BY – Sunita Rawat MHA 1st year SGRR Dehradun

  • Modern healthcare management
  • Introduction to functions of management
  • Forms of organisational structure(hierarchy)


Healthcare management is the profession that provides leadership and direction to organizations that deliver personal health services and to divisions, departments, units or services within those organisations.

Health system management is defined as purposeful and efficient use of health system resources and to get members of the health team coordinated to work harmoniously in order to achieve the desired common goals and objectives.


  • Integration of health programs/departments
  • Overload of work and distribution of work
  • Changing health needs/health demands
  • Improvement of health care delivery system by applying modern management methods and techniques


  • Planned and point of a health activity
  • Deals with the problem in health activity


Indicators to measure the outputs/progress in a health activity

What are health system resources ?

Man power            money

Materials                minutes(time)

knowledge             techniques




  • Organizational designs : to meet health need /demands
  • Personnel management : proper person at proper place/right person for right job
  • Communication : effective sharing of information between different levels of hierarchy
  • Information system : data/feedback for action (ex-health management information system(HMIS)
  • Management by objectives : result oriented based on minimum cost and minimum time.

QUANTITATIVE METHOD (based on principles of economics,budgeting and operational research)

  • Cost-benefit analysis
  • Cost-effective analysis
  • Cost accounting
  • Input-output analysis
  • Model
  • System analysis
  • Network analysis
  • Planning-programming-budgeting-system
  • Work sampling
  • Decision making

Luther Gullick has given a word POSDCORB

POSDCORB stands for :-

Planning,Organizing,Staffing,Directing,Coordinating,Reporting and Budgeting



It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals. According to KOONTZ, “Planning is deciding in advance – what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.


It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s”. To organize a business involves determining & providing human and non-human resources to the organizational structure. Organizing as a process involves:

  • Identification of activities.
  • Classification of grouping of activities.
  • Assignment of duties.
  • Delegation of authority and creation of responsibility.
  • Coordinating authority and responsibility relationships.


It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behaviour etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure”. Staffing involves:

  • Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place).
  • Recruitment, Selection & Placement.
  • Training & Development.
  • Performance Appraisal.
  • Promotions & Transfer.


It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:

  • Supervision
  • Motivation
  • Leadership
  • Communication

Supervision implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers.

Motivation means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership may be defined as a process by which manager guides and influences the work of subordinates in desired direction.

Communications is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.


It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps:

  • Establishment of standard performance.
  • Measurement of actual performance.
  • Comparison of actual performance with the standards and finding out deviation if any.
  • Corrective action


The reporting to management is a process of providing information to various levels of management so as to enable in judging the effectiveness of their responsibility centres and become a base for taking corrective measures, if necessary.

Reporting Management contributes to an integrated Service Management approach by achieving the following goals:

  • Every authorized report facilitates the monitoring of services and service quality
  • Reports facilitate the improvement of services and processes
  • Reports document service delivery, service quality and service improvement
  • Reports will communicate service delivery, service quality and service improvement
  • Reports also ensure legal functions
  • Every report runs through a set of standardized activities and procedures in order to ensure effective and efficient processing
  • Every implemented Reporting is documented

2.7 BUDGETING        

A budget is a financial plan for a defined period of time. It may also include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows. It expresses strategic plans of business units, and an organization, activities or events in measurable terms.

Budget helps to aid the planning of actual operations by forcing managers to consider how the conditions might change and what steps should be taken now and by encouraging managers to consider problems before they arise. It also helps to co-ordinate the activities of the organization by compelling managers to examine relationships between their own operation and those of other departments. Other essentials of budget include:

  • To control resources
  • To communicate plans to various responsibility center managers.
  • To motivate managers to strive to achieve budget goals.
  • To evaluate the performance of managers
  • To provide visibility into the company’s performance
  • For accountability


Organizational structure refers to the formal configuration between an individual and the group with respect to the allocation to tasks,responsibilities and authority within an organization. An organization is the structural framework for carrying out the functions of planning,decision-making,control,communication,motivation etc.


