Financial soundness of each type of business diversification by clinics operated by medical corporations

Abstract

These days, many clinics pursue ancillary business diversification. Therefore, it is important for community-based integrated care system to pay attention to sustainability of these clinics. It is required for sustainability evaluation to analyze effect of diversifications on not only profitability but also financial soundness. This study verifies the effect on financial soundness by regression analysis, where each type of diversifications are chosen as explanatory variables, and corporate characteristics such as economic scale are used as control variables.

Compared with care planning support only, many types of diversification providing care services have significant negative effects on financial soundness in terms of equity ratio and avoidance of insolvency. Especially, diversification combining care with elder care facility, diversification combining care planning, care and elder care facility, diversification combining day care with elder care facility, and diversification combining four types of ancillary businesses have strong negative impact on equity ratio and avoidance of insolvency.