Conditions

– APA -7 format, in-text citations, references include, 6 pages

– Topic: Read the Michael Counte Chapter 1( attached below) then

      – CLO.1.  Analyze the root and immediate causes contributing to health insecurity in a given region or nation.  

      – CL0.6.  Plan supply, support, communication, and information management services for global health operations.

While analyzing case assess:

1. What resource environment this case is relevant to? How does it affect the disease impact on the population health? Why?
2. Evaluate local public health structures and activities that exist to address this issue?
3. Evaluate international efforts that are in place to address this matter?
4. Offer assessment of the One Health approach used to address the matter. 
5. What are the positive lessons? What needs to be done to maximize them?
6. What are the negative lessons and deficiencies? Why? 
7. What can be done to overcome them? 

CHAPTER

3

FUNCTIONS, STRUCTURE, AND
PHYSICAL RESOURCES OF HEALTHCARE
ORGANIZATIONS

Bernardo Ramirez, MD, Antonio Hurtado, MD,
Gary L. Filerman, PhD, and Cherie L. Ramirez, PhD

Chapter Focus

The key idea of this chapter is that form follows function, and function defines
structure. Healthcare organizations vary—not only from country to country,
but also within each country—as they address issues of access, quality, and cost
that are influenced by social, economic, and political factors. The principles
described in this chapter can be applied to ambulatory, acute, chronic, and
home care organizations with varying levels of resources and local organizational
response capacity. The first section of this chapter examines the key functions
of healthcare organizations, with an emphasis on the need for a continuum of
patient-centered care. Later sections review the main components of health-
care organizations and the ways they interact to achieve desired outcomes and
performance improvement. The chapter explores ways of designing, structur-
ing, and analyzing organizations to effectively and efficiently manage physical
resources and carry out key functions.

Learning Objectives

Upon completion of this chapter, you should be able to

• distinguish the key functions of healthcare organizations and relate
them to the priorities of access, cost, and quality;

• develop mechanisms to assess the performance of healthcare
organizations;

• design a structure for an organization that takes into consideration the
resources available in a given community to achieve the best possible
health outcomes;

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AN: 1985979 ; Michael Counte.; The Global Healthcare Manager: Competencies, Concepts, and Skills
Account: s4264928.main.eds

The Global Healthcare Manager4

• plan and prioritize the physical resources needed to effectively
accomplish the organization’s key functions, taking into account the
available resources in that particular system; and

• integrate physical, human, and technological resources to provide
appropriate clinical, support, managerial, and supply chain services
in a healthcare organization, taking into consideration all legal,
accreditation, and regulatory mandates.

Competencies

• Demonstrate an understanding of system structure, funding
mechanisms, and the way healthcare services are organized.

• Balance the interrelationships among access, quality, safety, cost,
resource allocation, accountability, care setting, community need, and
professional roles.

• Assess the performance of the organization as a part of the health system.
• Use monitoring systems to ensure that corporate and administrative

functions meet all legal, ethical, and quality/safety standards.
• Effectively apply knowledge of organizational systems, theories, and

behaviors.
• Demonstrate knowledge of governmental, regulatory, professional, and

accreditation agencies.
• Interpret public policy, and assess legislative and advocacy processes

within the organization.
• Effectively manage the supply chain to achieve timeliness and efficiency

of inputs, materials, warehousing, and distribution, so that supplies
reach the end user in a cost-effective manner.

• Adhere to procurement regulations in terms of contract management
and tendering.

• Effectively manage the interdependency and logistics of supply chain
services within the organization.

Key Terms

• Facility design
• Healthcare system
• Health technology assessment

(HTA)

• Prearchitectural medical
functional program

• Regionalization
• Sustainability

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 5

Key Concepts

• Facility design
• Facility management
• Low-resource management
• Medical equipment

• Operations management
• Organizational design
• Performance improvement
• Physical resources management

Introduction

We can defi ne the most important functions of healthcare organizations using
a systemic analysis inspired by Avedis Donabedian’s (1988) original conception
of structure, process, and outcomes. Exhibit 1.1 shows how, as the population
and the healthcare organization interact, the system aligns the available or
required resources to produce the key notions of utilization, access, produc-
tivity, effi ciency, and effectiveness, which interact to shape the organization’s
performance. Performance, meanwhile, depends on the competent actions of
healthcare managers and other human resources in the organization.

Since the mid-1900s, the functions, responsibilities, and competencies
of healthcare managers have developed in different ways around the world. In
the United States and Canada, the role primarily developed as a postgraduate
specialty supported by the W. K. Kellogg Foundation under the umbrella of

HEALTH AS A SYSTEMRESOURCES

HEALTH SERVICES

POPULATION

HEAL

TH STATUS

PRODUCTIVITY

INDICATORS

STRUCTURE

PROCESS

OUTPUTS

OUTCOMES

TH STATUS

Sources: Data from Bradbury and Ramirez-Minvielle (1995); Donabedian (1966).

EXHIBIT 1.1
Elements of
Health Systems
Analyzed with
a Systemic
Approach

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The Global Healthcare Manager6

the Association of University Programs in Health Administration (AUPHA).
A handful of university programs were established in 1948. As demand grew
and the healthcare field expanded, new graduate and undergraduate university
programs developed in a number of schools related to health or management
disciplines (Counte, Ramirez, and Aaronson 2011).

Around the world, a number of countries—and a number of locations
inside countries—have developed a strong alignment of professional healthcare
managers across healthcare organizations; other locations, however, have almost
no notion of healthcare management as a profession. In some countries, clinicians
are promoted to serve in managerial roles at healthcare organizations without
first having had the opportunity to acquire management competencies (West
et al. 2012). The International Hospital Federation (IHF) has created a special
interest group in health management to promote the professionalization of the
discipline and the use of a leadership competency framework to improve the
impact of managers at all levels of organizations and health systems (IHF 2015).

