kfederln's blog for Tenet Healthcare

Diversification efforts can create value or fail miserably. Paying too much for the target firm, failing to integrate all aspects of the acquired entity into the acquiring firm, and undertaking initiatives that are easily copied by competing organizations are all reasons that diversification can fail. In order to succeed in diversification the similar and unrelated diversification efforts must be addressed. Sharing market power, vertical integration, leveraging of core competencies, and other sharing activities can create value with related diversification. Corporate restructuring and parenting create value with unrelated diversification. There are various means of engaging in diversification, through internal development, joint ventures, and mergers and acquisitions. Value creation can be jeopardized by growth for growth’s sake, egotism, and antitakeover tactics. Tenet Healthcare is highly diversified. It once was hospital-centric, but with divestiture of poor performing hospitals and acquisition of ambulatory surgery centers and revenue cycle management services, Tenet has integrated multiple entities as a parent company.