Health systems are navigating a perfect storm of workforce shortages, rising costs, demographic shifts, and increased scrutiny around care quality and access. Against this complex backdrop, traditional efforts to control costs or consolidate functions no longer suffice. To remain sustainable and mission-driven, health systems must fundamentally rethink how work is organized and executed.

Operating model design is no longer a background exercise. It is now central to health system performance, resilience, and innovation. The time has come to reimagine, not just restructure.

Keep these important considerations in mind as you move forward:

The “Box Top” Challenge: Start with the End in Mind

Many organizations begin their redesign efforts by rearranging reporting lines, but this approach misses the bigger picture. Real transformation starts by defining a clear, shared vision of what the organization is trying to become. We call this establishing the “box top” — like the full picture on a jigsaw puzzle that shows how all the pieces fit together.

A helpful framework is our Operating Model Blueprint, which defines four archetypes:

• Network Manager
• Strategic Leader
• Operational Leader
• Integrated Operator

These represent different levels of centralization and integration across governance, brand, support functions, and care delivery. Leaders must assess where they are today and intentionally choose where they would like to be in the future. That choice will shape every subsequent decision.

 

Centralization is Not One-Size-Fits-All

One of the most common questions we hear is: What should we centralize? Our answer is that it depends. Functions like HR, IT, and Finance often benefit from centralization because they involve scalable, repeatable work that requires deep expertise. Centralizing them can improve efficiency, consistency, and career development.

However, not all work should be centralized. Functions that require responsiveness to local needs — such as clinical staffing or community outreach — often function best when they remain close to the point of care. The goal isn’t to centralize for its own sake, but to do so with intentionality and based on the nature of the work.

A hybrid model is most common. For example, health systems may centralize recruiting processes but deploy local talent acquisition partners who understand specific markets. The key is striking the right balance of being informed by data and aligned with the broader operating strategy.

 

Rethinking Care Delivery in a Post-Acute World

Legacy operating models were built for episodic, acute care. However, today’s demand is increasingly driven by chronic and complex conditions that require coordinated, longitudinal management.

The shift in disease burden means that the traditional hub-and-spoke model, which centers on inpatient facilities, is no longer optimal. Instead, health systems must build capabilities to deliver care closer to home – often in ambulatory or digital environments. This requires not only different physical infrastructure, but also new workforce roles, workflows, and decision-making models.

Care is too often designed around appointments and throughput metrics when what’s really needed is continuous engagement. Operating models must evolve to meet patients where they are with flexible, responsive structures that support proactive care and ongoing monitoring.

 

Using Technology Intentionally (Not as a Band-Aid)

Health care innovation has frequently added cost without improving productivity. When done right, however, technology such as AI, automation, and ambient monitoring can enhance the workforce rather than replace it.

Leading organizations are beginning to integrate predictive tools that flag at-risk patients and enable earlier, more targeted interventions. By combining clinical data with data related to food security, social isolation, or other non-clinical risks, technology can help prioritize care and allocate resources more effectively.

Technology must be embedded into the operating model, though — not layered on top of it. This means defining roles, workflows, and governance that support digital tools, training the workforce to use them, and measuring outcomes accordingly.

 

Governance, Decision Rights, and Culture: The Invisible Design

One of the biggest barriers to transformation isn’t structure — it’s decision-making. Health systems that have merged or acquired new entities often struggle with legacy governance structures, competing local interests, and fragmented decision rights.

Successful organizations clarify who decides what, where, and how. This includes:

• Realigning board structures to reduce political complexity
• Harmonizing incentives and metrics across the enterprise
• Creating unified leadership models that respect local needs while enabling system-level strategy

Equally important is culture. When two systems come together, blending different values, norms, and practices requires as much attention as any structural realignment. Without cultural integration, even the best-designed models will falter.

 

A Practical Path Forward: Where to Start

Operating model redesign must be approached with discipline, empathy, and clarity. Based on our work with dozens of health systems, we recommend the following steps:

• Establish shared design principles: Align senior leaders on the goals of transformation before addressing structure.
• Use benchmarking and data to focus efforts: Identify where costs, spans and layers, or performance gaps are out of sync with peers.
• Redesign beyond the org chart: Address decision rights, workflows, talent deployment, and cultural alignment.
• Involve stakeholders early and often: Build change management into every phase of the effort.
• Reinvest for impact: Use savings from greater efficiency to invest in workforce development, digital capabilities, and care transformation.

Avoid common pitfalls such as rushing the process, underinvesting in change management, or viewing the redesign purely as a cost-cutting exercise. This is strategic work that requires thoughtful execution.

 

Reimagining, Not Just Restructuring

Transforming the operating model is not about efficiency alone. It’s about building a more resilient, adaptive, and mission-aligned health system. One that is better equipped to care for its workforce, its patients, and its communities.

The opportunity is clear. The time is now – and the organizations that take the leap will be the ones best positioned to lead health care into the next era.

 

By Garrett Sheridan