Momia Healthcare & Corporate Hospitals 

Hospital Diversification:-

Hospital managers buy the “unique” plan of the more unscrupulous (atypical) consultants: “diversify; it’s fail-safe, and you cannot help but make money.” Such administrators would do well to study the failure rate of diversification programs in the industry. Not enough hospitals do a complete analysis of future patient volume, cash flows, overhead, fixed start-up costs, and the potential political and economic problem of undermining existing programs and clinics. Diversification is often sold with a simple qualitative argument that the more diverse the product line, the greater the number of affiliated physicians and, therefore, the greater the demand for each of the hospital’s products. One might speculate that small-scale gambles with diversification require less-than-average managerial patience to see the project to a conclusion because the maximum regret (loss) is low, and large-scale gambles may require less-than-average patience because the initial commitment has been so large that management fears the long-run consequences of timidly “cutting out losses” and pulling back on diversification (retrench). As more financially distressed firms continue to take more risks, this will reconfigure the historic association between risk and return. Future models might explore whether hospital trustees, bolstered by rising consumer demand for care, seek to build a more balanced corporate portfolio of service offerings.