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Human Capital Management in the US’s Healthcare Industry Essay


The healthcare industry is the most important in the economy since it deals directly with the lives of the citizens. This means that the elements of ethical considerations and moral obligations are very important in the industry. The success of the industry depends on the ability of the various stakeholders to ensure that ethical considerations and moral obligations are given priority in the industry.

This objective can only be achieved if the firms in the healthcare industry are able to recruit and retain talented and creative employees. Thus human capital management has become a fundamental function in most healthcare organizations especially in the US market that is characterized by clients who are more concerned with quality and value for their money.

Human capital relates to the assessment of the human resources that are at the disposal of an organization. Human capital management considers the skills, experiences, motivation and aspiration of the employees as the most important assets in an organization. Thus organizations must be in a position to invest in the development of these assets and ensure that their workforce use them for the benefit of the organization.

This paper will focus on the value of human capital management. The meaning of human capital, the strategies that firms are using to develop their human capital and the drivers of human capital will be illuminated in light of the US healthcare industry.

Strategies for Developing Human Capital in Order to be Competitive

Having realized the value that employees add to the competitiveness of businesses, healthcare organizations are currently focusing on strategies that can help them to retain the best talent in the industry. Consequently, a variety of strategies and policies have been formulated and implemented by various organizations. These strategies include the following.

Development Strategies

Development strategies relates to the efforts that are made by an organization to improve the competence of its employees. Improving the competence of the employees is mainly done through continuous training and education. Even though most organizations focus on introducing the training programs, the methods that they use vary from one organization to the other.

Some firms have implemented a comprehensive development program that also caters for the training costs. Such organizations use their own facilities to train their employees instead of contracting third party organizations to offer the training services. The comprehensive programs have been the most successful in the development of human capital due to two reasons.

First, all employees have the opportunity to access the training services since the financial constrain have been eliminated. Second, it leads to the desired outcomes due to the fact that the training is done in accordance to the technical needs of the organization. Some organizations have adopted partial development programs due to their limited financial capabilities.

In this case, the employees are given incentives such as study loans and study leaves in order to pursue various courses that are related to their roles. This strategy has not been very successful since the employees always go for training that fulfill their needs instead of the technical needs of the organizations. The human development programs have helped to improve the competence of the employees.

Job Satisfaction in the Workforce and the Role of Stress Audits

Job satisfaction relates to employees attitudes towards their work. The level of job satisfaction has a direct impact on the performance of the employees and the organization has a whole. The performance of the employees will be high if they are satisfied with their jobs. Thus healthcare organizations are using incentives to motivate their employees.

Besides, they are investing in acceptable work environment in order to retain their employees. Stress audits relates to the process of monitoring the stress levels among the employees. Such audits enable the organizations to formulate strategies that can be used to help the employees to manage work related stress. High levels of job satisfaction among employees lead to better performance in the organization.

Employee Retention Programs

Employee retention programs are concerned with the ability of firms to reduce employee turnover by offering the most competitive and acceptable work environment. These are incentive-based programs that are used by employers to reward top performance in their workforce. Employees tend to be more committed to their work if they believe that their efforts are recognized and rewarded accordingly by their employer.

This has prompted organizations to adopt acceptable performance appraisal systems in order to eliminate bias in the process of evaluating the performance of employees. Effective retention programs enable employers to avoid losing their valuable employees to their competitors.

Safety and Management of Behavioral Risks

Safety and behavioral risks influence the quality of human capital in two ways. First, the safety of the employees influences their performance. The employee will be more productive if they are not exposed to health related risks such as contracting diseases that are prevalent at the workplace.

Second, the behavior of employees such as substance abuse affects their health. In the healthcare industry, the employees have to be healthy in order to avoid infecting their patients. Thus the performance of the workforce will only be high if safety measures have been put in place. The performance will also improve if behavior change programs succeed in promoting the physical wellness of the employees.

The Meaning of Human Capital Management in the Industry

The firms in the industry believe that effective management of their human capital is the key to success. Thus human capital management in the US healthcare industry is considered to be the combination of all those process that involve the acquisition and retention of talent. Even though there are other factors that contribute to the competitiveness of healthcare organizations, human capital has been distinguished as the most influential on the performance of the firms.

Human capital is the most important success factor in the industry since the knowledge, attitude and skills of the workforce determines the patient outcomes and hence the quality of services. This means that it is the ideas and the contributions that employees make in their organizations that determine the overall performance.

It is not the amount of financial capital or health equipment that really improves the competitiveness of the healthcare organizations. Thus “strategic talent acquisitions” have become the main trend in the industry. This means that healthcare organizations are investing a high percentage of their resources in recruiting and retaining talented employees.

Human capital management has thus become the major tool for creating competitive advantages in the industry. This explains the value of the human capital in the healthcare industry.

