Abstract The healthcare industry is confronted with the challenge of offering customized services while in the meantime to control increasing healthcare costs. Modularization is an important approach to reduce healthcare costs and improve patient-centered services via decreasing process complexity and enhancing flexibility through configuring pre-identified service modules. Recognizing the importance of modularity for healthcare services, this paper introduces Design Structure Matrix (DSM) as a technique for healthcare process modularization. A DSM-based modularization and sequencing algorithm is developed to allocate healthcare activities to service modules using Genetic Algorithm (GA) and arrange sequences of services both within and across service modules to support modular clinical pathway design. The proposed algorithm is implemented with a case study, the results of which have demonstrated the feasibility and applicability of the proposed DSM-based modularization method for healthcare process design.