Value Creation in Italian Private Healthcare Companies: A Comparative Analysis

The paper aims to test the capability of Italian private healthcare companies to create value. The study compares Italian private healthcare companies with the EU28 peers in the period 2013-2017. Competitive positioning is investigated using the performance benchmarking model and the ability in wealth creation for shareholder is expressed by positive ROE-Ke differential. The analysis shows that Italian private healthcare companies have negative differential of ROE-Ke in all the period. This is to be attributed to distortions in the financial structure, strongly debt-oriented, and to the country risk: these elements generate an increase in the cost of equity that affect the ability to create value. The study suggests the performance benchmark model as a new method to measure the competitive positioning of private healthcare companies. Furthermore, in order to investigate value creation by these companies the analysis is assisted by the examination the differential ROE-Ke.