e., encoded price) (Jacoby & Olson, 1977). Chen, Gupta, and Rom (1994) and Han and Kim (2009) described this encoded price as an individual's evaluation of the adequateness/reasonableness of the price for a product or service in comparison to prices charged by competing companies. In other words, price reasonableness can be described as customers' perceptions of the appropriateness of a price for a product or service in comparison to competitors' (i.e., reference) prices. Many researchers have indicated that due to the complexity of the pricing environment in the hospitality/tourism sector, it is necessary to utilize the actual price of a product or service when examining its role in customers' decision-making processes (Chen et al., 1994; Han & Kim, 2009). For instance, a medical clinic may offer several types of operation in an effort to provide international travelers with a variety of medical/healthcare/aesthetic products and diverse levels of hospitality services (e.g., a wide range of foods and beverages, rooms of various sizes or types, room service, concierge service). A medical clinic's prices include both the medical/healthcare/aesthetic product and the hospitality services used. In this convoluted pricing environment, a look at the perceived adequateness of price rather than actual price may be more suitable in determining its role in customer decision formation. According to Oh (2000) and Zeithaml (1983), customers tend to remember the encoded/perceived price rather than the actual price after subjectively assessing price reasonableness compared to reference prices offered by competitors. A substantial body of literature has identified the importance of price reasonableness in explaining consumer behavior (Crozier & Baylis, 2010; Han & Kim, 2009; Oh, 2000; Ryu & Han, 2010; Varki & Colgate, 2001). According to Oh (2000), perceived price reasonableness plays a significant role in customers' decision formation. Varki and Colgate (2001) found that price perception influences customer decisions to engage in repeat business and spread positive word-of-mouth about a firm. In a hospitality context, Han and Kim (2009) verified that reasonableness of price significantly affects individuals' intention formation. These researchers all agreed that perceived price reasonableness is one of the most important reasons consumers remain with a current provider or switch to another. From an international tourist's perspective, when choosing a medical clinic at a particular healthcareetourism destination, performance uncertainty may arise as patientecustomers cannot readily see and check the products/services offered by the clinic. In other words, the products and services are not likely to be available for examination before actual purchases are made. In such cases, price reasonableness will likely play a greater role in the formation of patientecustomers' behavioral intentions. Indeed, Jiang and Rosenbloom (2005) indicated that when individuals cannot actually observe or handle a product before purchase, their perceptions of price fairness/reasonableness become a reliable cue having a dominant role in their post-purchase decision-making processes. Medical tourists, particularly those from developed nations, frequently encounter significant cost disparities between their

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Fig. 1. Proposed conceptual model explaining intention formation.

home countries and destination countries for certain treatments (e.g., dental care, cosmetic surgery) (Crozier & Baylis, 2010). Accordingly, international medical tourists from many countries travel to less developed, equally developed, or developed countries, seeking more reasonable/appropriate prices. For instance, U.S. customers tend to travel abroad for less costly healthcare; Japanese also often travel internationally for more affordable care; and Chinese patientecustomers go overseas for high-quality medical care at a reasonable price. Price perceptions are important enough to cause international customers who experience a higher level of price reasonableness to form stronger behavioral intentions than those who find prices to be less appropriate to the medical product's performance, satisfaction, or reliability. Our proposition is in line with that of Ryu and Han (2010), who indicated that, in a hospitality context, patrons' assessment of product and service quality are likely to cause greater satisfaction and result in more favorable decisions for a firm when their subjective evaluation suggests the price is reasonable. Customers' perceptions of price reasonableness can lead them to one of two decisions: to equate high prices with high quality or to dissuade them from repurchase of a product/servicedboth decisions may play both positive and negative roles in their decision-making processes. Customers' decision-making processes heavily depend on their perceptions of price reasonableness, playing either a positive (e.g., price level is positively associated with product/service performance) or negative (e.g., price level inconsonant with product/service performance repels customers from repurchasing) role (Watchravesringkan et al., 2008). 2.5. Proposed conceptual model and hypotheses The model shown in Figure 1 was used to test the primary conceptual ideas and key objectives in this study empirically. Our main interest was in comprehending the intricate associations among perceived quality, satisfaction, trust in staff and medical clinic, and perceived price reasonableness in generating international medical tourists' intentions to revisit the clinic and revisit Korea as a destination country for medical care. A total of nine hypotheses was developed to evaluate the proposed model. Hypotheses 9a through 9h were formulated to test the moderating impact of perceived price reasonableness.