The main functions of healthcare systems and organizations in the
continuum of care are financing, provision of health services, stewardship, and
resource development (Frenk, Góméz-Dantes, and Moon 2014). Of these
functions, provision of health services and resource development are key, and
they are the ones further explored in this chapter. Provision of health services
starts with sound planning and effective/efficient organization. Financing is
addressed in chapters 2 and 3, and stewardship is discussed in chapters 6 and 11.

The Performance of Health Systems: Six Core Domains

Healthcare organizational performance around the world was the focus of an
extensive study sponsored by the World Bank, in which investigators conducted
a thorough literature review and developed a guide to concepts, determinants,
measurement, and intervention design (Bradley et al. 2010). The World Bank
report examined six core performance domains:

1. Access
2. Utilization
3. Efficiency
4. Quality
5. Sustainability
6. Learning

The first four domains are related to the “iron triangle” of healthcare, a concept
that was introduced by Kissick (1994) and later provided the basis for the “triple

healthcare system
The arrangement
of people,
institutions, and
resources that
deliver healthcare
services to meet
the needs of a
target population.
The system’s
framework aligns
resources to
support the key
performance
domains of
access, utilization,
efficiency, quality,
sustainability, and
learning.

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 7

aim” initiative developed by the Institute for Healthcare Improvement (IHI).
Kissick’s iron triangle consists of access, quality, and cost containment, whereas
the IHI’s “triple aim” adds the dynamics of population health (IHI 2012).

Access incorporates several dimensions—physical access, financial access,
linguistic access, and information access—that are supplemented by service
availability and the provision of nondiscriminatory services. Equitable treat-
ment should be provided regardless of gender, race, ethnicity, religion, age,
or any other physical or socioeconomic condition. Utilization includes dimen-
sions of patient or procedure volume relative to capacity or population health
characteristics. Efficiency is determined by cost- or staff-to-service ratios and
by patient or procedure volume. Quality includes clinical and management
quality, as well as patient experience.

The last two domains—sustainability and learning—are key to ensuring
constant, self-propelled growth in an ever-changing, complex environment such
as healthcare. Sustainability in healthcare can be defined as “the capacity of
health services to function with efficiency, including the financial, environment
and social interaction that guaranties an effective service now and in the future,
with a minimum of external intervention and without limiting the capacity of
future generations to fulfill their needs” (Ramirez, Oetjen, and Malvey 2011,
134). Sustainability can be considered from two distinct perspectives or dimen-
sions. The first perspective focuses on the sustainability of processes that create
a basic functional network throughout the organization, allowing for flexibility
and quality improvement—both of which are necessary for the dynamic change
environment of healthcare. The second perspective deals with organizational
sustainability, and it includes five multidimensional pillars:

1. The environmental pillar represents the initial point of focus for
sustainability, and it includes—but is not limited to—the use of clean
and renewable energy and the conservation of the natural environment.
This pillar incorporates recycling techniques to preserve the quality of
the atmosphere, to reuse solid and liquid waste, and to safely dispose of
contaminants.

2. The sociocultural pillar strengthens community support and promotes
the identification of key cultural, ethnic, and other values among the
community of staff, patients, and users. It incorporates population
health and social marketing strategies.

3. The institutional capacity development pillar promotes the strategic
management of the organization. It aims to strengthen competencies
at all levels and instill an empowering knowledge management culture,
facilitating coordinated efforts of governance, leadership, and personnel
integration and participation.

sustainability
The capacity
for a healthcare
organization to
function efficiently
and in a manner
that supports
effective service
both presently and
in the future.

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The Global Healthcare Manager8

4. The financial pillar ensures the delivery of healthcare programs and
activities that are cost effective and efficient in the use of resources. It is
indispensable for achieving the organization’s goals and objectives.

5. The political pillar involves staff, patient, and community advocacy to
advance the interests of the organization.

Finally, the learning domain empowers the organization to adapt to
change and to explore and adopt innovations. It incorporates efforts to use data
audit and feedback processes, to distribute relevant information and provide
patient education through partnerships with the constituency, and to imple-
ment training and continuing education initiatives for the healthcare workforce.

The Challenge of Organizing Health Services Resources
to Achieve Optimum Performance

The provision of universal access to optimal prevention, care, cure, and reha-
bilitation can be considered an ultimate goal of healthcare. Most governments,
either directly or indirectly, subscribe to this goal; the challenge is—given the
limitations of resources and entrenched infrastructure—achieving the greatest
possible return on the investment toward reaching it. All countries, regard-
less of their level of wealth or industrialization, are limited in their ability to
achieve this goal, often because of political philosophies expressed as public
policy. Even those nations in the most favorable positions often lack the will
or capacity to translate their knowledge of what is possible into practice for
the benefit of all people.

Over many years of technological development and interaction among
professional, political, and economic forces, three enduring organizational foci
have emerged for achieving the optimum health status for a population. They
are (1) hospitals, (2) primary care provision, and (3) regionalization.

Hospitals
In every country, hospitals are the most visible symbol of healthcare develop-
ment and care for the sick. They represent public assurance that there is a place
for people to go for care when needed. Hospitals are also important economic
engines, generating employment and anchoring the economies of communities.
They consume a large portion of the health sector resources in many countries.

The hospital is arguably the most complex contemporary organization
to manage. Hospitals, particularly in developing countries, struggle internally
with inadequate management and governance; limited sources of income;
insufficient human resources; poorly planned, financed, and maintained physi-
cal plants; and rudimentary quality controls. At the same time, they are often

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 9

buffeted by such external forces as regulations, competition, inadequate pay-
ment systems, and conflicting service demands.

