In this episode, we’re going to discuss Vendor Management Services and their impact on the travel healthcare industry. Now, this might sound like it’s a subject that has no impact on travel nurses and other travel healthcare professionals. But in reality, many of the questions that travelers have about the industry and many of the frustrations that travelers experience can be tied to Vendor Management Services. Now, there is some debate over the impact of Vendor Management Services and we’re going to take a close look at that debate to get a better understanding of the issues involved. [Please note that this is a transcript of a podcast episode. As such, grammar and spelling is not optimized for written content.]
Why Vendor Management Services are in Travel Nursing
So let’s start by discussing what Vendor Management Services are. We discussed this issue in episode 5 so we won’t go into too much detail here, but some background is warranted. As we discussed, the traditional approach to staffing was for staffing agencies to have a direct relationship with the facilities they worked with. This meant that there was no middleman between the agency and hospital. The agency had a contract directly with the hospital and the agency had relations with representatives at the hospital.
While there are some advantages to this approach, the bottom line is that it was riddled with problems. And when there are problems, then solutions are bound to pop up. So, just what are the problems? Well, for starters, hospitals typically have to work with multiple agencies to get their positions filled. And generally speaking, when it comes to the staffing industry, the more specialized and professional the candidate you’re seeking, the more difficult it is to find them. And because healthcare professionals like nurses and allied professionals are highly specialized and must be licensed in the state in question, it can be like finding a needle in a haystack.
Now this wouldn’t be much of a problem if the needs of the employer weren’t urgent. But when it comes to temporary staffing and in particular temporary healthcare staffing the, the needs of the employer are usually very urgent. So you need to find a needle in a haystack quickly. So the more people you have looking, the better.
Moreover, if you’re the hospital, then you want to generate some competition of course. I mean, that’s the single best way to get the best candidates at the best price.
Of course, communicating with more people is more difficult than communicating with just one person. So this system creates a problem in that regard.
And it doesn’t stop there. As any traveler will attest, there is tons of paperwork involved with travel healthcare. Hospitals are dealing with that too. And when they have direct relationships, this is process is typically haphazard. You have all this paperwork coming in from multiple locations and it can get quite unorganized.
Billing is another issue. It’s much easier to be billed by one entity than it is to be billed by 20. And this goes on and on. Time reporting is more difficult. Communicating your job orders is more difficult. Scheduling interviews is more difficult. Dealing with disciplinary issues is more difficult.
What Are Vendor Management Services in Travel Nursing?
So Vendor Management Services arose with an eye to solving all these problems. In a general sense a Vendor Management Service is any mechanism that helps healthcare employers manage their business with various vendors, ie healthcare staffing agencies. A Vendor Management Service will typically standardize, centralize and streamline all aspects of the business relationship between hospitals and staffing agencies including job order management, onboarding, and billing.
Now, there are several types of vendor management services and it’s important to understand the differences. The first one is typically referred to as a vendor management system. This is a software platform that hospitals and agencies can sign up with. So the hospital’s representatives would learn how to use the platform on their end and the agency representatives learn how to use it on their end. Then, all business gets conducted through the platform. Generally speaking, this type of platform is called Software As a Service, or SAAS for short. Of course, there are people who work for the software company, but they’re generally there to provide software support and build out new features. One of the more popular services like this is called Medefis.
Now, the next type of service is called a Manage Service Provider. A managed service provider is a healthcare staffing company that becomes a “single source provider” of healthcare staff for the hospital. Travelers and recruiters often refer to this as an “exclusive contract”. Of course, Managed Service Providers will contract out with other agencies to help them fill the needs of the hospital. And Managed Service providers will typically use a vendor management system to help them streamline everything with the hospital and the agencies they work with.
As mentioned in episode 5 of the podcast, one of the key differences between Vendor Management Systems and Managed Service providers is what’s called “vendor neutrality.” The Systems are considered vendor neutral while the MSP’s are not. Because the MSP is itself a healthcare staffing agency, it has an inherent bias in favor of staffing the positions themselves. MSP’s tend to be the largest companies in the business, because why would a hospital sig such an agreement with a tiny company? So companies like American Mobile and Cross Country have many such contracts.
Okay, so in between these two Vendor Management Service Types, there are several other ways that vendor management services can be organized. For example, you could have a company that provides all the service so that hospital staff isn’t really involved, but they’re still vendor neutral because they themselves don’t provide staffing services directly. They just manage everything. Companies like this might even have staff on site with the hospital’s staffing office. For example, a company called RightSourcing provides this type of service.
Okay, so why is any of this important for travelers or travel healthcare recruiters? Well, to answer that question we’re going to take a look at a debate that took place a couple years back on website called The Staffing Stream. This website is run by Staffing Industry Analysts which is a big staffing industry think tank that holds conferences and does market research for the staffing industry. There were guest articles written on their blog about the issue that offered opposing viewpoints.
The first article was titled “Why Small Healthcare Staffing Firms Should Take a Stand on VMS/MSP”. The blog post was written by Colleen Mills who represents an organization called the National Healthcare Staffing Alliance. It had a relatively negative outlook on Vendor Management Services.
