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KMID : 1170320090150020123
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Korean Journal of Health Economics and Policy
2009 Volume.15 No. 2 p.123 ~ p.150
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Impact of Service Diversification on Hospital Performance: A Case of Diversified Hospitals in California
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Suh Won-Sik
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Abstract
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The study was designed to provide an enriched understanding of diversification and performance (D-P) by fully exploring the original theory of diversification, which is rooted in industrial organization (IO) economics. By employing data of 294 diversified general acute care hospitals in California for the period 1995 to 1999, the research which focused specifically on hospital service diversification led to three major findings. First, diversification measured through economy of scope was significantly (negatively) associated with hospital performance. Second, diversification measured through multi-market contact shows a positive relationship with hospital performance. And finally, the effect of diversification on performance measured through multi-market contact was greater than diversification measured through economy of scope, therefore, organizations should pay attention to both economy of scope and multi-market contact when considering diversification.
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KEYWORD
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service diversification, I/O economics, multi-maket contact, performance
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