The business community has long used the multicorporate structure as a vehicle for diversification and flexibility in acquiring and unloading business lines. The genesis of corporate restructuring in the health care industry was prompted by the enactment of Medicare and Medicaid, which led to increased regulatory and fiscal pressures. In the late 1970s and early 1980s, hospitals and home health agencies, respectively, moved from single corporate entities to multicorporate structures largely to remove certain activities from regulation and to maximize cost-based reimbursement, which was subject to adjustment based on other activities performed by the hospital or home health agency. As the industry entered a cost containment cycle the motives for corporate reorganization changed. The phased-in implementation of a Medicare prospective payment system for inpatient care in late 1983 and actions taken by private industry to reduce employer-financed insurance premiums caused hospitals to lose hundreds of millions of dollars and the demand for inpatient care to plummet. Hospitals employed diversification strategies for survival and used multicorporate structures to launch new businesses such as home care. Faced with increased competition and measures which attempted to curtail the Medicare home care benefit, certified home health agencies diversified into profit-making businesses, such as durable medical equipment and private duty nursing and personal care services, through multicorporate structures. While the reasons for restructuring change over time and are highly dependent on the outside environment, corporate reorganizations should only be undertaken as a part of a home health agency's strategic plan. The process is time consuming, is complex, and affects nearly everyone within the organization from the board of directors down. Evaluating corporate reorganizations is a continual process; the criteria for evaluation change with the dynamic health care environment and as new agency goals and objectives are established. Although corporate restructuring has come to be known in the health care industry as the formation of multicorporate structures, recent evidence suggests that the proliferation of these structures is stemming as health care executives refocus on their core business to improve their organization's position. Diversification is being challenged by limited management time, money, and returns that are not substantial enough to justify the resources that have been devoted to it. The structures that brought us diversification are also being rethought by executives who are trying to find the right balance between the simple, less flexible organizational structure and the multicorporate structure which can become all too complex and unwieldy.