H1: Perceived medical quality significantly affects customer satisfaction. H2: Perceived service quality significantly affects customer satisfaction. H3: Customer satisfaction significantly affects trust in the staff. H4: Customer satisfaction significantly affects trust in the medical clinic. H5: Trust in the staff significantly affects intention to revisit. H6: Trust in the medical clinic significantly affects intention to revisit. H7: Trust in the staff significantly affects intention to revisit Korea for medical care. H8: Trust in the medical clinic significantly affects intention to revisit Korea for medical care. H9aeh: Perceived price reasonableness significantly moderates the relationships among study constructs (i.e., perceived medical quality, perceived service quality, satisfaction, trust in the staff, trust in the medical clinic, intention to revisit, and intention to revisit Korea for medical care) within the proposed conceptual model. 3. Methodology 3.1. Measurements and questionnaire development The survey questionnaire had three major sections (description of the research, questions relating to study variables, and questions to collect demographic information). Based on the existing literature, well-validated measurement items for study constructs were adopted and included in the questionnaire. Multi-item and sevenpoint Likert-type scales from “Extremely disagree” (1) to “Extremely agree” (7) were consistently utilized to measure study variables. Specifically, three previously validated items from previous studies (Oh, 2000; Taylor & Baker, 1994) were employed to evaluate perceived medical quality and service quality, respectively. Three-item measures for satisfaction were employed from Oliver (1997) and Taylor and Baker (1994). Three items for trust in the staff and three items for trust in the medical clinic were adopted from Morgan and Hunt (1994) and Santos and Basso (2012). Three items each from Han and Kim (2009) and Oh (2000) were used to measure perceived price reasonableness. Lastly, measures for

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behavioral intentions (i.e., intentions to revisit the medical clinic and to revisit Korea for medical care) were borrowed from Han (2013) and Oliver (1997). A two-item measure was used for these intention constructs. According to Kenny (2011) and Kenny, Kashy, and Bolger (1998), in the measurement/structural model, two indicators (or more) per latent variable are normally needed; and such two measurement items per unobservable variable can be sufficient to measure each latent construct if their errors are uncorrelated and the correlation between the two items is significantly positive. Their assertion is in line with the two-indicator rule that supports the competence of a scale consisting of two items (observed variables) to measure each latent construct in a measurement model (Bollen, 1989; O'Brien, 1994). Many researchers have demonstrated the reliability and validity of these adapted measures in diverse contexts (e.g., Han, 2013; Han & Kim, 2009; Morgan & Hunt, 1994; Oh, 2000; Oliver, 1997; Santos & Basso, 2012; Taylor & Baker, 1994). Thus, the measurement scales adapted in the present study had high applicability in various settings. A pre-test was conducted with five academics in tourism, five industry professionals, and five frequent medical travelers to enhance content and face validity. Based on their feedback, the initial version of the questionnaire was slightly altered and improved. 3.2. Data collection and respondents' profiles A visitor survey was conducted using a convenience-sampling approach. For this field survey, we contacted 20 medical clinics frequented by international travelers that were located in two metropolitan cities in Korea and received permission to collect data at five of these clinics. Numerous alternatives are available near these clinics, and most of their patients are international medical/ healthcare tourists. Since their customers usually communicate in Chinese, English, Japanese, or Korean, four different versions of the questionnaires were prepared. To minimize translation errors, we employed a blind translation-back-translation method, which is the most commonly applied translation technique because of its consistency and accuracy (Bracken & Barona, 1991; Van de Vijver & Tanzer, 1997). The translated questionnaires (Chinese, Japanese, and Korean versions) were thoroughly reviewed and improved by Chinese-, Japanese-, and Korean-speaking tourism academics. Trained graduate students delivered questionnaires to international patientecustomers in the main entrance lobbies of the clinics. Only those who actually received medical treatment/ healthcare/aesthetic services in a clinic and were later completely discharged were asked to fill out the questionnaire. A detailed description of the survey was provided to them. Survey questionnaires were given and retrieved onsite. After checking for completeness, a small local souvenir was provided to the participants. A total of 325 questionnaires was received. After excluding outliers and unusable responses, 309 responses were deemed fit for data analysis. Of the 309 participants, a majority was females (66.7%). Respondents ranged in age from 20 to 65, with 36.74 being the average age. In terms of household income, about 34.8% indicated that their income was between $40,001 and $60,000; 41.5%, $60,001 or more; and 23.7%, $25,000 or less. The highest proportion of participants reported being four-year college graduates (51.1%). In addition, about 18.5% indicated being high-school graduates, and 5.5% were graduate-degree holders. In terms of their frequency of medical tourism within the last five years, 39.8% reported two times; 36.9%, one time; 20.1%, three times; and 3.2%, four or more times. Most respondents were from China (37.8%), Japan (33.7%), and America (10.9%). The other participants were from countries such as the Philippines (4.7%), Canada (4.3%), Taiwan (4.0%), Russia (2.3%), and others.

