This study aims to analyze the efficiency of the financial performance and financial characteristics of publicly traded healthcare companies in the GCC region over the period 2011–2021 using data envelope analysis and financial performance indicators. Moreover, the results have shown that the mentioned differences are less pronounced in the case of pure technical efficiency, implying that the overall inefficiency of healthcare companies in the GCC region can generally be attributed to economies of scale. Healthcare sector in the GCC region Table 11 Pharmaceutical companies Ratios Statistics for the healthcare sector in the GCC.
Introduction
- Background
- Context of the Study
- Purposes and Objectives of The Study
- Significance, Scope and Definitions in The Healthcare Sector and Industries
- Thesis Outline
Those who are similar in the sense that they make a decision about the efficiency of things. Therefore, the research in this work attempts to evaluate efficiency based on financial inputs and outputs, i.e., the efficiency of the preventive public's financial performance. Medical care is represented in health care and further divided into six primary sectors.
Literature Review
- Introduction
- Health System Efficiency
- Evaluation of Firm Performance, Financial Efficiency with DEA Model
- Summary and Implications
To this end, many other researchers have focused on the relationship between corporate governance and firm performance. In other words, corporate governance involves shareholders, managers, customers, suppliers, financiers, the government and the community. One of the studies on the relationship between companies' performance and corporate governance score was written by Maher and Anderson (1999).
Likewise, Black BS. 2003) examined corporate governance and its effect on firm performance. Kyereboah-Coleman (2008) used both market- and accounting-based performance measures and examined the effect of corporate governance on firm performance in Africa. Their result showed that the rankings from the performance score and corporate governance score did not move accordingly.
Similarly, this current study investigates the financial performance of companies that are also included in the corporate governance index. In this sense, the financial performance results of companies are analyzed with financial variables and corporate governance assessments. Examining the performance of companies allowed us to determine the extent of the effects of total assets, total capital and corporate governance scores.
Unlike other studies, financial variables and corporate governance scores are used as input; sales and operating profit are used as output in DEA.
Research Design
- Methodology And Research Design
- Participants
- Analysis
- Ethics and Limitations
This first stage minimizes θ, where constraints (1) and (2) clearly show that (Xλ, Yλ) exceeds (θ*x0 y0) when θ* < 1: In this context, input surpluses and output deficits are identified like. These differences between global and local efficiency results are due to the scale size of the DMU. Quantitative financial performance measurement in related studies must include Annual data for a ten-year period provided by published financial statements was used to measure the performance of healthcare companies.
As this is a DEA prerequisite, all selected data ie. inputs and outputs comparable and reliable for the entire HED. In addition, we consider financial performance ratios such as the company's efficiency ratio, ROA, ROE and ROS profitability, leveraged debt and ROIC with growth and company activities among the performance results. GTC growth (%) Total capital at the end of the period−Total capital at the end of the previous year)/Total capital at the end of the year.
GSALE (%) (Sales at the end of the year-Sales at the end of the previous year) /Sales at the end of the year. The coefficient of a linear relationship between variables measures the strength and direction of the relationship. In that case, it will be based on the significance of the differences between the models' results under CRS and VRS assumptions.
No ethical considerations emerged as an outline of the study or any problems, limitations that constituted weaknesses, as well as any threat to the validity of the results.
Analysis and Discussion
Efficiency Measurement and DEA Model Application
- Slack Variable and Target Level Analysis
- The Results Summary for Efficiency Measurement Using DEA Model
One of the many approaches that researchers propose for ranking an efficient unit is the overall frequency with which it occurs in reference sets of inefficient units. As shown in the table, these shares vary depending on the assumption of returns to scale, i.e. the model's type. Their mean values, which lie between 0.26433 and 0.74135 depending on efficiency type and observed year, indicate that a more significant part of the firms' total inefficiency can be attributed.
However, elimination of pure technical inefficiency should be achieved by naturally incorporating benchmarking unit strategies in the context of the selected input and output variables. On the other hand, SULAIMAN AB has the highest pure technical efficiency due to its use of the fewest inputs, despite being ranked second in technical efficiency. Regardless of the type and extent of inefficiency, less than optimal results were generated regarding the resources utilized and SULAIMAN AB is the most efficient entity.
Although all these limitations have been addressed in this study, it would be interesting to test the robustness of the DEA results using one of the parametric approaches mentioned above. The actual result is somewhere in between, as evidenced by the average values of the variables, which for this year range from the most favorable (lowest average wages) to the least good (highest average wages) (highest average investments and lowest average total revenues). ). This can be interpreted as a confirmation of the superior suitability of the BCC model over the CCR model for the process analyzed in this paper.
