In the healthcare industry, many organizations are looking to reduce costs, reduce competition and increase demand, through mergers or acquisitions. Companies spend a significant amount of time and money on due diligence and other analyses prior to entering into a merger or acquisition, however many of these analyses do not include a detailed impartial valuation of human capital.
Secondary research shows that mergers and acquisitions are common in the healthcare industry; however an objective analysis of human capital is not generally included in the analysis of the value of an organization. The primary research, included in this study, consists of a series of interviews, surveys and questionnaires. The focus of the research is to determine factors that effect human capital and how much of an impact they have on the success of an organization. This information was used to create a valuation guide, which can be used to determine human capital value of departments in the healthcare industry.
Questionnaires were sent to the transportation division of Company X for evaluation in each of its four hospital’s Mobile Intensive Care Units. Ten human capital factors were evaluated in each of the departments. Those factors, listed in order of their impact on an organization, include: customer service, employee morals, productivity, employee performance, work experience, continuing education programs, education/certifications, longevity, employee turnover, and orientation/training programs.
The results of the valuation indicate that the human capital value, of the four departments, ranges from approx. 60% to 96% of each department’s payroll. Three of the four departments have similar human capital values; however, they have significant differences in payroll expenses. From the research, it has been determined that Hospital #1 has the highest human capital percentage of payroll, at 95.62%, even though the payroll expense is the second lowest, at...