4. Results 4.1. Measurement model results Prior to data analysis, the values of skewness and kurtosis were examined. This investigation found that several variables include significant skewness problems. These values were transformed to be appropriate for data analyses. SPSS and AMOS 20 were used to analyze the data. A measurement model was initially conducted before estimating the structural model. The results of the measurement model are shown in Table 1. Findings from the Confirmatory Factor Analysis (CFA) showed that the measurement model satisfactorily fit the data (c2 ¼ 361.706, df ¼ 180, p < .001, RMSEA ¼ .057, CFI ¼ .968, NFI ¼ .939). Factor loadings for the indicators for each variable were all significant (p < .01) and sufficiently high. Composite reliability was computed using factor loadings and measurement errors for the indicators for each construct. Values ranged from .854 to .928 and therefore were all acceptable, exceeding the suggested cut-off of .600 (Bagozzi & Yi, 1988). In addition, Cronbach's alpha values for study constructs were all above the minimum threshold of .70 (Hair, Anderson, Tatham, & Black, 1998), indicating internal consistency in measurement items. AVE values were then calculated. The extracted variances for study variables fell between .685 and .811. These values were all above .50. Thus, convergent validity was evident (Hair et al., 1998). These AVE values were all greater than the square of correlation between pairs of constructs. Accordingly, discriminant validity was evident (Fornell & Larcker, 1981). 4.2. Model evaluation and hypotheses testing A Structural Equation Modeling (SEM) with maximum likelihood estimation procedure was run, with results showing a good model fit (c2 ¼ 407.884, df ¼ 142, p < .001, c2/df ¼ 2.872, RMSEA ¼ .078, CFI ¼ .945, NFI ¼ .918). Our proposed model satisfactorily accounts for the variance in explaining intention to revisit the clinic (R2 for IR in the original model ¼ .560) and to revisit Korea for medical care (R2 for IRKMC in the original model ¼ .460). Subsequently, the proposed model was compared to an alternative model. In the competing model, an alternative ordering of satisfaction and trust where trust in the staff and trust in the clinic are used as direct predictors of satisfaction was tested. In comparing the competing model (c2 ¼ 514.108, df ¼ 142, p < .001, c2/df ¼ 3.620, RMSEA ¼ .092, CFI ¼ .923, NFI ¼ .897) to the proposed model, it was evident that the proposed model's fit was better (Dc2 (1) ¼ 106.224, p < .01). The hypothesized relationships were tested. Table 2 presents the empirical findings from the SEM. Hypotheses 1 and 2 were tested, and their results indicated that perceived medical quality (b ¼ .502, p < .01) and service quality (b ¼ .297, p < .01) significantly and positively affected customer satisfaction. This finding supported Hypotheses 1 and 2. Together, perceived medical and service quality accounted for 52.7% of the total variance in satisfaction. When Hypotheses 3 and 4 were tested, results showed that satisfaction exerted a significant influence on trust in the staff (b ¼ .768, p < .01) and trust in the clinic (b ¼ .779, p < .01). Thus, Hypotheses 3 and 4 were also supported. Satisfaction and its antecedents explained about 59.0% of the variance in trust in the staff and approximately 60.8% of the variance in trust in the clinic, respectively. Hypotheses 5 and 6 were then evaluated. Intention to revisit the clinic was found to be a positive and significant function of both trust in the staff (b ¼ .274, p < .01) and trust in the clinic (b ¼ .551, p < .01). Therefore, Hypotheses 5 and 6 were supported. Next, Hypotheses 7 and 8 were assessed. The proposed impact of trust in the staff (b ¼ .253, p < .01) and trust in the clinic on intention to

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Table 1 Results of the confirmatory factor analysis.