The Pro Vendor Management Service Argument for Travel Nursing
The response came from Bob Livonius who at the time was the President of Workforce Solutions for AMN Healthcare, also known as American Mobile. Now, he provided a very succinct response to Colleen’s article and we’ll link to it in the show notes. We’re going to cover his response first because it actually makes for a better flow in our discussion. So, he basically makes three arguments.
First, he asserts that over the last 30 years, businesses in every sector all around the world have embraced the Vendor Management Services model. So it’s pointless to sit on the sidelines and let the clients dictate the terms and just wish that these systems would go away. In this case, the clients are the hospitals. So he’s saying that agencies need to get involved to start dictating the terms of these agreements. I don’t think Colleen would disagree with this.
Second, he says that Vendor Management Models actually rely on the success of the affiliate vendors. Remember, we pointed out earlier that even the largest agencies need to use other agencies to help them fill the openings.
Third, he says that many staffing companies actually have longstanding relationships with MSPs that have resulted in greater profitability and growth. This is true to some degree. Often times when a smaller to mi-sized agencies lands a contract with an MSP, it gets them access to a bevy of hospitals. By doing so, it greatly enhances their exposure to available jobs and should ultimately lead to increased retention rates because they have more jobs to offer their current travelers, so those travelers might not need to bail to another company to get the job they want. The agencies should be able to attract candidates more easily because they have more job options.
The Anti Vendor Management Service Argument for Travel Nursing
As the title of the article suggests, she is writing from the perspective of the small to mid-sized agency. And she essentially raises 9 distinct issues with vendor management services. We discussed them in a previous blog post and I’ll link to that in the show notes, but let’s run through them right now.
To view the nine issues, read this article.
Now, she went to levy a fairly harsh final statement and I want to quote that for you, she says:
With 2014 and implementation of the Affordable Care Act, along with a sizable percentage of baby boomer healthcare workers retiring, healthcare staffing is poised for a healthy rebound. As margins continue to fall due to VMS/MSP proliferation, where does that leave the small staffing agency? As VMS/MSP gain strength, they will gain power and they can see to your demise. What is their end game? I believe it’s your client base, as with a reduced pool of staffing resources and market competition eliminated, rates will soar for the providers.
So, what she’s saying is that the larger agencies could potentially soak up all of the hospital clients and ultimately leave the small and mid-sized agencies high and dry and ultimately put them out of business. Then, the larger agencies could increase rates because there was less competition in the market. Moreover, they’d be the only game in town so the increased rates probably wouldn’t result in higher pay for travelers.
Okay, so you can see the concerns that many smaller and mid-sized agencies might have with the Vendor Management Model. And as you can see, it’s fair to say that there is a little truth to both sides of the debate. We’ll let you be the judge as to which side of the debate has more merit.
How Travel Nurses Counterbalance the Pressure?
One thing is for sure. Hospitals are able to increase competition for their jobs by working with more agencies than ever before. This certainly should be putting downward pressure on bill rates and therefore traveler pay rates. As a Traveler, you can counterbalance that effect by working with as many agencies as possible in an effort to increase competition for your services.
You see agencies are just the middlemen. But as it stands, they’re getting much more pressure from one side of the equation. Of course, as a traveler, it’s difficult for you to manage multiple companies and that’s a small part of what BluePipes can help you do. When you join BluePipes, you’re able to create your own job application, skills checklists and resume. And you own these documents; you can send them wherever you want. There are over 25 agencies that have contacted us to let us know that they’ll accept your documents in lieu of completing their own agency documents. And there are some amazing companies on the list including Valley Healthcare Staffing, Atlas MedStaff, Travel Nurse Across America, Trinity Healthcare Staffing, The Right Solutions, Soliant, and many more. You can also store copies of your licenses and certifications on BluePipes so that you can manage all your documents in one central location. You can network with recruiters and colleagues and you can even put your availability for your next assignment on your profile so that you can really get recruiters competing for your services.
Of course, there are advantages for agencies as well. Agencies can get the documentation they need to get their candidates submitted much more quickly. I mean, recruiters often run into the situation where they are working with a candidate who is totally interested in a job, but the candidate is working 12 hour shifts over the next three days and just won’t be able to get to the paperwork until that’s over. The recruiter knows that job will be gone because Vendor Management Services mean that there are hundreds of other agencies getting their candidate profiles ready to submit. So, time to submit is very important for healthcare staffing agencies. You will definitely improve your time to submit with BluePipes.
So to recap While it’s true that these services have solved a lot of problems in the system, they have also created some problems of their own. Some of these problems can directly impact you as a traveler, so it’s warranted to sometimes give your agency the benefit of the doubt when certain problems arise. In the end, it’s all about how those problems are handled. . In our view, both sides of the debate have some merit. VMS’s aren’t going and it’s highly likely that they will continue to improve the services they provide. Meanwhile, you can counterbalance the downward pressure on bill rates by increasing competition for your services.
Once again, we’ll have links to all the items that we discussed in this episode on the show notes page. That’s at blog.bluepipes.com/episode15. Please visit that page if you have any questions or comments to share with us about this topic.
We hope you enjoyed this episode and until next time have a safe and prosperous travel healthcare adventure.