Two critical streams of research, conducted one hundred years apart, are converging today. The groundbreaking mathematical and data-driven studies by Florence Nightingale during the Crimean War in 1820 revolutionized how healthcare professionals determined the root causes of illness and injury among patients (Bradshaw, 2020). A century later, Fredrick Winslow Taylor established a theory of management and workflow analysis known as “Scientific Management.” This research would later be known as “Taylorism” and recognized as a precursor to modern human capital analytics (Birnbaum & Somers, 2022). Despite long histories, the disciplines of healthcare performance analytics and human capital analytics followed parallel but separate tracks during the 19th and 20th centuries. Little has been done to integrate these two analytic disciplines to improve the delivery of medical care and the sustainability of healthcare organizations. Today, there is an increased demand for healthcare to meet the aging world population, spiraling healthcare costs, and a shortage of human resources to meet patient needs. It is imperative that healthcare professionals apply innovations to explore and optimize value from a combined discipline of healthcare human capital measurement and reporting.
The Case for Human Capital Measurement and Reporting
We define human capital as the knowledge, information, ideas, skills, and wellbeing of individuals and groups of individuals. Just as physical capital is created from the production of materials, human capital is created from the application of skills and capabilities of individuals within a workforce (Coleman, 1994). Human capital has been referred to as “the most important form of capital in modern economies… While all forms of capital are important, including machinery, factories, and financial capital, human capital is the most significant” (Becker, 2002).
Nowhere is the value of human capital more apparent than the healthcare field, an industry that relies upon skilled professionals with specialized education, training, and unique competencies to reduce suffering and restore health. The healthcare industry is one of continuous and rapid change. Advances in technology, practice, and medical breakthroughs (all human capital value-driven outcomes in themselves) require a continually evolving workforce–one that requires careful management focused on the development and engagement of trained professionals to optimize the value of human capital.
It is not uncommon to hear organizational leaders claim that people are the most valuable asset in their organizations. These same organizations regularly provide the public with detailed information about their financial and operating assets that represent tangible investments. These actions demonstrate their ability and willingness to measure and disclose information about certain aspects of operational and financial performance of their organization. However, most are either unable or unwilling to provide meaningful information about the contribution of human capital to the tangible and intangible value of their workforce (Lev, 2001).
In this paper, we take the position that 1) Human capital is one of the most, if not the most, critical assets of healthcare industries today, 2) Human capital can and should be quantifiably measured, and 3) Standardized measurement and transparent reporting of human capital metrics should be undertaken in the healthcare industry to better inform management (and the public) about the efficiency and effectiveness of investment in human capital.