Vol. 6, Issue 7, Part C (2020)

Abstract
The Healthcare system is one of the major service sectors which contributes to the stability of any nation. Better quality of healthcare services may have a positive effect on patient loyalty and it will lead to the betterment of the healthcare organizations. The study is therefore mainly focused on identifying the relationship between service quality and patient loyalty of public and private hospitals in Colombo district. In this research, the service quality model (SERVQUAL) which was introduced by Parasuraman et al. (1988) ^[38] has been used for evaluation of service quality while the measurements of Zeithaml et al., (1996) ^[47] has been used for evaluation of satisfaction and loyalty. The required information was obtained through a structured questioner and the sample size was 400. The sampling technique was multi-stage cluster sampling. The descriptive analysis, hypothesis testing, principal component analysis and Structural Equation Modeling (SEM) were used to derive the required inferences. The results of this research show that service quality affects patient satisfaction, and patient satisfaction effects on patient loyalty in the contexts of both public and private hospitals while a significant effect of service quality on patient loyalty was recorded only in the private sector. Furthermore, it presents that private hospitals form a partial mediating effect and the public hospitals form a full mediating effect by patient satisfaction for the relationship between service quality and patient loyalty. These results can be used by hospital authorities to implement effective strategies to ensure the superior quality of healthcare services and enhance patient satisfaction and loyalty.