Diversification and Performance in Dutch Health Care: an Empirical Analysis

The health care industry has a very particular business environment in relation to other industries. As from 2006, more market forces are introduced in the Dutch health care industry which increased the need for flexibility, quality, and efficiency. This made it inevitable for hospitals to be more dynamic and market oriented, as privatization puts pressure on certainty and security by increasing own responsibility. One popular way for hospitals to cope with this pressure, is to develop new revenue sources through diversification. International research claims that diversification can generate increased performance. However, large differences exist between related and unrelated diversification and empirical research in the health care industry is lacking. Therefore, this work investigates the effect of diversification is on performance in the Dutch health care industry, either related or unrelated.