StudyKraken Medicine
Print Сite this

Organizational Management in the Healthcare Sector


Healthcare is the preservation of good physical and mental health through the treatment of illness or through preventive measures by employing the services of health professionals for the wellbeing of individuals in society. Healthcare organization is the process of putting up structures to ensure provision of health services as well as professional management of health issues within a given society. Healthcare organization is undertaken by healthcare providers who have the capacity to meet the legal as well as professional requirements, thus fall under the auspices of healthcare providers (Mamdani, 2007, pp. 186-188). Such organizations are insurance companies, government departments, hospitals, clinics, doctors, pharmacists among others.

Healthcare organizations vary in scope from local governments to global organizations and their services too vary from health care group to the other. Some healthcare organizations work for profit, while others are not for profit, depending on their objectives at the time of formation or financial background. Thus their structural make up has a significant impact on the execution of services.

Main body

Healthcare organizations are formed to achieve different objectives and purposes. Some are formed to provide medical services, others to provide healthcare education, others to provide financial services, while others to provide affordable healthcare services (Pirnejad, 2007, pp. 1-6).

The positioning of a healthcare organization in the market is what will define its organizational structure as well as its mode of operation. These factors are used to determine whether an organization will centralize its operations or if it will decentralize them.

Centralization in healthcare organizations happens in three main forms; Shared Services, Centralization and Center of Excellence.

In the current world, healthcare attention is being focused more on clinical quality and thus it has become essential for healthcare organizations, to reorganize their structures so that they can support the implementation of quality improvement schemes. These schemes will create an accountability structure for quality care. When the hospital-based care model became the dominant system for healthcare, most hospitals adopted a functional mode with discipline based specialization. Under this structure, each area of specialization say the laboratory, clinical departments and the nursing departments had a manager who reported to another manager and who reported to the organizations chief executive. Such a centralized approach has allowed for benefits in terms of economies of scale.

Centralization in most healthcare systems happen in the following way; the concerns from the head office get all the priority in that everything that has to be done has to conform to the directive of the head office. This helps the management exercise full control in running of the organization by giving directions the organization has to take and thus creating a synchrony in the operations of the organization. It creates a clear chain of command that allows for responsibility in all the aspects that will touch on the organization as each persons activity will be accounted for.

Centralization offers an opportunity for standardization of operations and other activities. This ensures that quality services are delivered in tandem with the laid down standard levels. It thus eliminates haphazard creation of procedures that might lead to conflicts in the execution of duties. Standardization of services enables the organization to run its functions in tandem with its policy, thus incase of any problem, it is able to be detected and effectively sorted (KPMG, 2010, Para. 4).

Centralization of healthcare also leads to good governance. Healthcare organizations own capital in terms of infrastructure labor and finances that have to be used properly and according to expectations. Therefore, centralization of operations and management functions is one way of ensuring that the best practices are applied. A change in labor and capital may influence outcomes, but governance can either enhance or blunt the effects of the two. One way of enhancing governance is through the use of a centralized system that will put total control of the organization in specific hands. The top most managers under this case are able to give an account of how each department is functioning with all the information on their fingertips in terms of numbers and other facts. This is a sure way of total control and with this, pilferages can be curbed. However, good governance is not just the preserve of the top management, but a responsibility of all members of the organization.

Transparency in organizations, especially healthcare groups is a factor that has to be upheld as it comes in more than one way. Due to high demand in quality medical care, patients in health organizations want to get all the information required on how things are done or happen (Romgens, 2002, Para 2-5). In this case, regulation, financial incentives and public reporting are the three major approaches to improving patients’ safety. Of these three, public reporting of performance information and feedback to providers is the most important. Reporting and feedback creates a clear picture of what is going on in the organization and creates the best atmosphere of trust between the patients and the management. This enhances the working of the organization by providing information about progress and also information on what needs to be corrected (Leape, 2010, pp. 1-3).

