What’s all the talk about supposed MSP ‘Vendor Neutrality’ in healthcare staffing?
Now that the contract labor spend is dropping for most hospitals around the country, many are taking a closer look at how their supply chain for temporary personnel is performing. Prudent executives realize the drop in contract labor today doesn’t preclude another crisis staffing situation in the future. It is always better to prepare and take precautions before a crisis than to try to fight fires in the midst of it.
One of the strategies in the human capital space for over 20 years has been the proliferation of third party Managed Service Providers (MSPs) that use Vendor Management Software (VMS) to connect facilities to healthcare staffing agencies via a one-stop shop.
While most hospitals were inundated with training and compliance demands associated with internal implementation of ERP, MSPs presented themselves as a simple way to hand off those details and responsibilities to a third party. However, after the sudden explosion of contingent labor costs during the COVID-19 pandemic, systems are began taking a closer look at the often-hidden financial risks and losses created from outsourcing valuable order fulfillment opportunities.
These systems’ goals in turn shifted from remaining completely hands-off the staffing of contingent workers, due to fear of navigating an agency-driven landscape, to taking back control over the labor management practices and decisions proving so crucial to their fiscal futures.
One of the costs hospitals discovered had been “disguised” in the traditional model came from MSPs withholding as much as 5% pay from the subcontracted agencies providing their clinical talent.
This meant that only 95% of hospital costs were actually going to agency candidates, and the other 5% was being retained by the MSP itself. Since today’s technology allows hospitals to manage their contingent workforce entirely themselves, bringing those staffing processes in-house with allocation of minimal infrastructure resources and personnel, an immediate savings to their agency spend can be enjoyed.
This takes us to the point of vendor neutrality, and why it is considered an issue. The definition most often heard is that no agencies take preference over others. However, many complaints vendors have center on the seeming hidden agenda of MSPs to retain more of the bill rate by controlling or manipulating the order flow for the benefit of their own employees.
For example, there have been concerns raised over the potential for an MSP to “hold” hospital orders for upwards of 48-72 hours to give their own recruiters for a head start in finding W2 personnel to fill them. If this were to be happening, both access to the contingent labor market and its associated pricing could be negatively impacted.
Contrastingly, a non-agency MSP, with no access to its own caregiver supply pool, does not have a so-called dog in the fight and is not competing with the very vendors it’s responsible for feeding jobs to. There is a 3-part test that you can execute that will confirm whether your MSP is truly vendor neutral.
- Go to your search engine and, using the name of your MSP, search for “Who Owns ________”.
- If the ownership is determined to be an agency, get them to confirm how soon after receiving your order requests they disseminate them to their participating vendors. With today’s technology, anything under one hour is unacceptable.
- Play the Joint Commission card: Ask the MSP for their main contact at several agencies that are approved to staff at your facility. Without notice, and on a random basis, call these participating agencies an hour after you’ve released an order to see if they’ve gotten it. If they haven’t, you know your supply has been compromised, which could ultimately result in higher cost to you and receipt of fewer qualified candidates.
If your spot checks provide proof of consistent and timely communication of your staffing needs from the MSP to all eligible vendor suppliers, then you should rest easier!
ABOUT THE AUTHOR
Tim Teague
President, BlueSky Synergy
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Tim is a thought leader in the contingent labor market place. His latest technology approach takes advantage of hospitals developing their own “gig” workforce. This technology is similar to what staffing agencies have enjoyed for years.