Experts from a number of countries, the World Health Organization
(WHO), and the international development agencies of industrialized nations
came together in an extraordinary meeting to address the challenges facing
hospitals today and going forward (German Federal Ministry for Economic
Cooperation and Development [BMZ] / German Corporation for International
Cooperation [GTZ] and WHO 2010). The meeting was based on the premise
that the role of hospitals should change within the upcoming decade, and it
sought to clarify the critical issues concerning hospital reform. It also sought
to formulate a plan to address those issues. There was no official follow-up to
the meeting, but the consensus sent a powerful message to the policy com-
munity. The key issues identified by the meeting are as follows (BMZ/GTZ
and WHO 2010):

• Clarifying the role and function of hospitals in the health system
• Political dimensions and expectations of hospitals
• Hospital isolation in the face of blurring demarcations
• Linkages between hospitals and other levels of the health system
• Cost and benefit of technological progress
• Data to measure hospital performance in relation to population

outcomes
• Universal coverage and accessibility
• Hospital financing within overall health spending
• Hospital governance and autonomy
• The legal framework within which hospitals operate
• Human resources
• Involvement of private hospital actors
• Hospitals in a global health marketplace
• Hospitals and the wider economy

There is no better summary of the challenges facing hospital and health system
administrators and planners.

Primary Care Provision
The development of primary care has emerged as the central strategy to achieve
universal access, comprehensive care, and cost containment, not only in devel-
oping countries but also in industrialized countries. The goal for low-resource
societies is to provide essential services that are realistically within their reach,
with community participation. WHO (1978) has promoted primary care
development since the Alma-Ata Declaration of 1978. The declaration was

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The Global Healthcare Manager10

formulated by public health leaders who were largely committed to the position
that healthcare is a right and that the state has the responsibility to provide it.

Alma-Ata created an enduring tension between two “ideal” models—a
hospital-centric ideal model of health system development, with overtones
of private practice and specialization, and an ideal model based on publicly
supported community-based primary care providers, with the hospital in a
supporting role. The conflict between the two ideal models was summarized
by Frenk, Ruelas, and Donabedian (1989, 1):

In most developing countries the concern is that . . . [hospitals] already absorb such

a high proportion of resources that they seriously threaten any effort to achieve

full coverage of the population. Furthermore, it is widely believed that a health care

system centered around hospitals is intrinsically incompatible with the geographic,

economic, and cultural attributes of many populations. In addition, the mix of services

offered by hospitals . . . is believed to poorly match the prevailing epidemiologic

profile and the population needs for preventive and continuous care.

Gillam (2008, 537) assessed the practical impact of the Alma-Ata Dec-
laration on governments’ policies and actions, noting that “early efforts at
expanding primary care in the late 1970’s and early 1980’s were overtaken
in many parts of the developing world by economic crisis, sharp reductions
in public spending, political instability, and emerging disease. The social and
political goals of Alma Ata provoked early ideological opposition and were never
fully embraced in market oriented, capitalistic countries. Hospitals retained
their disproportionate share of local health economies.”

In setting out a model of a preferred future, the WHO (2008, 55)
states: “Primary-care teams cannot ensure comprehensive responsibility for
their populations without support from specialized services, organizations and
institutions that are based outside the community served . . . [and] typically
concentrated in a ‘first referral level district hospital.’” Assuming that, in many
countries, most of the existent service deliverers are controlled by the system
designers, the model calls for coordination of all resources to be vested in the
primary health team, presumably mandated by law in most cases. Under that
premise, “The primary-care team becomes the mediator between the com-
munity and the other levels”(WHO 2008, 55).

It is important to emphasize that primary care systems are ultimately
dependent on hospitals. To be comprehensive, a system must have a hospital
available to treat complicated, often life-threatening cases. The system also must
be able to receive trauma cases from rural employment and transportation situ-
ations that far exceed the competencies and resources of primary care. Patients
who are unable to access community and primary care services have been known
to travel great distances to reach the nearest hospital in case of emergency.

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 11

Regionalization
Regionalization is the third enduring organizational focus, but a specific defi-
nition of the term is evasive. The term has as many definitions as it has plans
and applications. Roemer (1965) stated that regionalization cannot be defined
on the basis of experience but that agreement can be reached with regard to
its objectives. The following general objectives have emerged, with a degree
of agreement across applications, as central to the regionalization process:

• The efficient utilization of limited health resources
• The efficient utilization of expensive health resources
• The provision of adequate, appropriate, and accessible health services to

a population
• The improvement and maintenance of standards of health services

provision

The application of the concept of regionalization to healthcare provi-
sion can be traced back more than a hundred years. The event that had the
broadest global impact was the United Kingdom’s 1920 “Interim Report on
the Future of Medical and Allied Services,” commonly known as the Dawson
report, after Sir Bertrand Dawson, a physician to the British royal family. The
report proposed a comprehensive national organization of health services that
was organized around base hospitals and integrated most services in defined
regions of the country (Consultative Council on Medical and Allied Services,
Great Britain 1920). The United Kingdom implemented the report’s basic
principles in the country’s National Health Service over the course of 28 years.
The Dawson report has influenced health systems in a variety of countries,
particularly in Europe.

Dawson proposed dividing the country into regions that would (eventu-
ally) meet most of the preventive and curative health needs of the population.
Specialized, scarce, and expensive services for a wider area (or country) would
be available on referral but not duplicated at the regional level. The services
of hospitals would be defined according to a classification system, thereby
ensuring access to basic services while avoiding competition and underuse. The
influence of Dawson’s emphasis on the integration of preventive and curative
resources to achieve a more effective investment balance cannot be overstated.