PMQ PSQ CS TS TC PPR IR IRKMC Mean SD Cronbach's Alpha

PMQ

PSQ

CS

TS

TC

PPR

IR

IRKMC

AVE

.867a .587b .540 .540 .535 .512 .503 .482 4.082 1.028 .859

.345c .914 .468 .497 .518 .537 .417 .500 4.246 1.122 .912

.292 .219 .894 .591 .595 .551 .504 .492 4.053 1.008 .912

.292 .247 .349 .904 .707 .574 .577 .526 3.902 .942 .901

.286 .268 .354 .500 .928 .623 .654 .594 4.095 1.024 .926

.262 .288 .304 .329 .388 .893 .618 .729 4.051 .959 .892

.253 .174 .254 .333 .428 .382 .854 .593 3.796 1.012 .853

.232 .250 .242 .277 .353 .531 .352 .882 3.982 1.030 .882

.685 .780 .737 .758 .811 .736 .746 .789

Note 1. Model measurement fit: c2 ¼ 361.706 (df ¼ 180, p < .001), RMSEA ¼ .057, CFI ¼ .968, NFI ¼ .939. Note 2. PMQ ¼ Perceived Medical Quality; PSQ ¼ Perceived Service Quality; CS ¼ Customer Satisfaction; TS ¼ Trust in the Staff; TC ¼ Trust in the Clinic; PPR ¼ Perceived Price Reasonableness; IR ¼ Intention to Revisit; and IRKMC ¼ Intention to Revisit Korea for Medical Care. a Composite reliabilities highlighted in shade are along the diagonal. b Correlations between constructs are below the diagonal. c Squared correlations between constructs are above the diagonal.

revisit Korea for medical care (b ¼ .496, p < .01) was found to be significant. This result supported Hypotheses 7 and 8. The study variables in the proposed conceptual model accounted for 56.0% and 46.0% of the total variance in intention to revisit the clinic and intention to revisit Korea for medical care, respectively. Subsequently, the indirect impact of study variables was examined. As shown in Table 2, results revealed that perceived medical quality and service quality significantly and indirectly affected trust in the staff (bPMQ / CS / TS ¼ .386, p < .01; bPSQ / CS / TS ¼ .228, p < .01) and trust in the clinic (bPMQ / CS / TC ¼ .391, p < .01; bPSQ / CS / TC ¼ .231, p < .01) through customer satisfaction. This finding indicated that satisfaction acted as a significant mediator. Our results also verified a significant mediating role of trust in the staff and trust in the clinic between satisfaction and intention to revisit the clinic (bCS / TS/ TC / IR ¼ .640, p < .01) and between satisfaction and intention to revisit Korea (bCS / TS/TC / IRKMC ¼ .581, p < .01). Lastly, findings from the SEM revealed that perceived medical quality and service quality have a significant and positive indirect impact on intention to revisit the clinic (bPMQ / CS / TS/TC / IR ¼ .321, p < .01; bPSQ / CS / TS/TC / IR ¼ .190, p < .01) and intention to revisit Korea for medical care (bPMQ / CS / TS/TC / IRKMC ¼ .291, p < .01;

bPSQ / CS / TS/TC / IRKMC ¼ .172, p < .05). Overall, satisfaction, trust in the staff, and trust in the clinic played a significant mediating role in the proposed theoretical framework. 4.3. Test for metric invariance To test the moderating impact of perceived price reasonableness, a test for metric invariance with a series of modeling comparisons was conducted. Based on Steenkamp and Baumgartner's (1998) and Yoo's (2002) suggestions, both measurement and structural invariance models were also evaluated. To evaluate measurement invariance, a non-restricted model was initially generated after separating respondents into high (191 cases) and low (118 cases) groups of perceived price reasonableness, employing a K-means cluster analysis. Results showed that this freely-estimated model had an excellent fit to the data (c2 ¼ 483.367, df ¼ 260, p < .001, RMSEA ¼ .053, CFI ¼ .947, NFI ¼ .895). This model was compared to the full-metric invariance model in which all factor loadings were constrained to be equivalent across groups (c2 ¼ 501.417, df ¼ 272, p < .001, RMSEA ¼ .052, CFI ¼ .946, NFI ¼ .891). As shown in Table 3, the resulting insignificant invariance model (Dc2 (12) ¼ 18.05, p > .01) supported full-

