SI Review: September 2012

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Research Report: A different remedy

A Different Remedy

Talent shortages, reform could boost healthcare staffing

By Robert Balicki

Staffing Industry Analysts’ most recent survey of buyers of healthcare staffing sheds light on a procurement pain point that healthcare staffing firms are well positioned to profit from — the worsening shortage of doctors, nurses and IT professionals in the healthcare space.

This shortage is resulting in hospitals beginning to explore the recruitment process outsourcing (RPO) option as a serious recruiting solution. It could be an opportunity for long-term partnership and revenue growth in the segment.

These buyers were contacted as part of a larger survey of 297 North American buyers from a wide swath of industries that was conducted in the second quarter. Buyers in the healthcare industry were by far the least optimistic about their future use of temps, with only 14 percent planning to use more agency temporary workers over the next two years.

Likewise, healthcare buyers were by far the least interested in trying new suppliers — almost two-fifths of healthcare buyers said that they had “no plans” to try new suppliers. That still leaves more than 60 percent who are interested in new suppliers — even if not for their temps. Further, 62 percent of healthcare buyers plan to use more fulltime workers in the next two years. This could be the opening that staffing firms are waiting for.

Suppliers can now begin to form long-term partnerships based around RPO and direct hire.

RPO Route

In the survey, we asked buyers what proportion of their contingents were hired because permanent workers were unavailable. For healthcare buyers, the average response was 63 percent; in all other industries, the average response was no higher than 32 percent. A quarter of providers even indicated that 100 percent of their contingents were hired because a permanent worker was unavailable.

With so few healthcare contingents hired for seasonal or incidental needs, staffing firms can shift from a model in which they smooth out random or seasonal fluctuations in demand among hospitals to one in which they become a partner in the hiring process.

A hospital that hires an agency nurse because the HR department cannot find one on its own would prefer a direct hire or temp-to-hire relationship, or to outsource the entire recruitment process.

When it comes to outsourcing the recruiting process, the survey results show that 28 percent of healthcare buyers currently use RPO, and an additional 24 percent will seriously consider it over the next two years.

Crossroads

The healthcare staffing segment is at a crossroads. On the one hand, the Affordable Care Act introduced many measures and programs to encourage savings.

Given hospitals’ view of temp staffing as a cost center, agencies may find themselves on the receiving end of the push for efficiency. This could encourage the adoption of VMS in healthcare to drive down costs.

On the other, there is an acute nationwide shortage of doctors and nurses. Mathematically, hospitals will be unable to recruit enough talent; this presents a business opportunity for agencies to use their expertise in recruiting to let hospitals focus less on scanning resumes and more on healing the sick.

Robert Balicki is a research analyst with Staffing Industry Analysts. He can be reached at rbalicki@staffingindustry.com.

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