Diversification in the hospital industry.
An institution life cycle hypothesis is advanced to explain hospital behavior: boom and bust, diversification and divestiture, occasionally leading to closure or merger. Hospital diversification and its impact on the operating ratio are studied for 172 hospitals during the period 2002-2007. Diversification and operating ratio are modeled in a two-stage least squares (TSLS) framework as being jointly dependant. Institutional diversification is found to yield better financial position, and the better operating profits allow the institution the wherewithal to diversify. The impact of external government planning and hospital competition is also measured. Some services are in a growth phase, like bariatric weight loss surgery and sleep disorder clinics. Management's attitude concerning risk and reward is considered.
Department of Health Services Management and Leadership, George Washington University, Washington, DC, USA. hsmsre@gwumc.edu
Steven R
SR
Eastaugh
D004465:Economic Competition / Q000706:statistics & numerical data; D005377:Financial Management, Hospital / Q000706:statistics & numerical data; D006285:Health Planning / Q000706:statistics & numerical data; D006302:Health Services Research; D006754:Hospital Restructuring / Q000706:statistics & numerical data*; D006801:Humans