An organizational structure defines how jobs and tasks are formally divided, grouped and coordinated. The type of organizational structure would depend upon the type of organization itself and its philosophy of operations.


Tall organizational structure is one which has many levels of hierarchy. In these organizations, there are usually many managers, and each manager has a small or narrow span of control – they are in charge of only a small group of people.

A flat organization (also known as horizontal organization or delayering) has an organizational structure with few or no levels of middle management between staff and executives. An organization’s structure refers to the nature of the distribution of the units and positions within it, also to the nature of the relationships among those units and positions.

Some of the most common organization structures are:

  • The line and staff organization structure
  • The functional organization structure
  • The divisional organization structure
  • The matrix structure
  • The project organization structure

Network organization structure

3.2a Line and Staff Organization

In this type of organization, the functional specialists are added to the line, thus giving the line the advantages of specialists. This type of organization is most common in our business economy and especially among large enterprises. Staff is basically advisory in nature and usually does not possess and command authority over line mangers. The staff consists of two types:

General Staff: This group has a general background that is usually similar to executives and serves as assistants to top management. They are not specialists and generally have no authority or responsibility of their own. They may be known as special assistants, assistant managers or in a college setting as deputy chairpersons.

Specialized Staff: Unlike the general staff who generally assist only one line executive, the specialized staff provides expert staff advice and service to all employees on a company wide basis. This group has a specialized background in some functional area and it could serve in any of the following capacities:

(a) Advisory Capacity: The primary purpose of this group is to render specialized advice and assistance to management when needed. Some typical areas covered by advisory staff are legal, public relations and economic development.

(b) Service Capacity: This group provides a service that is useful to the organization as a whole and not just to any specific division or function. An example would be the personnel department serving the enterprise by procuring the needed personnel for all departments. Other areas of service include research and development, purchasing, statistical analysis, insurance problems and so on.

(c) Control Capacity: This group includes quality control staff who may have the authority to control the quality and enforce standards.

The line and staff type of organization uses the expertise of specialists without diluting the unity of command. With the advice of these specialists, the line managers also become more scientific and tend to develop a sense of objective analysis of business problems. According to Soltonstoff, a staff member may serve as a coach, diagnostician, policy planner, coordinator, trainer, strategist, and so on.

Advantage: that the specialized advice improves the quality of decisions resulting in operational economics.

Staff specialists are conceptually oriented towards looking ahead and have the time to do strategic planning and analyze the possible effects of expected future events.

Disadvantage: the confusion and conflict that arises between line and staff, the high cost that is associated with hiring specialists and the tendency of staff personnel to build their own image and worth, that is sometimes at the cost of undermining the authority and responsibility of line executive

3.2b Functional Organization

The functional organizational concept, originated with Fredrick W. Taylor and it permits a specialist in a given area to enforce his directive within the clearly defined scope of his authority.

Fig3.2b:- A block diagram of the functional oraganization

A functional manager can make decisions and issue orders to the persons in divisions other than his own, with a right to enforce his advice. Some good examples of specialists who have been given functional authority in some organizations are in the areas of quality control, safety and labor relations.

Fig3.2b:- A block diagram of the functional oraganization

The functional organization features separate hierarchies for each function creating a larger scale version of functional departments. Functional departmentalization is the basis for grouping together jobs that relate to a single organizational function or specialized skill such as marketing, finance, production, and so on. The chain of command in each function leads to a functional head who in turn reports to the top manager.

The functional design enhances operational efficiency as well as improvement in the quality of the product because of specialists being involved in each functional area and also because resources are allocated by function rather than being duplicated or diffused throughout the organization .

Disadvantages : the functional design is that it encourages narrow specialization rather than general management skills so that the functional managers are not well prepared for top executive positions. Also, functional units may be so concerned with their own areas that they may be less responsive to overall organizational needs.