Hospital-centered regionalization has become a widely discussed
approach to health system organization in a number of countries, particu-
larly in Europe but also elsewhere. For instance, the Chilean National Health
Service reorganization program, which started in the 1960s, created hospital
areas with the understanding that a hospital would have full responsibility for
the health of the population within its service area. With all health activities
linked to the hospital, clinical physicians would have to be directly involved in

regionalization
A broad
organizational
concept with
a variety of
applications;
its key aims
include efficient
use of limited
and expensive
health resources,
the provision
of accessible
health services
to a defined
population, and
the development
of standards for
health services
provision.

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The Global Healthcare Manager12

the field programs, potentially leading to the effective integration of preventive
and curative medicine. At the time of the program’s implementation, private
hospitals were not included; the director of the area was to be the director of
the largest (frequently, the only) hospital in the area.

The rationalization of health-provision resources to serve a defined
population—be it a country, region, district, or community—is a very appealing
idea. In theory, it is most likely to succeed in a central command-and-control
political system, wherein one owner has control over all the components.
However, that theory assumes that the full range of essential services exists
or is accessible in each region. Application becomes more complicated—and
potentially unrealistic—when applied to pluralistic environments with diverse
financing schemes, multiple ownerships, local governments, advocacy orga-
nizations, and competing demands. Also, of course, additional complications
follow from the differing political philosophies about the role of the state.

One key organizational issue focuses on how to integrate new knowl-
edge into the capital planning process. Another issue deals with reducing the
duplication of diagnostic services that can be provided electronically to many
hospitals. An additional question is how to create incentives in the capital
management process that will modify internal organization and facility design
to support such changes (Edwards, Wyatt, and McKee 2004).

Kenya’s pluralistic environment provides an example of how the role of
the private sector can be constrained by the lack of access to capital. A substantial
portion of care is provided by private for-profit and faith-based hospitals that
have difficulty obtaining loans. As a result, funds are not available to start new
hospitals, or to improve or replace existing facilities (Barnes et al. 2010). In
Benin, banks generally loan only to large, well-established hospitals that are
managed or owned by well-known doctors, and smaller enterprises are rarely
considered. Capital funding limitations can also result from poor management
skills, difficulties with property titles, and lack of collateral (Strengthening
Health Outcomes Through the Private Sector [SHOPS] Project 2013).

Addressing these issues will require an understanding of global experience
and an emphasis on the development of leadership and management compe-
tencies. The professionalization of healthcare managers will be indispensable
in advancing the effective and efficient use of organizations’ resources.

Organizational Planning and Design

Organizational planning and design enable managers to align the healthcare orga-
nization’s functions and resources with its mission, vision, values, goals, and objec-
tives. The planning process incorporates a variety of tools to facilitate work relations
and interactions, efficient resource allocation, and effective decision making.

facility design
The design of the
space in which
a business’s
activities take
place. The
planning and
layout of that
space have a
significant impact
on the flow of
work, materials,
and information
through the
system.

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 13

The challenges facing healthcare managers can be either internal or
external to the organization. One of the most important internal challenges
involves the increasing technical complexity of the services being provided,
which stems from continually changing medical technologies and the diver-
sity and professional autonomy of the health professionals who interact in the
delivery of services. Other internal and external challenges are associated with
healthcare managers’ need to balance the components of the iron triangle.
Balancing access and equity with efficient, cost-effective services and qual-
ity outcomes requires robust organizational design and planning, as well as
flexibility to confront the dynamic conditions of the healthcare environment.

Organizational designs take as many forms as needed to address the
uniqueness of a dynamic organization. The designs are usually reflected in an
organizational chart that describes the relations, authority, responsibilities,
and interactions of the different units and individuals. Other documents and
tools—such as organizational manuals, job descriptions, policies, regulations,
and legal or administrative documents—also describe the various functions,
resources, and responsibilities in more detail. A number of these tools are
described throughout this book. Some tools commonly used in the planning
process are flowcharts, affinity diagrams, Gantt charts, and balanced scorecards.
In large and complex organizations, and across countries and healthcare sys-
tems, increasingly comprehensive information systems and the application of
informatics are now indispensable.

Several questions need to be answered before an appropriate organiza-
tional design can be determined. For example, how can we design an organiza-
tion that responds to the pace of change and complexity of the external envi-
ronment? How can we create a simple enough organization that presents clear
responsibilities for all areas of the organization while responding to complex
interrelations and problems that need to be solved? How can we incorporate
clinicians and managers in the decision-making process? How do we create
strong supporting guidelines throughout the organization while at the same
time allowing some level of autonomy and empowerment for the providers
and units (Baker, Narine, and Leatt 1994)?

An organizational chart can be presented in a variety of ways, and there
is no clear “best” organizational design. Most organizations will use combina-
tions of design types, most of which derive from three basic formats—func-
tional design, divisional design, and matrix design. Functional design is the
most traditional of the formats, and it is well suited to organizations that offer
well-defined services or products, respond to slower environmental changes,
and have clearly defined stakeholders. Divisional design works better in larger
organizations with multiple product or service lines that can be grouped into
larger divisions. Finally, matrix design is most appropriate for organizations that
must respond to rapid changes in technology or highly dynamic or competitive

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The Global Healthcare Manager14

environments. A variation of the matrix design is the program design, which
combines substantive areas and strong, well-differentiated programs with com-
plex and unique requirements for performance. These design formats have been
used in all types of healthcare organizations, and each includes elements that
can effectively contribute to organizational success. It is relatively common for
organizations to adopt hybrid models or change their organizational designs
to respond to specific circumstances.