However, since one of the objectives of this study is to distinguish between different types of inefficiency, the CCR and BCC models were used.
Financial Performance of Healthcare Firms and Subsidiaries
- Basic Statistics
- Comparison of Financial Performance
- Correlation Analysis
- Regression as per Firms Subsidiaries’ Level
- The Results Summary for Financial Performance of Healthcare Firms and Subsidiaries
The ratio of firm efficiency to cost of hospital firms is slightly smaller than that of pharmaceutical firms without statistical significance. It has been shown that healthcare companies have a significantly larger ratio of FEFFCER treated as efficiency cost to sales and FEFFCS ratio than hospital firms. This means that pharmaceutical firms spend less efficiently in contrast to costs than hospital firms for continuous operating time.
The ratio of selling expenses, general and administrative expenses and turnover (EX/S) of hospital companies is close to that of hospital companies, which can be explained that both have the characteristics of a growth industry, relatively they spend almost the same in contrast to general administrative cost. expenditure. The average value of the leverage ratio is 1.0340 for pharmaceutical companies and 3.3705 for hospital companies with statistical significance (Figure 8). We then perform correlation analysis using EViews 10 and resulting preliminary regression analyzes with the variables found to be significantly different for all companies in the previous analyzes between two groups of pharmaceutical companies and hospital companies.
As further research, regression analyzes were performed with ROE, FEFFCER and LEVERAGE as dependent variables that differed significantly in financial performance indicators between pharmaceutical companies and hospitals. The coefficient of sales, general, and administrative cost-turnover ratio (FEFFCER) for the sample of health care companies is significantly positive, while that negative of pharmaceutical companies is insignificant, meaning that the higher the sales, general, and administrative cost, hospital companies more received return on equity. In addition, the coefficient of company size (Log probability) of the post-sample hospital companies is significantly positive, while that of pharmaceutical companies is insignificant, meaning that as the size of hospital companies increases, the company receives more ROE expenses compared to pharmaceutical companies.
These results indicate that profitability, growth and return on invested capital of hospital companies are reflected in financial performance when considering superiority in efficiency and growth in pharmaceutical companies.
Conclusions & Recommendations
Summary for the Results and Implication
Out of the total number of companies, only 17% can be considered efficient in 2021; SULIMAN AB throughout the period in both the CCR and BBC model and MUASAT & MIDAN KK in the BCC model. These differences are less pronounced in the case of pure technical efficiency than in the cases of technical and scale efficiency, leading to the conclusion that the overall inefficiency of analyzed firms can generally be attributed to scale efficiency. In the search for the modality to organize and deliver acceptable efficiency levels, the mentioned targets were calculated to consider the improvement of performance by scaling up their activities and expanding their operations to reach an optimal scale.
The first hypothesis, proposing a significant inter-unit variability in financial performance due to the activities of different firms, has been confirmed. The results show that reducing the direct costs with investment in long-term assets followed by more non-operating income generation is the most effective method to improve the financial performance of inefficient firms. As mentioned earlier, the existing empirical research does not represent an effective evaluation of performance delivered among the subsidiary's level and financial performance.
There are significant (at both unit and department levels) differences in the number of efficient firms and their ranking, the efficiency scores and their volatility, the type of firm returns to scale, the proposed input and output improvements. In addition, the outcome of this study is that the financial performance and characteristics of healthcare companies are analyzed. Unfortunately, the results show that healthcare companies in the GCC region do not spend or invest in the research and development (R&D) efforts for technological innovation as a competitive advantage.
With this trend, the results of this study will have implications for investors and policymakers who are very interested in the industry.
Limitations of This Study
Some models for evaluating technical performance Basu S (1977) Investment performance of common stocks in relation to their price earnings. Proceedings of the f113 and World Health Organization Conference on Health Investment Assessment, Luxembourg, 17-18 June 1999. Performance measurement of manufacturing firms with a data envelopment analysis model based on super slacks: application to 500 major industrial firms in Turkey.
Gupta PP, Kennedy DB, Weaver SC (2009) Corporate governance and corporate value : evidence from Canadian capital markets. Relationship between financial performance and efficiency in the healthcare sector in the GCC region: a non-parametric evidence-based. Proceedings of the EIB and WHO Conference on the Appraisal of Investments in Health, Luxembourg, 17–18 June 1999.
Copenhagen, WHO Regional Office for Europe on behalf of the European Observatory on Health Systems and Policies. Tehrani R, Mehragan MR, Golkani MR (2012) A model for evaluating financial performance of companies through data envelopment analysis: a case study of 36 corporations affiliated with a private organization.
Recommendations for Future Research
