Home Articles Specialization of Urban Services (Medical) : A Case Study of Penang Island

Specialization of Urban Services (Medical) : A Case Study of Penang Island


Peter Ong Kok Vui
Urban And Regional Planning
Universiti Sains Malaysia (USM)
Penang, Malaysia
E-mail: [email protected]

After the Second War World, most cities had gone through a transformation from a specialization by sector to a specialization by function. In modern urban systems, the economic growth of cities is largely motivated by services. While specialization continues to be a main highlight of the urban system of Malaysia, cities are increasingly distinguished by their serviceable specialization rather than by their sectoral specialization. This transformation of urban structure has thus far been unremarkable.

Striking evidence is presented of a previously unremarkable transformation of urban structure from mainly sectors to functional specialization and this transformation is inextricably unified with changes in firms' organization. A greater variety of business services for headquarters and of sector-specific intermediates for production plants within a city reduces costs. Cities change from specializing by sector, with integrated headquarters and plants to specializing mainly by function, with headquarters and business services clustered in larger cities, and plants clustered in smaller cities.

Literature Review

Metropolitan Choice Effects
The production milieu refers to the agglomeration economies and the basic infrastructure that offer to induce certain activity in an area. This is because the agglomeration provides a pool of technical knowledge and specialization. This has the advantage of reducing the production cost and providing important information such as regulation, standardization, marking, product testing and financial knowledge. As a result, the level and number of skilled labour will soar and upgrade the quality of life, thus enhance specialization in education and culture. Concentration of knowledge provides better accessibility and communication between organizations in the area while government initiatives such as tax reduction and financial support, infrastructure development and job-training encourage research and development activities (R&D).

R&D activities play important roles in strengthening technological ability of organizations especially those located in urban areas. Competitions among them have encouraged more effort and investment being channelled into research development. Skilled labours such as scientists and engineers are also important players in technological development of an organisation since they constantly generate new and better products for the market. Larger organisations have the ability and resources to invest more in R&D activities, thus making them more innovative and product marketable as compare to smaller one (Frenkel, 2001).

Locational Criteria for Health Facilities
Locational criteria such as accessibility, environment, catchments area, infrastructures, public facilities and costing are often used to locate suitable site for a new health facility. These criteria are important to reach the target group. Efficient accessibilities include proximity to the main road and accessibility to public transportation. Health facility should be located outside town centre to avoid traffic congestion but close to catchment areas such as housing, commercial and neighbourhood centre to capture wider market territories. The market for health services should be considered in the decision making process since the planning and development of a health centre involve major expenditures such as land availability, building design and accessibility to public facilities and utilities. High expenditures could result in increasing maintenance and operating costs for the centre (Mayhew, 1986).

Healthcare Services Background in Penang Island
Several hospitals in Penang Island had an interesting history behind their establishments. The healthcare system was first established by the colonial authorities followed by participations from local Chinese charities organization and Christian missionaries who provided healthcare services to the local community. In 1883, a group of Chinese charities had established a traditional medical centre, Hospital Lam Wah Ee on Muntri Street, Georgetown. This was followed by the establishment of Seventh-day Adventist Clinic in December 1924. Both clinics shared a same vision that was to provide free consultation and medical assistance to the local community especially to those who are poor and sick.

Medical sector began to mushroom in the 70's after the successful set up of few private hospitals on the island. In February 1971, the Cantonment Medical Specialist Centre Sdn Bhd was established in Pulau Tikus which later renamed to Pulau Pinang Clinic Sdn Bhd. It was the first of its kind to offer private healthcare services in Malaysia. Subsequently, Loh Guan Lye Specialist Centre was established in 1975 followed by Hospital Mount Miriam in 1976. The increasing demand for private healthcare services has encouraged the development and concentration of private hospitals in Penang Island which also serve the needs of healthcare services for the northern states of Malaysia (SERI 2004).

The establishment of the first private nursing college (1986) in the Northern Region of Malaysia by Hospital Lam Wah Ee has further enhanced the development of skilled-labour private medical services. Today, there are three private nursing colleges on the Penang Island. This was followed by the establishment of the Loh Guan Lye College of Nursing and the Adventist College of Nursing by Penang Adventist Hospital. Loh Guan Lye College of Nursing was the first private nursing college to offer Conversion Programme of State Registered Nurse in the Northern Region of Malaysia.

In the 80s, the involvements of private company in medical sector have become more conspicuous in Penang Island. The Pulau Pinang Clinic Sdn Bhd for example, was taken over by Gleneagles International (S) Pte Ltd; which later renamed 'Gleneagles Medical Centre'. It is a wholly-owned subsidiary of Parkway Holdings Limited which has the expertise in medical sector and has few branches in Singapore, Brunei and India as well as partners with some hospitals in Europe. Later, few other private hospitals were established in the 90s which include Tanjung Medical Centre, Pantai Mutiara Hospital and Island Hospital.