3.2c Divisional Organization

The divisional or departmental organization involves grouping of people or activities with similar characteristics into a single department or unit. Also known as self-contained structures, these departments operate as if these were small organizations under a large organizational umbrella, meeting divisional goals as prescribed by organizational policies and plans.

The decisions are generally decentralized so that the departments guide their own activities. This facilitates communication, coordination and control, thus contributing to the organizational success. Also, because the units are independent and semi-autonomous, it provides satisfaction to the managers that in turn improves efficiency and effectiveness.

This division and concentration of related activities into integrated units is categorized on the following basis:

a.Departmentalization by Product:- In this case, the units are formed according to the type of product and it is more useful in multi-line corporations where product expansion and diversification, and manufacturing and marketing characteristics of the product are of primary concern. The general policies are decided upon by the top management within the philosophical guidelines of the organization.

b.Departmentalization by Customers:-This type of departmentalization is used by those organizations that deal differently with different types of customers. Thus, the customers are the key to the way the activities are grouped. Many banks have priority services for customers who deposit a given amount of money with the bank for a given period of time. Similarly, business customers get better attention in the banks than other individuals.

c.Departmentalization by Area:- If an organization serves different geographical areas, the division may be based upon geographical basis. Such divisions are specially useful for large scale enterprises that are geographically spread out such as banking, insurance, chain department stores or a product that is nationally distributed.

d.Departmentalization by Time:-Hospitals and other public utility companies such as telephone company that work around the clock are generally departmentalized on the basis of time shifts. For example, the telephone company may have a day shift, on evening shift and a night shift, and for each shift a different department may exist, even though they are all alike in terms of objectives.

3.2d Project Organization

These are temporary organizational structures formed for specific projects for a specific period of time and once the goal is achieved, these are dismantled. For example, the goal of an organization may be to develop a new automobile. For this project, the specialists from different functional departments will be drawn to work together.

These functional departments are production, engineering, quality control marketing research, etc. When the project is completed, these specialists go back to their respective duties. These specialists are basically selected on the basis of task related skills and technical expertise rather than decision-making experience or planning ability.

These structures are very useful when:

  1. The project is clearly defined in terms of objectives to be achieved and the target date for the completion of the project is set. An example would be the project of building a new airport.
  2. The project is separate and unique and not a part of the daily work routine of the organization.
  3. There must be different types of activities that require skills and specialization and these must be coordinated to achieve the desired goal.
  4. The project must be temporary in nature and not extend into other related projects.

3.2e Matrix Organization

A matrix structure is, in a sense, a combination and interaction of project and functional structures and is suggested to overcome the problems associated with project and functional structures individually. The key features of a matrix structure are that the functional and project lines of authority are super-imposed with each other and are shared by both functional and project managers.

Fig3.2e:- Matrix Organization

The project managers are generally responsible for overall direction and integration of activities and resources related to the project. They are responsible for accomplishing work on schedule and within the prescribed budget. They are also responsible for integrating the efforts of all functional managers to accomplish the project and directing and evaluating project activity. The functional managers are concerned with the operational aspects of the project. The functional structure is primarily responsible for:

  1. Providing technical guidance for the project.
  2. Providing functional staff that is highly skilled and specialized.
  3. Completing the project within prescribed technical specifications.

Greiner sees matrix organization, in which cross-functional teams are used, as a response to growing complexity associated with the organizational growth. These complexities, both internal(size, technology) as well as external (markets, competitors), create problems of information processing and communication that are best dealt by matrix type of organization.

3.2f The Network Structure

This type of structure is also known as virtual corporations or virtual organizations. Here, the main organization is linked to outside firms (such as vendors, clients, associates) with a computer connection in order to achieve collective growth and profitability. This structure allows them to work as a single unit.

In a network structure, the organization keeps its core business to itself and the rest of the processes are outsourced. Sometimes this type of organization is also known as hollow corporations or hollow organizations.