Management of Physical Resources
How do organizational processes determine the physical design and structure
of healthcare organizations? This discussion will focus on two main elements.
The first element involves the planning processes of healthcare units, of which a
critical component is the development of a prearchitectural medical functional
program that defines the services to be offered and the resources required. The
second element involves the supplies and utilities needed by healthcare units
(e.g., electric power, water, fuels, medicinal gases, telephones, internet), which
can be provided by either public services or private companies. The process-
ing and distribution of these supplies take place in the “house of machines,”
which serves as the nuclear resource for the units’ function and connects the
operation of all systems (e.g., electric, hydrosanitary, air conditioning, telecom-
munications, information technology). These activities enliven the elements
and allow the optimal operation of functional units or facilities, administrative
services, and support services as an integrated, efficient, and effective operation.

Clinical units, administrative units, and the resources of general sup-
port services that were defined in the corresponding prearchitectural medical
program are distributed among the hospital buildings. Each functional unit
has its own structure with respect to physical, human, material, and techno-
logical resources. The units carry out processes that transform the resources
into services, the results of which are generally evaluated with indicators of
quantitative and qualitative performance. Each unit receives general support
services, including maintenance of architectural finishes, furniture, facilities,
and equipment; cleaning and disinfection; disposal of waste; and the supply
of inputs required for operation. These elements and their interrelations are
illustrated in exhibit 1.2.

The construction and operation of healthcare units are strongly regulated
by laws, rules, and norms of compulsory observance, typically to ensure quality,
preservation of the environment, and health and safety in the workplace. The
operation of the units generates liquid, solid, and gaseous waste, the manage-
ment of which must be in accordance with legal provisions intended to control
the pollution of air, land, and water mantles and to avoid risks to the health of
patients, users, service providers, vendors, and visitors to the units. Because of
safety concerns, particular interest exists with regard to proper management of

prearchitectural
medical functional
program
A planning
document that
serves as a
road map for
the design of a
facility; it identifies
functional program
areas and defines
such aspects as
users, operational
scenarios, design
criteria, and
square footage
needed.

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 15

equipment and substances that emit radiation and biological products capable
of generating infections.

Current trends support the efficient use of energy and the use of renew-
able energy to promote a less costly and more environmentally friendly opera-
tion. Such trends can be seen in the use of solar panels for the heating of water
and photovoltaic cells for the generation of electric power, as well as intelligent
systems that control lighting and air conditioning.

Water management seeks to ensure water availability, storage, and pota-
bility, to maintain both a continuous supply and a critical reserve in case water
availability is suspended, which may happen during natural disasters. Potable
water is critical both for ingestion and for use in processes of care that require
efficient washing of hands, surfaces, and equipment. Wastewater treatment
plants can be used to recycle water and reduce consumption, leveraging water
to recharge the subsoil, to water gardened areas, and to use in health services.

Solid waste management is of the utmost importance. Classifications
for solid waste management include organic and inorganic waste, potentially
contaminated waste, and waste that requires special management because of
strict regulations regarding its collection, storage, transportation, and disposal.

Health units’ internal and external communication requires a complex
telecommunication infrastructure, internet connectivity, and systems that allow
the efficient management of voice messages and data. Such systems are par-
ticularly important for the electronic registration of various transactions and
interactions necessary for the operation of the unit.

EXHIBIT 1.2
Management
of Physical
Resources in
Healthcare
Units

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The Global Healthcare Manager16

The Planning Process
During the planning process for the construction of healthcare units, a num-
ber of elements are taken into consideration: location and geographical area
of influence; the target population, with its demographic and epidemiologic
profile; the types of services to be offered; and market analysis with respect to
offer and demand of services both public and private.

Based on the preliminary information, a prearchitectural medical func-
tional program is developed. This program defines the services that will be
offered and any required physical spaces in accordance with the applicable
regulations. A key challenge is to articulate the requirements to create func-
tional units equipped with all the necessary resources to ensure their correct
operation. At the same time, additional challenges involve making sure that
the interrelations between the clinical units and the support services establish
a pattern of consistent functionality and maximize efficiency to users, staff,
and suppliers of goods and services. The dimensions and orientation of the
land to be used for the construction will affect the number and configuration
of the levels to be built, as well as the distribution of services to be provided.

The functional medical program provides the basis for the development
of the architectural project, which in turn will produce functional units with
appropriate furniture and equipment. Given the highly specialized and con-
stantly evolving nature of hospital services and medical technology, this plan
needs to be developed by a group of experts in hospital design, with participa-
tion of both architects and the operators of health units.

The architectural project must comply with the established framework of
laws, regulations, and standards. It should keep in mind the following considerations:

• Installed capacity that responds to the needs of the target population, as
well as the provision of personal clinical services

• Sufficiency of resources to achieve the goals and objectives
(productivity) outlined in the business plan

• Functionality (efficiency and effectiveness) in compliance with current
regulations, to ensure regular and emergency access to clinical
healthcare services with comfort and security for staff, third-party
suppliers, patients, and their families

Once the clinical and support units (e.g., outpatient care, emergency
care, hospitalization wards, diagnostic support units, general and administra-
tive services) and their specific capacities (e.g., numbers of offices, cubicles,
operating rooms, warehouses, waiting rooms) have been defined, the final
considerations for the functional plan involve determining the medical and
instrumental equipment required for the operation of the various units. Deci-
sions made at this point will depend on the financial resources available and
the level of complexity expected for a particular medical facility.

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 17

Once the prearchitectural functional program has been developed and
adjusted, the executive project defines all systems, facilities, and equipment
that will require supplies and utilities such as water, drainage, electric power,
hydrosanitary services, air conditioning, medical gases, fuel, and telecommunica-
tions. These needs are reflected in a program with a phase-in plan that considers
the stages required for construction, facilities, equipment, preoperation, and
commissioning of the units in question.

