Team health means that the building blocks of an effective team are in place. Without team health I find that unproductive conflicts are more likely to arise. All in all, conflict competence will be constrained. Conflict competence refers to how well an organization, team, or individual responds to conflict in all its manifestations.

Below, I outline four building blocks of team health, as I currently think about them, and how they affect conflict competence.
Vision
Teams need a clear understanding of their purpose and direction. These give meaning to work life for the individuals on a team, and without a common purpose and direction, unnecessary and harmful conflicts in decision-making will arise. When direction is not commonly understood, individuals will make their own assumptions about it. These diverging assumptions create unproductive differences between team members.
Structure and Systems
Team members need to know what they are responsible for and how the team carries out its activities. This can include an organizational chart or established flow of work. As with Vision, when not clear, people may work counter to each other. Or, important requirements get missed. The drive of everyone to achieve specific goals will be frustrated, which can lead to blaming and unproductive conflict.
Relationships
Strong work relationships are foundational to healthy teams. There should be an expectation that members make these relationships work in service to team responsibilities and goals. If there are relationship challenges between team members, there should be known options available for addressing them – whether through coaching, mediation, or team support. Developing work relationships in an ongoing manner is part of becoming a thriving and more capable team.
Diversity of viewpoints is a strength. It will sometimes lead to conflict, which in turn can be consciously harnessed to fuel innovation. Team relationships need to have enough trust that constructive conflict over principles, policies, and planning is possible.
Leadership and Power
Team health does not depend on a particular style of leadership; for example, there are variations between effective teams in how much authority the team leader exerts. More critical is an explicit relationship with power. Team members can talk freely and without fear about how the leader and any other member is influencing the group – what is helpful and what is not helpful – and there are understood means for working on unproductive dynamics and making adjustments when there is dysfunction. Team members are reflective. They talk about team processes and work at improving them.
You can summarize these four building blocks of a healthy team in a word each:
Vision
Systems
Relationships
Power
Health in each is required for conflict competence. I would also venture to say that team health in each building block is needed for a team to reach its potential or perform at a high level.