In early 2000, health tourism was introduced by the Ministry of Health in collaboration with the Ministry of Tourism to promote the market for health services and tourism industry in the country. This has attracted and increased the arrival of foreign patients/tourists especially those from Medan, Indonesia. The growing number of foreign tourists seeking medical services in Penang Island has stimulated the medical sector and motivated local private hospitals to expand their operations and to improve the quality of healthcare services (SERI 2004).

Today, Penang Island has nine private hospitals (Refer Figure 1) and they contributed about 35% (1557 beds) of total number of beds in Penang State (Health Facts 2005, May 2006). The number of doctors at these hospitals has increased from 856 people in 1996 to 1748 people in 2005. These private hospitals have over 10 branches in Malaysia and more than 400 branches and affiliates all over the world.

Figure 1: Private Hospitals in Penang Island

In this study, qualitative and quantitative approaches are adopted to identify factors that contributed Penang Island as the centre of medical services for the northern region of Malaysia. The study also aimed to investigate the location choice factors of private hospital in Penang Island. Survey is conducted by employing questionnaires focusing on elements related to locational choice and profiles of private hospitals in Penang Island.

Descriptive statistical analysis and explanatory method are applied to identify and analyze findings from the survey. Elements such as the factors affecting locational choice of private hospitals, current scenario, type and cost of medical services provided and relationship or cooperation with other organisations within the vicinity of medical field are identified. Geographic Information System (GIS) is applied to explain the locational distributions and to identify land uses surrounding private hospitals. These findings are compared with the existing locational choice concept such as the Metropolitan Choice Effects and the locational criteria for health facilities established through the literature review above.


1. Private Hospital's Attributes
The main objectives of most private hospitals on the Penang Island are to offer the best medical services to patients, to improve hospital image and to fulfil social obligations. In addition, the religion aspect is also part of the vision and mission for one of the private hospital. "God Heal, We help" is the trademark and identity for Penang Adventist Hospital. Strong determination and ambitions of private hospitals in Penang Island have led them to the highest achievement in providing healthcare services. As a result of this, there are five hospitals have been awarded accreditations recognitions by SIRIM QAS International-ISO 9001:2000, four hospitals received accreditation as 3 Years Full Accreditation by The Malaysian Society for Quality in Health (MSQH), and a private hospital managed to achieve recognition as Baby-Friendly Hospital (BFHI).

One of the reasons why these private hospitals are able to progress and grow rapidly is due to the high demands for health services in the region (SERI 2004). Majority of patients who seek the medical treatments in Penang Island are from the locals, followed by those from the northern states such as Kedah and Perlis. Foreign patients on the other hand, especially those from neighbouring countries like Indonesia and Thailand, are becoming the new market for these hospitals (Refer Table 1). Results from the questionnaire indicated that a private hospital have reported a surge in foreign patient arrivals of about more than 500 people in a week.

Table 1: Places Providing the Majority Number of Patients

Penang State 1
Northern Region of Malaysia 2
Overseas 3
Other states in Malaysia 4

The major "draw factor" for foreign patients to seek medical services here was the close cultural and linguistic similarities which enable them to communicate with doctors easily, particularly those patients from Indonesia. The Indonesia patients accounted for approximately 20 to 30% of total outpatients in one of the private hospitals in Penang and contributing 10-20% of revenue generated per month. The increasing arrivals of patients from this country have inspired some hospitals to expand their market coverage toward cities like Medan and Aceh in Sumatra, Indonesia.

Due to the growing demand from foreign patients, private hospitals in the Penang Island were able to grasp challenges fast and effectively. Based on the questionnaire, six hospitals offered special pickup services from the Penang International Airport to their hospitals. Method of payment such as credit payment and money exchange services are also made available to patients. All of the private hospitals have even appointed a team of staff to assist and cater the needs of foreign patients. Upon request, this team will prepare accomodation arrangements for patients such as making hotel or apartment bookings, provide transport and other health related services. Among the private hospitals in the Penang Island, there is one hospital which has prepared special rooms inside the hospital for relatives in accompanying the patients.

In order to further improve and enhance the skills among hospitals' employees, these hospitals have been allocated more than RM100, 000 per year for the training of specialised worker. They offered or required their staff to attend seminar, conference, workshop, short courses, external training and on job training. Qualified staffs are offered to further their studies in bachelor, master and PhD degrees locally or overseas. Establishing training centre and engaging with other medical training institutions are also strategic initiatives taken by hospitals to produce skilled workers. Currently, there are six medical training centres, four nursing colleges and a training centre for human resources in Penang Island. These initiatives are significant as highly skilled and competent hospitals' staff will strengthen the ability and competitiveness of private hospitals.

Private hospitals have made an extraordinary attempt to promote and market their services abroad through website, marketing team, advertisements in magazine/ brochure/ multimedia, health seminars and road shows. Some established partnerships with governments and NGO's by setting up medical referral centres locally and overseas. The results from questionnaire showed that website, marketing team, advertisements in magazine/ brochure/ multimedia are the most common marketing strategies which have been utilised by all the private hospitals. Effective marketing strategies have enabled these private hospitals to attract more foreign patients to seek medical treatment in Penang.

