The Pros and Cons of Managed Service Providers for Travel Nurses

Over the past decade, more and more hospitals have turned to one of the various Vendor Management Service models to meet their travel nursing and other contingent staffing needs. In this blog post, we’re going to take close look at one of the more common Vendor Management Service models utilized in the healthcare staffing industry, the Managed Service Provider (MSP). In doing so, we’ll discuss the pros and cons of this model for travel nurses.

What is the Managed Service Provider model?

We’ve described in detail the various types of Vendor Management Services in previous blog posts. Here we’re going to focus on the MSP.

A Vendor Management Service offers one central source for the hospital to work with in meeting its ravel nursing and other healthcare staffing needs. Instead of working with multiple, sometimes hundreds, of different staffing agencies (vendors), the hospital funnels all activity through the Vendor Management Service. In essence, Vendor Management Services centralize, organize, and streamline the staffing process.

An MSP is a particular type of Vendor Management Service in which a healthcare staffing company serves as the hospital’s Vendor Management Service. MSPs are typically larger healthcare staffing agencies like American Mobile, Cross Country, Comforce, and others. It’s important to point out that some would argue that an MSP doesn’t necessarily need to provide staffing services of their own. However, you’d be hard-pressed to find one that doesn’t.

How does the MSP model function?

The MSP has an exclusive contract with the hospital to provide staffing services. This means that the hospital is forbidden from bringing on other vendors to help them meet their staffing needs. However, the MSP is allowed to bring on other vendors who operate through a sub-vending agreement with the MSP. The sub-vendors pay a fee to the MSP which is typically between 2%-3% of the bill rate.

When the hospital has a new job requisition they release it to the MSP. Therefore, the MSP always gets the first crack at filling the job openings. Filling the opening with their own nurse is the best case scenario for them as they stand to make the most money this way. If they are unable to fill the position, then they’ll release it to the sub-vendors.

The pros of working with the MSPs as a travel nurse

By some accounts, there are over 250 agencies in the United States. With such a broad selection of agencies and the litany of variables that travel nurses must consider, choosing the right travel nursing agencies to work with can be a daunting task. There are many advantages to working with agencies that are MSPs.

First Crack at Travel Nursing Jobs

Perhaps the biggest advantage is that you’ll be among the first candidates to have a shot at landing the jobs at hospitals where the agency serves as the MSP. Again, the MSP will first attempt to fill the hospital’s contracts with the MSP’s candidates. They do this by keeping the job openings private for a certain period of time. For that time frame, only the MSP’s recruiters know about the opening. Therefore, there is a good chance that you may never know an opening exists if you’re not working with the MSP because it may get filled before your agency is alerted.

Closer Relationship between Agency and Hospital

Travelers may also benefit from the closer relationship that the MSP has with the hospital compared to sub-vendor agencies. For all intents and purposes, the MSP is in direct contact with the hospital. Therefore, your recruiter may receive more timely updates and feedback on your submission.

Additionally, if you have problems while on assignment, then your recruiter may be able to address them more quickly. Moreover, the onboarding process when you start a new assignment may run more smoothly. If you’re working with a sub-vendor, then all communication must run through the MSP, so there may be delays and communication breakdowns.

Potentially More Convenient

Working with MSPs may also be a much more convenient approach for the travelers to maximize their exposure to the travel nursing job market. If you were to sign up with American Mobile, Cross Country, Aya, Medical Solutions, and HealthTrust, then it would be fair to say that you would have access to a significant percentage of all the jobs available. This would go a long way toward ensuring that you are able to maintain continuous employment.

Potentially Higher Pay

Finally, there is a good chance that the MSP may be able to pay a little more for the travel contracts at the hospital in question. Remember, the sub-vendors must pay a fee for working with the MSP. That fee is typically 2%-3% of the bill rate. So the MSP is certainly starting out with more money. However, this doesn’t always translate into more pay. You’ll need to conduct a travel nursing pay package comparison in order to be sure.

The cons of working with MSPs as a travel nurse

The Downside of Larger Agencies

While there are clearly many advantages to working with MSPs there are also many disadvantages. First, many experienced travelers detest the larger agencies. American Mobile and Cross Country routinely draw the ire of travel nurses on online forums and social media. Their complaints are broad based but almost always related to poor service.

Many complain that the larger companies have a strong bias toward the interests of the hospital. For example, MSPs may be more prone toward siding with the hospital in disputes over scheduling or other contract related issues and less prone to facilitating an amicable solution. Many also complain that they are made to feel like a number instead of human being.

Consolidation and Fewer Agencies

Second, if more and more nurses sign on with MSPSs, then consolidation in the industry will certainly follow. Small and mid-sized agencies will be forced out of business. Travelers will have fewer choices.

Potentially Lower Bill Rates

Of course, there is certainly a debate to be had as to whether this would be good or bad. On one hand, less competition could mean that the MSPs will force bill rates higher which could ultimately result in higher pay rates for travelers. On the other hand, MSPs could continue to push bill rates down in an effort to maintain their MSP contracts and protect them from getting taken over by the few competitors in the market.

However, one thing is for sure. Bill rates have declined significantly with the proliferation of MSPs. Bill rates have declined $8 to $10 per hour in recent years. Of course, some of this can be attributed to the economic downturn. However, reduced bill rates is one of the major selling points that MSPs pitch to potential client hospitals.

Only time will tell if MSPs come to completely dominate the industry. Hospitals may find it in their best interest to manage a Vendor Management System on their own, or to ensure that the MSP is only involved in managing the staffing needs and in no way involved with directly staffing the hospital’s openings. How this shakes out will have undoubtedly have an impact on travel nurses.