The Nursing Human Capital Value Model

Abstract

Nursing's economic value is presently framed within the dominant "outcomes-over-cost" value framework. Within this context, organizations employing nurses often use nursing budget reductions as a cost-minimization strategy, with the intent of retaining high quality outcomes. However, persistent issues such as nurse understaffing, burnout, and turnover threaten healthcare systems' capacity to deliver the quality, equitable, affordable patient care that the public requires. In this paper, we propose a new conceptual model and definition of nursing's economic value. The model development is guided by the convergence of three classic economic frameworks: human capital theory, production theory, and value theory. Grounded in these theories, we envision nursing as a value-adding human capital asset and explicitly link nursing staff characteristics and allocation to the production of healthcare services and organizational financial outcomes. We redefine nursing's economic value as the return on investment (ROI) in nursing human capital reflected in the improvement of consumer, nurse, and organizational outcomes. This new conceptual model, termed the Nursing Human Capital Value Model, presents a cycle of value creation that starts with investments in growing, developing and sustaining an organization's nursing human capital. Nurses, as a human capital asset, deliver nursing care-a foundational ingredient to the production of healthcare services and consumer outcomes. Improved outcomes, subsequently, drive organizational revenue growth. Finally, the accrued revenue is reinvested in nursing, further propelling the cycle's continuation. This innovative model, which is applicable across health systems financed through both governmental and private/non-governmental payor sources, highlights that investment in nursing human capital development is essential for sustainable value generation, identifying opportunities for optimizing nurses' contributions to the value cycle. By directly incorporating economic theories of human capital, production, and value, our model paves the way for future research on the dynamic scope of nursing's economic contribution within healthcare organizations and systems and underscores its necessity for the long-term sustainability and growth of the nursing profession. Tweetable abstract: The economic value of nursing lies in the return on investment in nursing human capital. #nurses #ROI #healthcare.

Keywords: Economic value; Economics; Healthcare finance; Nurses; Nursing human capital; Nursing practice environment; Operating margin; Return on investment; Workforce development.