Table 2 Results of the structural model. Hypotheses

Paths

Coefficients

t-values

Hypothesis 1 Hypothesis 2 Hypothesis 3 Hypothesis 4 Hypothesis 5 Hypothesis 6 Hypothesis 7 Hypothesis 8 Variance explained R2 (CS) ¼ .527 R2 (TS) ¼ .590 R2 (TC) ¼ .608 R2 (IR) ¼ .560 R2 (IRKMC) ¼ .460

PMQ / CS PSQ / CS CS / TS CS / TC TS / IR TC / IR TS / IRKMC TC / IRKMC Goodness-of-fit statistics: c2 ¼ 407.884 (df ¼ 142, p < .001), RMSEA ¼ .078, CFI ¼ .945, NFI ¼ .918 Total effect on intention to revisit: bPMQ ¼ .321** bPSQ ¼ .190** Total effect on intention to revisit Korea for medical care: bPMQ ¼ .291** bPSQ ¼ .172*

.502 .297 .768 .779 .274 .551 .253 .496 Indirect effect:

6.737** 4.380** 11.821** 11.913** 4.367** 8.452** 3.831** 7.293**

bPMQ / CS / TS ¼ .386** bPMQ / CS / TC ¼ .391** bPSQ / CS / TS ¼ .228** bPSQ / CS / TC ¼ .231** bCS / TS/TC / IR ¼ .640** bCS / TS/TC / IRKMC ¼ .581** bPMQ / CS / TS/TC / IR ¼ .321** bPMQ / CS / TS/TC / IRKMC ¼ .291** bPSQ / CS / TS/TC / IR ¼ .190** bPSQ / CS / TS/TC / IRKMC ¼ .172*

*p < .05, **p < .01 Note. PMQ ¼ Perceived Medical Quality; PSQ ¼ Perceived Service Quality; CS ¼ Customer Satisfaction; TS ¼ Trust in the Staff; TC ¼ Trust in the Clinic; IR ¼ Intention to Revisit; and IRKMC ¼ Intention to Revisit Korea for Medical Care.

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Table 3 Invariance tests for the measurement and structural models. Groups

Models

c2

df

RMSEA

CFI

NFI

Dc2

Full-metric invariance

High and low groups for perceived price reasonableness

Non-restricted model Full-metric invariance

483.367 501.417

260 272

.053 .052

.947 .946

.895 .891

Dc2 (12) ¼ 18.05,

Supported

Paths

PMQ / CS PSQ / CS CS / TS CS / TC TS / IR TC / IR TS / IRKMC TC / IRKMC

High

Low

Coefficients

t-values

Coefficients

t-values

.530 .305 .778 .759 .510 .632 .304 .540

5.458** 2.734** 9.891** 9.487** 5.362** 6.894** 2.850** 5.894**

.302 .258 .581 .635 .092 .358 .160 .301

2.628** 2.945** 5.727** 6.429** 1.069 3.907** 1.836 2.894**

p > .01 (insignificant)

Baseline model (Freely estimated)

Nested model (Constrained to be equal)

c2 (296) ¼ 625.613 c2 (296) ¼ 625.613 c2 (296) ¼ 625.613 c2 (296) ¼ 625.613 c2 (296) ¼ 625.613 c2 (296) ¼ 625.613 c2 (296) ¼ 625.613 c2 (296) ¼ 625.613

c2 (297) ¼ 632.429a c2 (297) ¼ 625.656b c2 (297) ¼ 631.035c c2 (297) ¼ 626.249d c2 (297) ¼ 636.659e c2 (297) ¼ 633.377f c2 (297) ¼ 626.237g c2 (297) ¼ 633.176h

