Human Capital and the Healthcare Industry

By Leslie Charles Coover

Human capital is made up of the physical and mental abilities of employees that contribute to productivity (Garibaldi). Human capital is the foundation of intellectual capital, which includes such things as an organization’s reputation, the loyalty and commitment of its employees, the quality of customer relationships, organizational values, and brand names (Dess et al.).

One, if not the most important human capital resource in the healthcare industry is the primary caregiver. Because primary care physicians are the main link in the patient-doctor relationship, the supply of this valuable resource is essential if the healthcare industry is to succeed in meeting the needs of all Americans. Primary care physicians often are family doctors. They have played a vital role in shaping the reputation, quality of relationships, and cultural values of our healthcare system. When most Americans think of their family doctor they have an image of a caring, compassionate care giver who has a great deal of medical training and experience in the field of medicine.

When potential future doctors, nurses, and medical technicians consider their career paths they determine whether expected benefits exceed costs. Although they will probably be greatly influenced by intrinsic motivation (e.g., the opportunity to help people), from a purely practical perspective they determine if the present value of their income stream less the present value of costs merits the investment in time, money, and commitment.

Jason Plautz addressed the issue of shortages in the supply of primary care givers. “The American Academy of Family Physicians estimates that by 2020, the patient load will require 40,000 more doctors than will be practicing.” Many worry that expanding coverage under the Patient Protection and Affordable Care Act (HR 3590) and healthcare reconciliation (HR 4872) will worsen the problem.

According to Lauran Neergaard, a reporter for the Associated Press, “primary care physicians already are in short supply in parts of the country.” This quintessential element in the fabric of healthcare is “losing out to the better pay, better hours and higher profile of many other specialties.”

The need to address the issue of primary health care providers was not missed by the framers of the recent healthcare reform bills. Title V of HR 3590 addresses the human capital needs of the healthcare industry. One of the goals is to increase the supply of qualified healthcare workers to improve access to and delivery of “health care services for all individuals” (p.1244). To accomplish this objective Title V spells out measures to enhance “health care workforce education and training” (1245).

Section 5002 defines a Health Care Career Pathway as “a rigorous, engaging, and high quality set of courses and services that . . . is aligned with the needs of healthcare industries” (1246). The term “‘physician assistant education program’ means an educational program in a public or private institution in a State that . . . has as its objective the education of individuals who, upon completion of their studies in the program, may be qualified to provide primary care medical services with the supervision of a physician” (1249).

Section 5102 establishes grant programs to “analyze State labor market information in order to create health care career pathways for students and adults, including dislocated workers” (1277). Most of the grant funds must be used “to promote innovative health care workforce career pathway activities, including career counseling, learning, and employment” (1282). The amount of planning and implementation grants for the year 2010 is $158 billion, and such sums may be allocated “for each subsequent fiscal year” (1285).

Sections 5203 and 5204 address health care workforce loan programs. Loans of up to $35,000 a year will be awarded to people pursuing degrees in healthcare who agree “to work in, or for a provider serving, a health professional shortage area or medically underserved area” (1299). If healthcare workers who have completed their degrees agree to serve in “the full-time employment of a Federal, State, local, or tribal public health agency,” (1302) in some cases for no more than three years, loans will be forgiven.

Other provisions of HR 3590 that will help increase the supply of primary care givers are found in Section 5207, which funds the National Health Service Corps Loan Repayment Program. This program repays up to $50,000 of a student loan for primary care medical, dental and mental health clinicians in exchange for 2 years of service in a Health Professional Shortage Area. Upon completion of service, clinicians may be eligible to apply for additional help in exchange for extended service.

Section 5208 funds “the development and operation of nurse-managed health clinics” (NMHCs) (1309). “The term ‘nurse-managed health clinic’ means a nurse-practice arrangement, managed by advanced practice nurses, that provides primary care or wellness services to underserved or vulnerable populations and that is associated with a school, college, university or department of nursing, federally qualified health center, or independent nonprofit health or social services agency” (1310).

The Secretary of Health will award grants to qualifying NMHCs. Fifty million dollars has been appropriated for fiscal year 2010 and additional amounts may be provided for the years 2011 through 2014 (1312).

One amendment to Title V (Health Care Workforce) lays a blueprint to develop a plan of action to eliminate “the barriers to entering and staying in primary care, including provider compensation” (2328). Another amendment authorizes the Secretary of Health to set up programs and provide additional grants to provide one-year training for nurse practitioners to prepare them for careers in federally qualified health centers (FQHCs) and NMHCs (2332).

Finally, Rural Physician Training Grants will be awarded to medical schools across the country to establish programs that will help train “home-grown” doctors with a real personal interest in the health of their community (2344). This is yet another provision designed to overcome one of the biggest barriers to health care in rural communities—the shortage of doctors, particularly primary care practitioners.

A brief look at the history of the American healthcare system may shed some light on the implications of the latest initiative. Medical education in the nineteenth century was usually brief and undemanding—physicians were numerous (Ludmerer). John Hopkins was the first medical school that required a college degree for admission; this policy was adopted in 1893. With the advent of the twentieth century, there was a growing optimism about the value of scientific medicine. Advancements in biomedical science made many people hopeful (Howell). Advances in diagnostic technology, surgical methods, and other medical practices gave patients, regardless of their economic status, reason to seek access to sophisticated care. As providers began to curtail free services, due to the increased cost of career development, technology, and other operating costs, the patients with modest or meager incomes frequently became the ultimate casualty of a consumer society.

Frequent attempts have been made for over 100 years to remedy the problem. Some advocates have proposed public medicine initiatives. At the other end of the ideological spectrum, others have promoted methods of achieving reform where the government has no role. Between these two extremes there have been hoards of plans that mix public and private forms of both insurance and care. The failure of these plans has resulted in many missed opportunities, including:

  • Doctors that leave the primary care field or who no longer accept Medicaid or Medicare patients,
  • Patients that can’t find healthcare providers, and
  • Students who choose other career paths due to the bureaucracy-hurdles that they cannot overcome.

Increasing the number of primary care providers is one substratum of the HR 3590 and HR 4872 bills. Hopefully the help will get to where it is needed and not just result in more fruitless studies and needless layers of bureaucracy.


Dess, Gregory G., G.T. Lumpkin, and Alan B. Eisner.Strategic Management. 3rd ed. Boston, MA: McGraw-Hill, 2007.

Garibaldi, Pietro. Personnel Economics in Imperfect Labour Markets. New York: Oxford University Press, 2006.

Howell, Joel. Technology in the Hospital: Transforming Patient Care in the Early Twentieth Century. Baltimore: John Hopkins University Press, 1995.

Ludmerer, Kenneth. Learning to Heal: The Development of American Medical Education. New York: Basic Books, 1985.

Neergaard, Lauran. “Health Overhaul Likely to Strain Doctor Shortage.” Associated Press March 28, 2010. New York Times Article Archive. 1 Apr. 2010.

Plautz, Jason. “Are There Enough Doctors To Make Reform Work?” National Journal (2009). Academic OneFile. Gale Document Number: A212589179. 1 Apr. 2010.

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