Innovation in private health sector: Innovation in private health sector and financial performance relation

Health sector is one of the sectors that influenced so much by the swift changes in technology. These changes shorten the products? usage times, increase the quality of services and hasten the placing of new products and services on the market. Beside new products and services placed on the market, refurbished products and services can be released to market with adding new features to existing products and changing their compositions. The process of changing and renewing products, services and production methods is referred to ?innovation?. For companies, innovation is a very important competition tool because it increases productivity and profitability; also it provides entry into new markets and enlarges the existing market. The economies which have efficient, profitable and competitive firms operating progress develop and gain a competitive advantage on a global scale. Hence innovation is the most important factor for countries that guarantees employment growth, sustainable growth, social welfare and the quality of life. It is an undeniable fact that innovation is risky but it brings evolution, learning and success. These risks manifest themselves as mostly loss of economic value, time and reputation moreover in health sector it brings the risks that threaten human life. But still innovation has a crucial importance for health sector. The innovation and progress in health sector directly affect the human life and its quality. With the increase of population and the ratio of old population, structure of illness and the needs of health has changed. Furthermore, income level is increased, technology is developed and health system is changed for cover all the population day by day. This increases the demand for better health system and provides advancement for private health sector. The purpose of innovation, move toward innovation in addition gaining competitive advantage thus increase the financial performance by being a strong and successful company. The purpose of this study is determining the innovation in Turkey?s private health sector, evaluating the financial states of the firms in private sector, determining the relationship between innovation in private health sector and financial performance and profiling firms by using their innovation states. Research environment is composed by medical firms, pharmaceutical companies and private hospitals which have data at T.C. Merkez Bankası between the years 2002 and 2011. In the study all of the data which is suitable for analysis is used without sampling. For determining the innovation, descriptive statistics according to innovation states of companies are taken. For determining financial performance state, ratio analysis is used. For determining the relationship between innovation and financial performance Chi-squared Test of Association is used. For profiling with innovation state, data mining method CHAID decision trees methods are used. According to analyzes; liquidity, financial structure, activeness and profitability states of private hospitals, pharmaceutical companies and medical firms are comparatively analyzed. In the scope of study, it is determined that %88.4 of 526 (465 companies) private health sector companies don?t do any innovative activities, %11.6 of them (61 companies) do innovative activities, %7.4 of innovative companies (39 companies) have a good financial performance, %66 of non-innovative companies (347 companies) have a good financial performance. The analyzes done by considering all private sector companies could not result into any statistical relation between financial performance and innovation, yet an important statistical relation between financial performance and innovation of medical companies it is determined. Moreover financial profiles of the private sector companies are stated with 10 different profile with considering their innovation by CHAID Decision Tree. From the results, it is determined that private health sector does not give enough importance to innovation activities and does not have a financial performance increase by innovation except medical firms. Private health sector should make more provision for their RD departments, track the technology that is changing, look into innovation subject more. Moreover in this study non-innovative companies are offered to pay attention to the innovative companies? profiles with benchmarking technique and using that observations determine financial strategies.