Note 1. PMQ ¼ Perceived Medical Quality; PSQ ¼ Perceived Service Quality; CS ¼ Customer Satisfaction; TS ¼ Trust in the Staff; TC ¼ Trust in the Clinic; IR ¼ Intention to Revisit; and IRKMC ¼ Intention to Revisit Korea for Medical Care Note 2. Other goodness-of-fit indices of the baseline model for two groups: RMSEA ¼ .060; CFI ¼ .922; NFI ¼ .863. **p < .01. Chi-square difference test: a Dc2 (1) ¼ 6.816, p < .01 (significant; H9a e supported). b Dc2 (1) ¼ .043, p > .05 (insignificant; H9b e not supported). c Dc2 (1) ¼ 5.422, p < .05 (significant; H9c e supported). d Dc2 (1) ¼ .636, p > .05 (insignificant; H9d e not supported). e Dc2 (1) ¼ 11.046, p < .01 (significant; H9e e supported). f Dc2 (1) ¼ 7.764, p < .01 (significant; H9f e supported). g Dc2 (1) ¼ .624, p > .05 (insignificant; H9g e not supported). h Dc2 (1) ¼ 7.563, p < .01 (significant; H9h e supported).

metric invariance for the high and low groups of perceived price reasonableness. Accordingly, this full-metric invariance model remained for subsequent analysis. A baseline model rooted in the full-metric invariance model was generated by adding the proposed links among study variables in both groups. Results indicated that the baseline model satisfactorily

fit the data (c2 ¼ 625.613, df ¼ 296, p < .001, RMSEA ¼ .060, CFI ¼ .922, NFI ¼ .863). Consequently, this model was compared with a series of nested models in which a particular path was constrained to be equal between high and low groups. In line with our study hypotheses, these modeling comparisons showed that the links from perceived medical quality to satisfaction (Dc2

Fig. 2. Results of the structural invariance model.

H. Han, S.S. Hyun / Tourism Management 46 (2015) 20e29

(1) ¼ 6.816, p < .01), from satisfaction to trust in the staff (Dc2 (1) ¼ 5.422, p < .05), from trust in the staff to intention to revisit the clinic (Dc2 (1) ¼ 11.046, p < .01), from trust in the clinic to intention to revisit the clinic (Dc2 (1) ¼ 7.764, p < .01), and from trust in the clinic to intention to revisit Korea for medical care were (Dc2 (1) ¼ 7.563, p < .01) significantly different between groups. These results supported Hypotheses 9a, 9c, 9e, 9f, and 9h. However, there were no significant differences on the paths from perceived service quality to satisfaction (Dc2 (1) ¼ .043, p > .05), from satisfaction to trust in the clinic (Dc2 (1) ¼ .636, p > .05), and from trust in the staff to intention to revisit Korea (Dc2 (1) ¼ .624, p > .05). Hence, Hypotheses 9b, 9d, and 9g were not supported. The findings from the structural invariance test are presented in Figure 2 Table 3. Some additional analyses were conducted to identify if gender affects the proposed theoretical framework. A non-restricted model involving male (n ¼ 103) and female (n ¼ 206) groups was generated. This model had a satisfactory fit to the data (c2 ¼ 476.860, df ¼ 260, p < .001, RMSEA ¼ .052, CFI ¼ .956, NFI ¼ .909). The model was then compared to the full-metric invariance model, which also had an excellent fit to the data (c2 ¼ 491.749, df ¼ 272, p < .001, RMSEA ¼ .051, CFI ¼ .955, NFI ¼ .906). The chi-square difference between these two models was not significant (Dc2 (12) ¼ 14.889, p > .01). Thus, the full-metric invariance for gender groups was supported. Subsequently, the baseline model was formulated (c2 ¼ 659.054, df ¼ 296, p < .001, RMSEA ¼ .063, CFI ¼ .926, NFI ¼ .874). This model was then compared with a series of nested models where a specific linkage of the model is restricted to be equal across male and female groups. Results from the modeling comparisons revealed that none of the links within the proposed model differed significantly across gender groups (PMQ / CS: Dc2 (1) ¼ .496, p > .05; PSQ / CS: Dc2 (1) ¼ .482, p > .05; CS / TS: Dc2 (1) ¼ .059, p > .05; CS / TC: Dc2 (1) ¼ 2.378, p > .05; TS / IR: Dc2 (1) ¼ 3.033, p > .05; TC / IR: Dc2 (1) ¼ 3.090, p > .05; TS / IRKMC: Dc2 (1) ¼ .018, p > .05; TC / IRKMC: Dc2 (1) ¼ .001, p > .05). These findings imply that the relationships among study variables within the proposed theoretical framework are not under the influence of gender. 5. Discussion and implications Despite the phenomenal growth in medical tourism, little is known about the role of quality, satisfaction, and trust in explaining international patient-travelers' post-purchase behavior. The main purpose of this study, therefore, was to develop a theoretical model that clearly explicates overseas medical travelers' intention formation by considering the impact of perceived medical and service quality, satisfaction, trust in the staff and clinic, and price reasonableness. Specifically, the present study examined the associations among these constructs in forming intentions to revisit the clinic and destination country for medical care to investigate the moderating role of perceived price reasonableness, to identify the relative importance among study variables in determining intentions, and to examine the mediating role of satisfaction and trust components. The present study went on to successfully incorporate medical and service quality and trust in the medical clinic and its medical professionals/staff into the theoretical framework explicating repurchase intention formation. In addition, the present study successfully extended the proposed model through the inclusion of medical travelers' perceptions of price reasonableness and identification of the fundamental moderating impact of this variable. Although we do not assert that our conceptual model is extremely robust, this model satisfactorily demonstrated how international medical travelers' behavioral intentions may be formed. Indeed, our theoretical model involving these key factors has a strong