The next step involves carrying out the executive project, which requires
the development of the operating systems necessary for the installation and
provision of the projected utilities and supplies. Project leaders should consider
environmental and safety implications and ensure full compliance with regula-
tions and standards for construction and facilities. They should also take into
account the requirements that may need to be met in the future to achieve
certification from accreditation agencies, such as The Joint Commission in
the United States.

Execution of the project requires a project management program that
elaborates required tasks, equipment and other resources, and the responsible
parties. The project management program takes into consideration the span
of time required for various activities and tasks, sets targets for their conclu-
sion, and facilitates coordination between components. A variety of project
management software programs are available to assist with this step. Depending
on the unit’s magnitude and complexity, the management of the project or
supervision of work can also be contracted to a third-party company that has
experience with similar units.

Of particular importance is the definition of the management model to
be used to operate the healthcare unit. Selection of this model considers the
strategic framework (i.e., mission, vision, values, goals, and objectives); the
organizational model; the desired measures of effectiveness; the distribution of
resources and workforce; internal operation manuals; work regulations; rules,
both internal and external; and market and/or operational plans and programs.
Specific calculations need to be made for the supply and consumption of various
materials, including items needed for office operations; food and medical sup-
plies; emergency and regular maintenance materials; and tools and equipment.

Health need assessments and the steps outlined in this section can deter-
mine the amount of investment required, as well as the cost of the operation,
for a unit. This information, in turn, can inform the development of a business
plan to identify the feasibility and sustainability of the proposed facility or unit.

Functional Unit Requirements
The requirements for the operation of a health unit should be assessed using the
management model, with attention to organizational design, the staff or person-
nel necessary to meet the established work shifts, job positions and descriptions,
organizational procedures and manuals, rules and regulations, and necessary

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The Global Healthcare Manager18

inputs. Planning for the design, operation, and use of resources is influenced by
such factors as the type of services provided, the medical and technological delivery
capacities, the availability of resources, and the country’s level of development
(taking into account health expenditure as a percentage of the gross domestic
product). It is also influenced by the part of the health sector in which the unit is
going to operate. The public and social security sectors have well-defined models
and prototypes, and most countries have specific rules for the private sector.

The functional units of the clinical area correspond to the provision of
direct services to patients and include outpatient care, auxiliary diagnostic,
auxiliary treatment, hospitalization, and specialized care units. The architectural
design should consider the locations and resources required for the operation
of each functional unit—incorporating both clinical services and support ser-
vices—to ensure optimal access, flow, and comfort for users, providers, and
suppliers. Flows should be accurately defined for the movement of users and
staff, as well as for food, clean and dirty clothes, solid and potentially contami-
nated waste, mobile equipment, and operating supplies. The aim is to establish
an infrastructure that facilitates efficient processes and stimulates productivity
and satisfaction for users and staff.

Clinical services generally include the categories of outpatient services;
support services, such as laboratory diagnosis and imaging; support treatment
services, such as surgical and obstetric units; and hospitalization and adult special
care units, such as intensive care units and burn centers. Clinical services support
is given largely through nursing, which is the main pillar for patient care and
an indispensable aspect for hospitalization, outpatient care, and clinical sup-
port areas. Support services—which are discussed in greater detail in the next
section—include food and dietary services, cleaning and disinfection, garden-
ing, security, waste management, and maintenance of buildings, installations,
and equipment. Management services—which include senior management
and middle management and supervision—are grouped by such functions as
direction, quality management, management of resources (human, material,
technological, and financial), public relations, and marketing.

All functional units and support services must have a management model
that is documented in a procedures manual, with components dedicated to
structure, processes, and expected outcomes. It should also have programs
relating to quality, protection of the environment, and health and safety at
work, as well as an annual operating budget and program that defines the goals,
objectives, strategies, and measurable results. Each unit and service can be
turned into a cost center that allows more detailed and accountable operations.

Exhibit 1.3 provides a guide for analyzing the main elements of structure,
process, and outputs/outcomes that interact in the operation of a functional
unit. The accompanying vignette uses an example from Brazil to illustrate
some operational issues.

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 19

Vignette: Operations Management in Brazilian Hospitals

by Ana Maria Malik

Research on private nonprofit hospitals with between 30 and 800 beds
revealed that bed management in the state of São Paulo, Brazil, is practi-
cally nonexistent (Raffa 2017). Although management is slowly becoming a

Exhibit 1_3 updated 1 10/10/18 12:26 PM

EXHIBIT 1.3
Functional Unit
Process

(continued)

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The Global Healthcare Manager20

Facilities, Materials Management, and Support Services

This section will examine key issues for the effective and efficient management
of buildings and facilities. It will discuss such topics as the planning, design,
construction, and remodeling of facilities; housekeeping and environmental
services; safety and security; issues with medical and nonmedical equipment;
health technology assessment (acquisition, management, and audits); food
services; purchasing, receiving, storing, distributing, processing, and control-
ling supplies; and the future of materials management.

Facilities Conservation and Maintenance
Management of the physical infrastructure focuses on the conservation, main-
tenance, and operation of buildings, facilities, and equipment. The depart-
ment responsible for this area represents a key structural element both for the
functioning of the unit’s services and for the development of the processes
that transform inputs into services. Its main objective is to ensure the good
condition of the property and the maintenance of the facility and equipment,
allowing for a correct and continuous operation with high levels of energy
efficiency and security. The department achieves this objective through the
work of trained personnel who apply both routine and preventive programs,
as well as corrective actions when needed.

Effective management requires building plans that are organized by
system and by architectural area, as well as an inventory of installed equipment
with technical specifications, warranties, service providers, and maintenance
programs. The facility must also have a stock of spare parts and supplies to use
for replacement, as well as tools and equipment needed for corrective actions.
Electronic devices can facilitate the registration of equipment.

