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Organizational Design Consistency: The PennCARE and Henry Ford Health System Experiences

EXECUTIVE SUMMARY There has been much discussion of the appropriateness of various organizational strategies for today's healthcare industry. This article presents case studies of two healthcare organizations that have pursued very different configurations. PennCARE uses a virtually integrated, loose contract‐based arrangement, while Henry Ford Health System employs a vertically integrated, tight ownership model. Despite these different approaches, their overall designs are strikingly similar. In essence both systems demonstrate a property called organizational design consistency; they simply approach it from different ends of the spectrum. This article presents the notion of organizational design consistency and defines it as the steady pursuit of a single preferred configuration strategy across key elements of organizational design. To illustrate the framework the case studies target four key elements of organizational design (governance structure, organizational culture, strategic planning processes, and decision‐making procedures) and explain how consistency across these components adds value to both of these differently configured healthcare systems. There is room enough for diverse configurations of organizations in the current healthcare environment. Consistency does not mandate conformity; value can be derived from both tight and loose models. Furthermore, when fashioning organizational design consistency strategies, healthcare systems should carefully choose tightly or loosely modeled configurations to appropriately suit their aims, their markets, and the capabilities and resources available to them.