Corporate health care network.
Diversification Diversification provides another strategy for survival in today’s economy. Diversification is the expansion of an organization into new arenas. Two types of diversification are common: concen- tric and conglomerate.
Concentric diversification occurs when an organization complements its existing services by expanding into new markets or broadening the types of services it currently has available. For example, a children’s hospital might open a day-care center for developmentally delayed children or offer drop-in facilities for sick child care.
Conglomerate diversification is the expansion into areas that differ from the original product or service. The purpose of conglomerate diversification is to obtain a source of income that will support the organization’s product or service. For example, a long-term care facility might develop real estate or purchase a company that produces durable medical equipment.
Another type of diversification common to health care is the joint venture. A joint venture is a partnership in which each partner contributes different areas of expertise, resources, or services to create a new product or service. In one type of joint venture, one partner (general partner) finances and manages the venture, whereas the other partner (limited partner) pro- vides a needed service. Joint ventures between health care organizations and physicians are becoming increasingly common. Integrated health care organizations, hospitals, and clinics seek physician and/or practitioner groups they can bond (capture) in order to obtain more referrals. The health care organization as financier and manager is the general partner, and physicians are limited partners.