The hospital operator should design and implement the necessary means
to ensure the timely, permanent, efficient, effective, safe, and reliable operation
of all infrastructure, facilities, general and special equipment, administrative and
fixed furniture, and public services. Operations should comply with a rigorous
“program of daily routines” that includes preventive, corrective, and reagent

buzzword, efficiency is not a real concern, and bed occupancy generally is
not planned. Barriers to bed management initiatives include (1) problems
with health information systems; (2) doctors being treated as though they
“own” the beds, meaning that their approval (either formally or informally)
is needed for use of the beds; and (3) a lack of discharge planning for inpa-
tients, leading many beds to go idle. Additional information in the original
Portuguese is available at http://gvsaude.fgv.br/sites/gvsaude.fgv.br/files/
tese_claudia_raffa_21_03 .

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 21

procedures, responding to the various particularities of each functional unit.
Activities must be based on strict procedures yet also designed with flexibility
to allow for technological updating, continued innovation, and responses to
changes in demand that may occur over the course of the contractual term.

Public Areas Services, Maintenance, and Energy Efficiency
Key objectives of this area are to maintain optimal conditions of the facilities
with regard to appearance, conservation, and functionality and to ensure the
continuity and operation of all facilities, fluids, energy, systems, and equipment.
Such efforts require an adequate annual program of preventive maintenance
in compliance with the requirements of the present description, performance
indicators, and applicable and existing legislation.

The operator should be responsible for the preventive and corrective
maintenance of administrative and fixed furniture and building equipment, as
well as all the facilities of the hospital or organization. Key priorities include
ensuring the provision of services for the public; meeting the needs of normal,
continuous, and permanent use of all areas and services of the organization;
ensuring a high level of safety; and providing efficient solutions that contribute
to the preservation of the environment.

Medical Gases Management and Distribution
The aim of this service is to ensure the permanent supply, conditions of use,
and operation of various types of medicinal gases. Such gases are needed to
assist patients and to support the operation of systems and equipment. The
operator must ensure the proper management of medicinal gases through the
most modern infrastructure and technology, meeting the needs of the hospital
and maintaining conditions of safety and efficiency in accordance with the scale
of the project. The operator must ensure the quantity, quality, continuity, and
reliability of gas services with absolute respect for applicable laws. This area also
must comply with the buildings’, installations’, and equipment requirements
for accreditation and certification, as specified in the appropriate manuals, and
any other terms and conditions established in contracts and their annexes. Ser-
vice should also ensure the correct management of processes and subprocesses
detailed in the approved operation manual.

Medical Equipment Maintenance and Supply / Health Technology
Assessment
The central objective of this service is to carry out all management procedures
concerning the operation, maintenance, and replacement of medical equip-
ment and instruments. A related objective is to design and implement training
and ongoing technical assistance for the correct use and operation of all of the
required equipment, with specially qualified personnel for each item and task,
to ensure operational excellence in all functional units. The operator should be

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The Global Healthcare Manager22

committed to the provision of safe, effective, and timely service, with absolute
respect for the laws in force and compliance with established processes and
subprocesses. Within this category of services, health technology assessment
(HTA) represents a multidisciplinary process for evaluating social, economic,
organizational, and ethical issues related to health technology. Several interna-
tional resources and organizations related to the HTA function are listed at the
end of this chapter. The accompanying vignette provides further illustration
of key issues related to technology assessment.

Housekeeping, Janitorial, and Environmental Services
The chief objective of this area is to implement a cleaning service and manage
common waste in all facilities and spaces of the hospital or organization. Adher-
ence to established standards and safe practices allows optimum medical and
nonmedical operation in terms of hygiene and aesthetics, while also reducing
the risk of nosocomial infections and disease transmissions. Such efforts foster
a sense of well-being among patients and personnel and project a positive
image of the organization. The operator should be fully committed to the
provision of a safe, effective, and timely service for common waste manage-
ment and cleaning, with attention to applicable laws and the sustainability of
the processes and products used.

health technology
assessment (HTA)
The systematic
evaluation of
health technology
and its properties,
effects, and
impacts; a
multidisciplinary
process for
evaluating
social, economic,
organizational,
and ethical issues
related to health
technology.

Vignette: Health Technology Assessment in Brazilian Hospitals

by Ana Maria Malik

Research has revealed ongoing challenges with health technology assess-
ment in Brazilian hospitals (Francisco 2017). A regulatory agency, ANVISA,
was created in 2000, and a national council, CONITEC, originated in 2006
and was institutionalized in 2011. In addition, a national network for HTA,
known as REBRATS, was created in 2008, and it consists of 80 health facili-
ties, 27 of which are hospitals. A research study sampled those hospitals
by region and interviewed participants of the HTA units; the interviewees
largely acknowledged that their actions had not been effective. An earlier
study, developed in 2011 and published in 2015, had produced similar find-
ings: The units did not have their own budgets, their staff used time that was
left over from other hospital activities, and they had no evidence that their
efforts saved money or improved outcomes. In short, the hospitals did not
really know what to do with their HTA units. Additional information in the
original Portuguese is available at http://gvsaude.fgv.br/sites/gvsaude.
fgv.br/files/dissertacao_-_fernando_de_rezende_francisco .

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 23

Safety and Security
This service area focuses on safeguarding all functional areas of the hospital or
facility and ensuring security, order, and personal integrity for patients, employees,
visitors, and others. Established standards should foster and contribute to a culture
of security, civil protection, self-protection, and order, in which both users and
assets are preserved and safe from risk. The organization should project an image
of safety through compliance with contractual requirements and applicable laws.

