The keys to successful diversification: lessons from leading hospital systems

Hospitals have engaged in a variety of diversification activities over the past five years--many of which have not met expectations. Based on a nationwide study of 570 hospitals belonging to eight leading hospital systems (both investor-owned and not-for-profit), four key factors are identified that differentiate the winners from the losers. These include strategies for working effectively with physicians; learning to combine centralized and decentralized strategic planning approaches; understanding partially related diversification; and effectively applying the experience curve. Putting these lessons to work will increase the probability of a more effectively diversified health care system in the future.