Hospital diversification into long-term care

In the 1990s, acute care hospitals in the United States encountered an unstable operating environment created by a series of transformations in the health care delivery system and long-term-care market. Confronted with an array of economic pressures and demographic changes, hospitals were motivated to engage in long-term-care diversification, such as establishing a long-term-care unit or providing home health services, as a means of entering new markets and ensuring financial stability. This article examines the organizational, market, and community factors associated with this strategic activity among a national sample of urban and rural hospitals.