Contingent buyers in the healthcare industry are among the last to adopt vendor management systems and managed service providers, and many staffing suppliers in the space have concerns.
VMS and MSP proved a controversial topic at the Healthcare Staffing Summit held late October in Chicago. The event brought together healthcare staffing firms.
VMS/MSP concerns aired during the conference included lower bill rates, lack of transparency and, in the case of MSPs, being forced to work with their competitors.
On the other hand, VMS and MSP supporters argued such systems could even the playing field among firms, improve payment terms and allow staffing suppliers to sell into large organizations without the need for a large sales force.
MSPs have been around for 20 years and VMS around for 17 years, but VMS and MSP in healthcare have been around only about a decade, said Bob Livonius, president, strategic workforce solutions, at AMN Healthcare Inc., in a talk at the conference.
And while VMS and MSP are already being adopted for healthcare staffing segments such as nurse and allied healthcare, locum tenens ranks among the last of the healthcare segments to get VMS. This is happening even as more firms enter the locum tenens segment (provision of temporary doctors), with healthcare staffing buyers getting inundated with sales calls.
“We are driving our clients nuts in the locums sector,” Livonius told the audience of healthcare staffing firms.
He cited three myths as to why locum tenens won’t go through VMS:
- “Physicians are ‘different.’”
- “Physicians can only be presented by the company that ‘represents’ them.”
- “We have to talk with clients directly.”
Livonius, whose company provides an MSP and VMS, said locums is the last labor category where potential savings can be achieved, and healthcare organizations are under enormous pressure to find ways to control costs.
However, concerns over VMS and MSP were aired at the conference as well.
Colleen Mills cited a survey of independent healthcare staffing firms where she said 100 percent of the responses included negative comments on VMS and MSP. Mills is senior vice president, standards and government relations, at the National Healthcare Staffing Alliance.
Concerns cited by Mills during her presentation included arbitrarily lowered bill rates, lengthened payment terms, staffing suppliers prohibited from directly contacting managers at buyer sites, lack of transparency and lack of feedback on workers sent to buyers among other things.
Mills’ survey found that 50 percent of independent healthcare staffing firms reported a decrease in rates of 10 percent. In addition, 38 percent firms reported a 15 percent decline in rates.
Many hospitals do not know staffing firms are not allowed to talk directly to them, she said. In one case, a contingent nurse was improperly blamed with a problem and the lack of contact rules made it difficult to solve.
Another concern was a lack of payment to staffing firms, in some cases, if the host facility recruits a temporary worker directly, Mills said. It’s also a concern that an MSP may have an opportunity to fill positions itself before going to suppliers.
However, there were VMS/MSP success stories among staffing firms as well
Pankaj Jindal spoke from an information technology staffing perspective, where VMS and MSP is already firmly in place. Jindal built up a $50 million IT staffing firm that did all its business through VMS/MSP.
VMS is a good value proposition for buyers, Jindal said told healthcare staffing firms during a panel at the conference. “We figured out this was a model that was going to catch fire.”
Although his firm didn’t start by solely servicing VMS/MSP, he tailored it to serving them in terms of recruitment strategy and incentives for internal workers. Jindal is now chief operating officer of Akraya Inc.
A benefit of a good MSP is that it can level the playing field, allowing smaller firms the same shot at filling openings as larger players, he said. MSPs can have program fees of about 1 percent to 2.8 percent, but that is somewhat offset by lesser investment in sales and account management as well as better payment terms. In one case, Jindal said a client with a 67-day term went down to 17-day payment term under an MSP.
MSPs can also provide a certain amount of volume, although there can be volume discounts, Jindal said.
Leanne Oatman, executive vice president of MSP-provider RightSourcing Inc., said in a conference session on working with MSPs that a concern when implementing such a system is getting everybody on board.
“The biggest challenge in the beginning is getting all the key stakeholder from both the suppliers and the client on the same page,” Oatman said. “So it’s understanding what’s in it for them? Where’s the value? What’s driving the change? And then communicating that out to the hiring managers and suppliers so that everybody’s on board in terms of change management and they’re award of again what’s in it for them.”
Several at the conference argued that efficiency will win out in the end.
The National Healthcare Staffing Alliance’s Mills said her organization is working on possible solutions to difficulties presented by the VMS/MSP relationship. However, she also said that hospitals — large buyers of contingent healthcare staffing — are in a tough spot.
“Hospitals are working in a very rigid, a very unfavorable climate and they have great challenges,” she said.