The Human Capital Drivers in the Industry


Innovation refers to the process through which new ideas or techniques are introduced in health care organizations in order to improve their competitiveness. Health care organizations will be able to facilitate innovation by employing talented individuals. The process of innovation can focus on the products or the processes of producing the products.

Product innovation aims at introducing new product that satisfies the specific needs of the clients. Thus it enables the firms to increase their revenues. Process innovation on the other hand aims at improving the efficiency of the firms in regard to the provision of their services. This means that it facilitates cost reduction and improvement of the quality of services. Innovation can be disruptive or non-disruptive.

Disruptive innovation usually replaces the existing system and creates more value to the owners of the health care organizations. Non-disruptive innovation on the other hand focuses on improving the existing system with the aim of solving a particular problem. Thus organizations that embark on appropriate innovation will be able to improve their competitive advantages in the industry.

Research and Development

Research and development relates to the process through which health care organizations conduct various studies on their products, processes and the industry in order to improve their competitiveness. In the context of human capital management, it focuses on the skills and knowledge of the employees. It is the driving force behind innovation because its findings inform the development of new products and strategies for offering services.

Health care organizations will be able to formulate effective marketing plans if they conduct research on their markets and industry. They will also be able to develop the right products by researching on the needs of the clients. For example, they can be able to develop more effective and cheap treatment methods through research and development. Therefore research and development has a positive impact on the competitiveness of health care firms.

Patient Outcomes

Patient outcomes refer to the result of the treatment process. It helps in evaluating the success or the effectiveness of the treatment services that are offered by health care organizations. Patient outcomes can be indicated by the readmission rates and the physical wellness of the patients after being discharged.

It determines the sales of health care organizations since the clients will only be loyal if they are able to realize positive outcomes. Consequently, the organizations are focusing on improving the competence of their physicians through training in order to ensure positive patient outcomes.

Response time

Response time relates to the time devoted to service delivery and how fast the clients are able to access the services. The clients usually prefer an efficient organization that is capable of responding to their needs immediately. Consequently, most firms have invested in communication technologies that enable the physicians to share information with their colleagues and the clients efficiently.

This enables the nurses to have more time to care for the patients in order to realize the expected patient outcomes. Thus health care organizations will be able to improve their competitiveness by focusing on rapid response time.

Quality of Customer Services

The quality of customer services determines the level of the clients’ satisfaction especially in the health care industry. Customers are usually concerned with the quality of services and will only visit a hospital if the value for their money is guaranteed. They also prefer health organizations that are able to respond effectively to their enquiries.

Thus health care organizations are investing on training programs in order to equip their employees with the best skills for offering customer services. The competitiveness of the firm will improve as the quality of customer services improve.

Evidence in Support of the Value of Human Capital Management

The value of human capital management can be explained by the following trends. First, due to the increasing demand for talent in the industry, healthcare organizations are becoming more innovative in recruiting their employees. Unlike in the past when physicians used to search for potential employers, healthcare organizations are currently sending their employees to teach in universities with the aim of identifying and recruiting talented students.

Second, the supply of talented physicians has not been able to match the demand in the industry in the last ten years. Consequently, healthcare firms have only survived due to the implementation of effective human capital management strategies. Third, the market value of most healthcare firms is measured in terms of intangible assets such as relationships, partnerships and creativity.

The development of these assets depends on the availability of talent. This means that healthcare organizations can not acquire the above mentioned assets if they do not focus on effective human capital management principles. Finally, the quality of services is the main success factor in the healthcare industry.

The quality of services on the other hand depends on the competence of the employees. The competence of the employees can only be improved if human capital management strategies that focus on skills, education and knowledge have been put in place.


Human capital management focuses on the development human resources in terms of the employees’ skills, knowledge, experience and education. Thus human capital management is used by organizations to create competitive advantages in the market by maximizing the potentials of their employees.

In order to achieve this objective, firms have implemented training programs, incentive programs and diversity programs. The main drivers of human capital in the healthcare industry include employee retention programs, development strategies and job satisfaction. Human capital management is the most important management function in healthcare organizations due to the evidences that have been discussed above.


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"Human Capital Management in the US’s Healthcare Industry." IvyPanda, 3 May 2019, ivypanda.com/essays/human-capital-management-in-the-uss-healthcare-industry-essay/.

1. IvyPanda. "Human Capital Management in the US’s Healthcare Industry." May 3, 2019. https://ivypanda.com/essays/human-capital-management-in-the-uss-healthcare-industry-essay/.


IvyPanda. "Human Capital Management in the US’s Healthcare Industry." May 3, 2019. https://ivypanda.com/essays/human-capital-management-in-the-uss-healthcare-industry-essay/.


IvyPanda. 2019. "Human Capital Management in the US’s Healthcare Industry." May 3, 2019. https://ivypanda.com/essays/human-capital-management-in-the-uss-healthcare-industry-essay/.


IvyPanda. (2019) 'Human Capital Management in the US’s Healthcare Industry'. 3 May.

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