27

explanatory power for outcome variables, effectively predicting intentions to revisit the clinic (R2 ¼ .560) and to revisit the destination country for medical care (R2 ¼ .460). Our investigation unearthed structural relationships among study variables that will provide marketers with valuable information for developing customer-retention strategies or strengthening existing strategies and that will help researchers gain a deeper understanding of overseas patient-travelers' decision formation for medical care. In general, our proposition that the linkages within the proposed conceptual model would be moderated by perceived price reasonableness was supported. As presented in Figure 2 and Table 3, relationships were significantly stronger in the high group than in the low group concerning price reasonableness. Our results imply that at similar levels of medical quality, patientecustomers with high perceptions of price appropriateness are more likely to be satisfied once these customers attain an adequate level of satisfaction; they likely will have a stronger level of trust in the medical professionals or employees at the clinic; and they will be more likely to return to the clinic and destination country. Put plainly, those at a similar level of trust are more likely to build an active intention to revisit than customers with a relatively lower level of price reasonableness. This study contributes to the very limited literature on medical travelers' price-related decision formation in the international medical tourism industry. Marketers at medical clinics and destination countries must recognize the intricate and essential role of price reasonableness and utilize it when developing efficient ways to boost customer retention and maximize revenue. If a customer is involved in any transaction, price reasonableness/fairness is likely to be decided by the way in which he/she takes advantage of it (Ryu & Han, 2010). The more benefits received by the customer, the more likely it will be that he/she will perceive the price charged by the firm as reasonable (Han & Kim, 2009). Practitioners who understand the complex nature of price reasonableness should develop diverse benefits that encourage repeat customers to believe that repatronage will offer various important outcomes (e.g., complimentary aesthetic services to non-aesthetic repeaters [e.g., skincare evaluation, chemical peels for increasing skin glow, facial cleanses], gift certificates for local restaurants, local souvenirs). In addition, market segmentation is recommended. For instance, while a majority of patientecustomers from some developed countries prefer less costly medical care when choosing a medical-tourism destination (Crozier & Baylis, 2010), upper-class individuals from developing and developed countries travel abroad for high-quality and safe medical care while seeking hotel-style comfort in clinics rather than spending hours in crowded places (Bernstein, 2012; Han, 2013). Detailed service and pricing strategies designed to target these types of customers will be necessary. And while prices for certain procedures may be high, if the clinic offers a lavish amenities floor with a superior level of hotel-style services and medical care, wealthy patient-travelers may consider these higher prices to be reasonable. While our invariance test results did not support the hypothesized moderating impact of price reasonableness on the link between trust in the staff and the intention to revisit Korea for medical care, the path waseinterestinglydsignificant only in the high group (high group: bTS / IRKMC ¼ .304, p > .01 vs. low group: bTS / IRKMC ¼ .160, p > .05). This finding is meaningful for the Korean government as it provides empirical evidence that when international tourists perceive high price reasonableness, their trust of staff drives an intention to visit Korea again for medical tourism. Similarly, although the path from trust in staff to intention to revisit the clinic differed significantly across the high and low groups, the link was not significant in the low group (low group: bTS / IR ¼ .092, p > .01). Practitioners should understand the