In general terms, centralization in healthcare organizations has benefits as well as shortcomings. Shortcomings of centralization happen in such a way that decisions may take long to be made on issues that could have even been sorted out at the department level. There are those small decisions that don’t stray far away from the main policies and which need to be made to correct small issues. Such quick decisions cannot be taken and thus small problems that need be decided on by short notice end up taking a long time.

On the other hand, with the head offices’ concerns taking centre stage, the departments concerns are neglected and thus lead to a compromise in standards as the departments will overlook most rules that conflict with the head offices’ concerns.

In the case of regional branches, each region has got its own needs and thus the services of the healthcare organization have to be tailor made to suit these needs. This will definitely be in conflict with the head offices’ wishes and thus will have to be ignored at the expense of the healthcare seekers.

Decentralization in healthcare happens when the management of the system gives autonomy to branches in the running of their affairs, thus allowing them to take decisions in their hands. These decisions are limited to what the policy on decentralization in the organization will say. Decentralized organizations have a sophisticated system of communication. When communication happens in such an instance, delivery of services is hinged on the efforts of members of the different departments. This therefore forces the adoption of team work among the department members for them to ensure that they keep the standards high up. Decentralization enables the departments to come up with the best ways of how to deliver services to the clientele in their jurisdictions and thus they are able to come up with their own in house made package that they are sure will serve the needs of the clientele as well as achieve the objectives of the organization as a whole. A decentralized system allows the organization to integrate its system with that of other societies that also offer healthcare thus allow exchange of information on healthcare issues (Peckham, Exworthy, Powel & Greene, 2005, Para. 2-7). This arrangement enables the healthcare organizations to benefit from information gathered by other organizations thus saving on costs.

Though it is full of advantages, decentralization also has its own disadvantages that affect the working of the healthcare organization and delivery of services. The granting of autonomy to departments may lead to a compromise in the service delivery of the organization as it will largely depend on the leadership of that department to deliver the results. Poor leadership is an absolute for poor services and poor services will lead to reaction from the clientele varying from them moving away to other organizations, to legal implications. Both moves by the clientele are costly and will thus affect the whole operation of the organization.


Therefore, for healthcare organizations to achieve the best results, they have to employ a collage kind of system that blends the best options from both the centralized and the decentralized systems of the organizations. This is because a pure centralized system has its shortcomings while a pure decentralized system as well has its shortcomings. These shortcomings from both groups cannot be ignored if the system aspires to give the best results.

Reference List

KPMG. (2010). Centralization of Healthcare Functions: A Key to Reducing Costs and Improving Efficiency. Web.

Leape, L. L. (2010). Transparency and Public Reporting Are Essential for a Safe Health Care System. The Commonwealth fund, 4, pp. 1-3.

Mamdani, B. (2007). Governance in healthcare. Indian journal of medical ethics, 4 (4), pp. 186 -188.

Peckham, S., Exworthy, M., Powell, M. & Greene, I. (2005). Decentralization, Centralization and Devolution in publicly funded health services: decentralization as an organizational model for health care in England. Web.

Pirnejad, H. (2007). Inter-organizational communication networks in healthcare: centralized versus decentralized approaches. International journal of integrated care, 7, pp. 1 – 6.

Romgens, M.H.M (2002). The virtual patient record. Web.

Cite this paper
Select style


StudyKraken. (2021, December 31). Organizational Management in the Healthcare Sector. Retrieved from


StudyKraken. (2021, December 31). Organizational Management in the Healthcare Sector.

Work Cited

"Organizational Management in the Healthcare Sector." StudyKraken, 31 Dec. 2021,

1. StudyKraken. "Organizational Management in the Healthcare Sector." December 31, 2021.


StudyKraken. "Organizational Management in the Healthcare Sector." December 31, 2021.


StudyKraken. 2021. "Organizational Management in the Healthcare Sector." December 31, 2021.


StudyKraken. (2021) 'Organizational Management in the Healthcare Sector'. 31 December.

This paper was written and submitted to our database by a student to assist your with your own studies. You are free to use it to write your own assignment, however you must reference it properly.

If you are the original creator of this paper and no longer wish to have it published on StudyKraken, request the removal.