Materials Management and Warehouses
This service deals with the acquisition, receipt, storage, custody, inventory con-
trol, and distribution of the supplies, materials, tools, and equipment needed
for the operation of the hospital or facility. This service should provide for
logistics and the daily functioning of the institution in conditions of safety and
high quality. The operator should be responsible for managing all the inputs
required for the correct performance of functional units, especially those where
medical tasks are performed. The operator is also responsible for maintaining
an up-to-date inventory of property, furniture, and equipment, all in optimal
conditions of order, cleanliness, and safety, for each of the areas of warehouse
(e.g., medical materials warehouse, equipment and furniture warehouse, dis-
continued items warehouse).

Pharmacy Services
The main function of pharmacy services is to procure, prepare, distribute, store,
and control drugs and other curative materials. Drug and medication manage-
ment is critical in the overall operation of healthcare organizations, particularly
with the disproportionate increases in drug costs and the abundance of new
medications available in local, country, and world markets. The management
of these critical resources is subject to a wide variety of regulations and market
conditions, which are mostly specific to particular countries. The operation
of the medication system is affected by such factors as the way physicians pre-
scribe and use drugs and medications; the way pharmacists prepare, dispense,
and distribute drugs and medications; the administration of medications by
nurses and other health professionals; the administrative processing, control,
and reimbursement mechanisms established by the health organization and its
departments; and applicable regulations.

Food and Nutrition Services
Nutrition is an indispensable element of good clinical outcomes in healthcare
organizations. This resource-intensive area involves more than just the hygienic
and efficient procurement, processing, and distribution of high-quality meals
to patients and staff. It involves specialized requirements for human resources,
food and supplies, equipment, furniture, and large spaces throughout the facility.

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The Global Healthcare Manager24

Such spaces include, but are not limited to, kitchens, offices, cafeterias, dining
rooms, elevators, warehouses, and storage areas. Food and nutrition services
also require thoughtful and creative controls and budgeting. Many organiza-
tions use outside catering groups to provide some or all of these services. Some
aspects of food services can be revenue generating.

Summary

This chapter has discussed the essential functions and structural components of
healthcare organizations, with attention to the key challenges that healthcare
managers face when aligning the structure and physical resources with the
organization’s mission, goals, and objectives. Different types of healthcare orga-
nizations and the varied health systems around the world present continuous
and dynamic challenges for managers, who must thoughtfully reshape, realign,
and redesign their management of resources to achieve value-based outcomes.

Discussion Questions

1. Using the diagram in exhibit 1.1, analyze how the various elements
function and interact in a particular healthcare organization with which
you are familiar. Then do similar analyses of the regional healthcare
system to which that organization belongs and the national healthcare
system to which the region belongs.

2. Review the Leadership Competencies for Healthcare Services Managers
framework developed by the International Hospital Federation (available
at www.ihf-fih.org/resources/pdf/Leadership_Competencies_for_
Healthcare_Services_Managers ). Work with your immediate peers
to determine which competencies you have developed and which you
need to work on to improve your individual and group performance. If
you wish to expand on this exercise, take the competency questionnaire
at http://healthmanagementcompetency.org/en/base.

3. How do the five pillars of sustainability apply to your organization?
Are there certain actions you can take to develop one or more of those
pillars? If so, make a plan of action, and set some measurable objectives
for the task.

4. What is your idea of primary healthcare? Can you design a strategy to
adapt primary healthcare to one of the services or programs in your
organization? If possible, work with a team of peers on this exercise.

5. Describe the type of organization used in a particular department or
service area of a hospital or healthcare organization with which you

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Chapter 1 : Funct ions, Structure, and Physical Resources of Healthcare Organizat ions 25

are familiar. Review the current organizational chart, consider the
department’s relations with other departments, and propose ways to
improve.

6. Review exhibit 1.2. Compare and contrast the elements in the diagram
with those of a healthcare unit with which you are familiar. Think of
two areas where improvements could be made, and design a plan to
address them.

7. What is the process for designing or redesigning a healthcare facility?
Think of a new service or program that would require physical
resources and facilities, and apply the process to that case.

8. What are the key elements to management of medical equipment and
supplies? Think of a specific piece of medical equipment, and identify
the key elements for ensuring a good and efficient maintenance
process.

9. What is health technology assessment? Look up some HTA agencies in
your country, and examine the resources they have available.

10. Interview one or two key individuals in the food and nutrition service
of a hospital or healthcare organization. Ask them to identify two of
the most important issues or problems they face in their service or
department. Develop a plan of action to address one of those issues.

Additional Resources

Health Planning
• World Health Organization, “Sub-national and District Management:

Planning and Budgeting for Services”: www.who.int/management/
district/planning_budgeting/en/

Performance Improvement
• World Health Organization, “Strengthening Management Capacity”:

www.who.int/management/strengthen/en/
• World Health Organization, “The Health Manager’s Website”: www.

who.int/management/en/
• World Health Organization, “Management for Health Services Delivery”

(examples of diverse country experiences, with documents and reports):
www.who.int/management/country/en/

Health Technology Assessment
• Health Technology Assessment International (HTAi), a global scientific

and professional society: www.htai.org/htai/about-htai/

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The Global Healthcare Manager26

• International Network of Agencies for Health Technology Assessment
(INAHTA), a network of agencies in various countries: www.inahta.org

• HTA Glossary, with definitions of various HTA terms: http://htaglossary.
net/HomePage

• World Health Organization, “Health Technology Assessment: International
HTA Networks”: www.who.int/health-technology-assessment/
networks/en/

Health Facilities Design and Management
• World Health Organization, “Management of Health Facilities”: www.

who.int/management/facility/en/

Facilities and Materials Management
• World Health Organization, “Management of Resources and Support

Systems: Drugs and Supplies”: www.who.int/management/resources/
drugs/en/

• World Health Organization, “Management of Resources and
Support Systems: Equipment, Vehicles and Building”: www.who.int/
management/resources/equipment/en/

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