28

H. Han, S.S. Hyun / Tourism Management 46 (2015) 20e29

implied meaning of this finding: when international tourists perceive that the price at the medical clinic is not appropriate, their level of trust in the medical/service staff is not meaningful in generating an intention to revisit the clinic. In the proposed theoretical model, medical travelers' satisfaction and trust components were found to have a significant mediating role. In particular, satisfaction significantly mediated the impact of perceived medical quality and service quality on its outcome variables; satisfaction also indirectly affected intention to revisit the clinic and Korea for medical care through trust in the staff and in the clinic; and satisfaction and trust together significantly mediated the effect of perceived medical and service quality on intentions. This finding fits with results from previous studies (e.g., Han & Kim, 2009; Morgan & Hunt, 1994; Oliver, 1993). Medical tourism researchers should understand the mediating nature of satisfaction and trust when developing a model/theory. From the managerial perspective, this means the impact of quality on intentions can be magnified when these mediators are boosted. Our findings also indicated that the impact of perceived medical quality on satisfaction, trust, and intentions was greater than that of perceived service quality. In addition, the effect of trust in the clinic on intentions was found to be greater than that of trust in the staff. These findings imply that international medical tourists consider the quality of medical treatment/healthcare offered by a clinic to be more important than the services provided by its staffdthey are more likely to revisit when they hold a high level of trust in the clinic. While both quality components and trust factors are vital in tourists' decision formation, clinic marketers should place more weight on strengthening their medical products and enhancing the level of trust in their clinics themselves. The total impact of satisfaction on intentions to revisit the clinic (b ¼ .640, p < .01) and to revisit Korea (b ¼ .581, p < .01) was the greatest among all variables. As repeatedly emphasized in numerous studies of marketing and consumer behavior, effectively dealing with this variable can be the key to successful customer retention for both the clinic and the destination country. As with any research, the study presented here had several limitations that should be considered in future research. First, this study drew on a data set in which 66.7% of the survey respondents were female. This imbalance is not abnormal in international inbound medical tourism studies in Korea (e.g., Lee et al., 2012); it is possible that the prominence of cosmetic surgeries among medical tourism procedures results in a female-skewing customer base. Nevertheless, future research designed to balance the number of male and female respondents would make a meaningful contribution. Second, the data were collected in medical clinics located in two metropolitan cities in Korea, employing a conveniencesampling approach. Caution must be taken when generalizing the findings to other clinics in other geographic locations. Future research should include a more thorough research design with a wider sampling range to attain a higher external validity and minimize sampling limitations. Third, in the present study, we assessed overall medical quality and service quality rather than evaluating all the possible attributes of quality. Thus, although previously well-validated measures for these quality constructs were used, unavoidably the measures were nonspecific and somewhat alike. For future research, assessing the detailed attributes of medical and service quality at a clinic will allow researchers clearly to differentiate measurement items and more thoroughly investigate the role of such quality constructs in international patient-travelers' decision-making processes. Fourth, the proposed conceptual model was not designed to include all possible influences on international patientecustomers' behavioral intentions; the scope was limited to incorporated variables in the proposed theoretical framework. While such variables effectively

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Heesup Han is an Associate Professor in the College of Hospitality and Tourism Management at Sejong University, Korea. His research interests include airline, medical tourism, green hotels, and hospitality and tourism marketing. His papers have been selected as the most downloaded, read, and downloaded articles in many top-tier hospitality and tourism journals.

Sunghyup Sean Hyun is an associate professor in the Department of Tourism and Convention at Pusan National University. He received his MA in hospitality and tourism management in 2005 from the University of Massachusetts-Amherst and earned his Ph.D. in hospitality and tourism in 2009 from Virginia Polytechnic Institute and State University. He has published many papers in the area of hospitality and tourism marketing, focusing on brand equity, customer equity, advertising, emotions, and communication. He received the Best Researcher Award from Pusan National University in 2012 in recognition of his work and has been the chair of Pusan National University's Department of Tourism and Convention since 2011.