Towards a holistic customer value approach in managing public health care services: a developers' view

• DOI: https://doi.org/10.1108/IJPSM-03-2022-0080
• Published date: 05 December 2022
• Date: 05 December 2022
• Pages: 46-63
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management
• Author: Hanna Komulainen,Satu Nätti,Saila Saraniemi,Pauliina Ulkuniemi

Towards a holistic customer value

approach in managing public health

care services: a developers’view

Hanna Komulainen, Satu N€

atti, Saila Saraniemi and

Pauliina Ulkuniemi

Oulu Business School, University of Oulu, Oulu, Finland

Abstract

Purpose –Recent literature within public service logic has called for more explicit conceptualisation of

customer value in public services. This study aims to fill this gap by examining how the customer value

approach can be applied in the management of public health care services.

Design/methodology/approach –This study is a qualitative case study of management of public health

care services in Finland. The authors interviewed 17 regional health care service developers and analyzed the

interview data using thematic analysis.

Findings –The study suggests five propositions for applying customer value approach from the marketing

literature in public health care service management. The study enables a deeper understanding of customer

value creation in this context and improvement of public health care services.

Originality/value –This study contributes to the public management research in general and public service

logic research in particular by suggesting what constitutes customer value in public health care services.

Keywords Customer value, Public services, Health care, Marketing, Public service logic

Paper type Research paper

Introduction

Public health care in Europe is challenged by a demand to improve access to primary care, to

tackle ever-increasing costs and to change the focus from curing disease to preventing illness

(Palumbo, 2016), thus requiring novel, value-creating approaches in service management. To

capture the complexities of such service management in public sector research, the

Public Service Logic (PSL) has emerged as a reaction to the shortcomings of widely used New

Public Management that introduced the idea of utilizing management principles from the

private sector (Alford, 2016). NPM has been criticized for its overt concentration upon the

managerial lessons from the manufacturing sector and focusing on discrete transactions and

singular outputs (Osborne et al., 2013;Osborne and Strokosch, 2013) thus encouraging a

short-term, introspective and transactional approach to the delivery of public services

(Osborne et al., 2015). PSL takes a very different approach and argues strongly for integrating

individual and societal value and value creation linking service production with their use

(Osborne et al., 2021), increasing the interest in the value approach in public service

management research. In line with that, major research streams in service marketing,

including service dominant logic (Vargo and Lusch, 2004), service logic (Gr€

onroos, 2011;

Gr€

onroos and Voima, 2013) and customer-dominant logic (Heinonen and Strandvik, 2015) all

have emphasized service user’s (i.e. customer’s) role in value co-creation. Regarding value

IJPSM

36,1

46

© Hanna Komulainen, Satu N€

atti, Saila Saraniemi and Pauliina Ulkuniemi. Published by Emerald

Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0)

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The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0951-3558.htm

Received 23 March 2022

Revised 4 July 2022

13 October 2022

Accepted 14 November 2022

International Journal of Public

Sector Management

Vol. 36 No. 1, 2023

pp. 46-63

Emerald Publishing Limited

0951-3558

DOI 10.1108/IJPSM-03-2022-0080

creation in public services, PSL has drawn especially from service logic (SL) literature in

marketing discipline (Gr€

onroos, 2011;Gr€

onroos and Voima, 2013). In accordance with this

thinking, the focus in PSL has shifted away from the “performance”of PSOs to “value”as a

measure and similarly, the locus of public service delivery has shifted from linear production

processes initiated by the PSO to emphasizing that service users create value through their

interactions with the PSO within the service system (Osborne, 2018).

Although public management theory increasingly adopts marketing-originated views, it

seems to struggle to apply the key concept of marketing, namely the customer. Indeed, in

public services, the innate meanings of the terms customer and value are controversial and

continue to spark discussion both in practice and academia (e.g. Osborne, 2018). We use the

concept of customer to capture the perspective of the individual user of a service through the

customer value approach in marketing (Zeithaml et al., 2020) in the context of public services.

Especially in developing and managing public health care services, applying the customer

value approach can help to configure the critical service points and thus detect opportunities

to improve the value derived from public money (Nordgren, 2009). However, applying this

approach requires in-depth understanding of the influence of this specific context. Therefore,

it is essential to gain more empirical understanding (Osborne et al., 2021) on implications of

customer value approach for PSOs and their service management.

The value co-creation paradigm is highly beneficial for public management research but

only if it is contextualized to fit the public service environment and the distinctive nature of

public services (Dudau et al., 2019). This is especially important in health care services that

can be very differently managed in private versus public context. For example, the public

sector’s core motivation in service management and development is overcoming the

challenges of allocating scarce resources in an impactful way to create the most value for

society rather than delivering profit (Leijerholt et al., 2018). Furthermore, PSOs deliver

services to advance the well-being of the populace while applying the basic principle of

equality, that is, ensuring every citizen has appropriate access to services (Costa-Font and

Hern

andez-Quevedo, 2012). Dynamics related to customer retention and voluntary agency in

value creation are also very different in private and public sectors (Osborne, 2018).

Although the need to adapt the theoretical models of customer value from the private

sector to meet the requirements of public services is widely recognized (Alford, 2016;

Osborne, 2018), PSL has been developed primarily through conceptual research (e.g. Osborne

et al., 2021) with only a few empirical studies. Moreover, as suggested in previous studies

(see e.g. Eriksson et al., 2021;Osborne, 2018) value continues to be poorly understood and

undertheorized in public management research and definition of what constitutes “value”is

still only embryonic in this literature. Thus, more nuanced empirically based understanding

of value in public management is needed (Dudau et al., 2019;Eriksson et al., 2021), concerning

of what value is constructed and how it can be conceptualized (e.g. Zeithaml et al., 2020). In

relation to this, PSL has sought to balance the original individualized conceptualization of

value with so-called public value, a construct that focuses on value at the collective level

(Moore, 1995), such as the common good or the public interest (Beck Jorgensen and Bozeman,

2007). It has been suggested that value in the public sector needs to be addressed ina broader

perspective that includes not only individual, private value but public value that benefits

society at large (Moore, 1995). However, Osborne et al. (2021) criticize public value thinking as

it lacks the links and tensions between individual and societal value and an overarching

framework within which to situate value creation as the fundamental building block of public

service delivery.

This study aims to fill the above-mentioned gaps by examining how the customer value

approach can be applied in the management of public health care services. We acknowledge the

importance of the wider ecosystem, i.e. the PSOs, employees, users, political parties and other

relevant stakeholders surrounding the individual public service user (see Petrescu, 2019).

Managing

public health

care services

47