The availability of experts and medical equipments for some specialized health services (Refer Figure 3) is another factor that attracts more patients to seek medical treatments in Penang Island. The findings showed all the private hospitals have invested more than RM100, 000 in R&D activities in every year. As a result of this, two private hospitals managed to product more than five new products or types or medical services within 5 years. All the private hospitals also have employed specialized medical personnel and furnished their centres with the latest technology of medical equipments to cater the demands for better and effective health services. For example, all private hospitals in Penang Island have radiology treatment and the largest radiology centre in Malaysia is Mount Miriam Hospital. The first laser centre in private hospital had been established by Island Hospital and also Loh Guan Lye Specialists Centre was the first hospital to offer the medical services such as Axsym Immunoanalyser, CB Erbium YAG Laser and "Endoscopic Plastic Surgery Facility" in Malaysia.

Table 2: Types of Specialised Medical Services Offered By Penang Private Hospital

Cardiology Gastroenterology Obstetrician & Gynaecologist
Anaesthesiology General Surgery Orthopaedic Surgeon
Cardiothoracic Surgery Internal Medicine Paediatric Surgeon
Endocrinology Nephrologists Radiology
Urologist Laparoscopic Surgery Physiotherapy & Sports Injury
Prosthodontics Eye Laser Therapy Brachy Therapy
Psychiatry Clinical Specialist Chemotherapy / Day Chemotherapy
Speech & Language Pathologist / Therapist Plastic, Reconstructive & Cosmetic Surgeon Child Development Specialist
ENT Surgeons Paediatrics Neuro Surgery
Haematology Gerontology Herpetology
Ophthalmology & Vitreo-Retinal Surgery Sleep Test Dermatology

In addition, some other facilities and services are also available at these private hospitals such as pharmacy, laboratory, CT scan, Laser / Health Screening, 24-hour operating rooms, dietetics, endoscopy, physiotherapy and maternity wards. At the same time, there are three private hospitals also offered pastoral care services, medical counselling and educational programme to their patients. Other facilities such as bakery shop, ambulance services, nursing station, religious facilities, parking lots, volunteer team centre are also available at these private hospitals.

To diversify and enhance the health services, all of the private hospitals have established collaborations and networking with other private hospitals, research centres, laboratory companies, insurance agents, corporate body and organisations, factories, hotels and the local clinics and pharmacies. For example, laboratory companies such as Gribbles Pathology and Pantai Premier Pathology Sdn. Bhd. and a medical research base company, Info-kinetics, have strong collaboration and close relationship with most private hospitals in Penang. The major roles and contributions of these companies are to improve the results in medical treatment, to escalate the effectiveness of medical treatment and to ensure new medicine products are safe for market destitution.

These collaborations are essential especially in sharing and exchanging information, borrowing medical supplies and equipments, expanding market coverage and encouraging agglomeration activities of knowledge and specialization. The findings showed that more than 70% of the parties involved in these collaborations have offices within the Penang Island with few in the neighbouring states.

2. Location Choice Factor
Findings from the study showed that accessibility is the most important factor in site selection for private hospitals. The Penang International Airport, Penang Ferry Terminal and Penang Bridge play significant roles as the main entrance for patients from the Northern Region of Malaysia and overseas. Geographically, Penang Island is blessed by its strategic location in northern Malaysia and between Thailand and Indonesia. Its close proximity to the surrounding states and neighbouring countries has attracted patients to seek medical services here due to the short distance and low travelling cost. The Island is accessible from almost every major city within the region whether by air, sea or land.

There are five private hospitals located within the George Town area with few scattered throughout the eastern corridor of the island. These are the most populated and dense areas on the island with high concentration of urban activities. These are catchment areas that provide greater market for private hospitals. Land uses within these hospitals are generally the residential and commercial types with good accessibility and close proximity to major arterial road (Refer Figure 2). Hospitals located within this corridor, the Gleneagles Medical Centre, Island Hospital, Loh Guan Lye Specialist Centre, Penang Adventist Hospital and Tanjung Medical Centre are close to housing and commercial areas. On the other hand, location is not a critical factor for Lam Wah Ee Hospital and Mount. Miriam Hospital. The land occupied by these hospitals was donated by local authority and a charity organization. Their locations are accessible by most major roads and public transport.

Figure 2: Landuse and Location of Several Private Hospitals within the George Town Area

The agglomeration of private hospitals in Penang Island has not only provided a platform for knowledge-based activities but also enhanced the specialization of urban services particularly the medical sector. Collaborations between private hospitals, medical laboratories, and research based companies have contributed greatly to the application of advance technology in health facilities and services. Strong financial supports and investment provide avenues for further medical research and development. New medical products are marketed and quality of services is improved.

The physical location of a private hospital is heavily influenced by accessibility and the catchment areas. The market for medical services is greater in areas occupied by residential and commercial types of land uses with close proximity to major arterial roads and public transportation. Such locational criteria have instrumented the agglomeration of private hospitals, thus turning medical into one of the latest specialized urban services in Penang Island.


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