Human Capital Effect on Healthcare Sector in the US

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Table of Contents

Definition of human capital management
Issues pertaining importance of human capital in health sector
Impact of human capital on health sector
Conclusion
References

Definition of human capital management

Human capital can be described as individual and collective human resources that are responsible for the achievement of an organizations objectives. Human resources are an integral part of every organization and without this, progress can not be ascertained. Human capital management is the process of recruiting, developing and retraining highly qualified individuals to carry out the organizations objectives.

Human resources have been explained by scholars as one of the factors of production, besides land and capital. Human capital is particularly important in the healthcare industry in order to deliver the key service to all Americans (Sultz & Young 2010).

The main aim of any human resources department is to attract and retain highly competent individuals and develop them through valid experience. When combined, employee and patient satisfaction are likely to lead to organizational success.

An efficient service is that which brings satisfaction to both the client and the service provider. Healthcare personnel are trained to restore well being in their patients. Some of the determinants that could exhibit the effectiveness and efficiency of the service awarded could include the patients well being and lack of complaints about the delivery of the service.

A good healthcare service improves patient health and provides personnel with the experience required to sort out similar events in the future. The passing of the recent healthcare bill means that more people will be able to seek quality treatment from US hospitals, thereby creating a need for hospitals to improve on their human capital in order to deal with the increased patient capacity.

Issues pertaining importance of human capital in health sector

Most organizations face internal pressure to increase productivity and improve value to all stakeholders. Thus, the top management has to seek ways of improving financial performance and output for this purpose, forcing human resources executives to focus on a business approach biased towards the organization.

The most common practice of improving performance is by cutting down on administrative expenses so as to improve on operating efficiency. However, more and more organizations, such as those in the health care industry, have seen the need to invest in their human capital in order to better performance, increase revenue and deal with rising competition.

External pressure is also building up for health care organizations to publicly report investments made in people. Health care is a highly sensitive service, thus constant quality checks are inherent in the health care industry. Health providers have to invest in qualified personnel in order to cope with government regulations and industry requirements.

Activist groups and non governmental organizations are intensifying their lobbying campaigns for organizations to be more responsive to the high unemployment rates in the US, with health care organizations being asked to increase their uptake of young interns.

The healthcare industry is constantly changing due to the changes being made in the technical world. New inventions in terms of machinery, techniques and medicines have made healthcare services easier for the practitioners, but have also led to job cuts.

Adequate training is required so that the employees can operate and interpret the results from the newly implemented technologies. Improving technology has facilitated the growth of software packages that measure and manage human capital in organizations.

Managing people is one of the most challenging tasks to accomplish in the healthcare industry. This is a challenge faced by most health care providers. The health care industry is under more scrutiny due to the escalating costs which have left most Americans without health care coverage (Plunkett 2008). Health care have of late come under more pressure to improve substandard services offered to most Americans, and this can be done by improving the quality of personnel in the industry.

The government is known to be the largest and effective employer in the US health care industry. Most employees look forward to working in the private sector since it has better pay and benefits, as opposed to the public sector (na 2005). The private sector is using such incentives to attract quality staff, which could also explain why the private sector is seen to offer better health care services than public hospitals. Competition within the private sector has also helped to escalate prices for quality staff, better services and overall improved human capital.

Several metrics have been formulated that seek to measure the value of human capital in organizations. The metrics are especially useful for labor intensive industries, such as the health care organizations. The revenue factor is most widely used form of measurement as managers evaluate income derived by its labor force.

One method of measuring the revenue from employees is by calculating the revenue and benefit streams that the employer or organization stands to gain by optimizing its human capital. Although such results cannot be accurately established, expected benefits are a good basis for the calculation, as determined by market forces (Musgrave 2006). The revenue factor links the income derived by an organization to the employees, therefore indicating the productivity of the employees.

Human capital in the healthcare industry can also be measured by the amount of investment made in the individuals. An employees stock of skills and capabilities is usually the resultant of investments and costs incurred during his or her life, and are influenced by a number of factors. Such factors include the employees themselves, investments made by their parents, the government and past employers.

The government could contribute through its education system, and public social and health services. Employers invest in employees by providing them with on-job training, experience and other staff development costs. Therefore, human capital will be the present value of the sum of expenditures incurred by the individual and his parents, costs incurred by the current and past employers and expenses incurred by the federal and state government.

As human capital has been described as the set of skills, capabilities and attributes that enable an employee to contribute to the organization, the value of those skills, capabilities and attributes inherent in the employee can offer a valid measure of the value of the human capital.

The major challenge that this theory faces is the pricing of the factors that make up human capital as there is no common unit of measurement and hence are not easily available. Capabilities related to the market can be measured by evaluating their impact on the organizations earnings or returns, but such characteristics will not reveal the overall value of human capital.

Impact of human capital on health sector

Investment in human capital in the health care sector will lead to the ultimate welfare services, causing customer satisfaction. Innovative alternative methods of offering health services are also developed as a result of investment in personnel, thereby causing an increase in productivity and quality services.

Implemented policies that offer equal opportunities for all staff are a key factor in ensuring that quality services are maintained since all personnel will access experience required to better their performance levels.

Supply of labor is usually influenced by market forces. People are likely to take up job offerings that promise higher salaries and benefits, as evidenced by the rising numbers of people who opt for jobs in the private sector over the public sector. Regional imbalances in terms of income have meant that practitioners prefer working in a high income state such as New Jersey over Mississippi.

Conclusion

Investment in human capital for any organization will most likely improve productivity, and overall satisfaction of the concerned stakeholders. Health workers need to have competent knowledge in health care and must have good diagnostic skills and provide the best patient care possible in order to save lives and improve public welfare. For this to be possible, management in the health care sector should adopt strategies that would ensure that personnel deliver the key service to the sick (Blair 2007).

This means that the management in the industry should have strategic measures that would help in identifying an employees competence, skills and the willingness to work especially when hiring health workers. Human resource managers in the health industry have to find ways of strategizing the workforce and find ways of retaining the workers to avoid shortage of nurses and hospital staff.

With most health care facilities under the management of the private sector, increasing competition has led to escalated costs for these individuals hence the organizations have to formulate strategies that will lead to the retention of highly qualified personnel (Porter & Teisberg 2006).

Human resource managers should put in mind that products are easily mimicked or duplicated in the market, but the same cannot be said about the knowledge, capabilities and skills of employees since they cannot be duplicated. Effective human capital management is necessary for the provision of high quality health care services to the American public (Breul & Gardner 2004).

In the past, organizations simply hired more employees in order to facilitate growth but have since moved from the quantity aspect of human resources to the quality of talent so as to improve productivity.

Health care in the US remains a challenge, with millions of Americans unable to access quality services due to the high costs. A health care facility will be considered to be of good quality if the available services deliver positive health results to the public, and such services should be acceptable and able to bring patient satisfaction.

Both health care providers and health insurance companies face major challenges in their attempt to ensure quality services due to budgetary constraints, lack of a favorable agreement between the stakeholders and the high turnover rates in the health care industry because of growing competition.

There is a clear connection between human capital and ultimate success in the health care sector. The human resources department has the task of identifying motivational factors that directly or indirectly improve on the organizations performance. Human resources remain a health care providers most valuable assets. Improved personnel job satisfaction will enable an organization to meet its retention rates and productivity targets.

Satisfaction can be achieved through empowering employees by allowing them to participate in patient care decisions. A good schedule program with favorable hourly shifts is also likely to please employees since they will not be overworked. A favorable schedule program can be facilitated by having an appropriate doctor or nurse to patient ratio, and this can be done by hiring more physicians at the hospital.

Measurement of performance is crucial for the organization to study the development of its employees, and come up with recognition programs that will increase job satisfaction and motivation in the workplace.

The measures also form an important basis for planning on the organizational structure, as well as from an investment perspective. The organization can be able to ascertain the benefits derived from its investments in its personnel, and establish whether it should continue to invest in human capital in the future.

Through understanding the metrics used to measure and value human capital, the human resources manager can better represent and recommend to top management on issues concerning human capital in the organization.

An organization that records high on various performance metrics is said to command a high quality workforce and able to attract and retain competent physicians who will use their skills and attributes to deliver quality patient care services for the benefit of the organization and all stakeholders. Key performance drivers in the healthcare industry include quality health services, patient satisfaction and welfare of the population and low attrition rates.

References

Blair, J. D. (2007). Strategic Thinking & Entrepreneurial Action in the Health Care. Industry. Boston: Emerald Group Publishing.

Breul, J. D. & Gardner, N. W. (2004). Human Capital 2004. New York: Rowman & Littlefield.

Musgrave, F. W. (2006). The economics of U.S. health care policy: the role of market forces. New York: M.E. Sharpe Publishers.

na. (2005). Human Capital Management: Top Human Resources Executives on Strategies for Success. Boston: Aspatore Books.

Plunkett, J. W. (2008). Plunketts health care industry almanac 2009. Houston: Plunkett Research.

Porter, M. E. & Teisberg, E. O. (2006). Redefining health care: creating value-based competition on results. New York: Harvard Business Press.

Sultz, H. A. & Young, K. M. (2010). Health Care USA: Understanding Its Organization and Delivery. Sudbury, MA: Jones & Bartlett Learning.

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