9 Points of Debate Between Travel Nursing Companies over the MSP Model

The debate over Managed Service Providers in travel nursing and healthcare staffing heated up in June of 2013 when opposing sides exchanged barbs on The Staffing Stream. Colleen Mills, a Senior VP for the National Healthcare Staffing Alliance wrote a piece urging small and mid-sized travel nursing companies to “Take a stand on VMS/MSP”. Days later, Bob Livonius, President of Workforce Solutions at AMN Healthcare, took exception and urged healthcare staffing agencies to “Work Together to Embrace Best Practices with MSPs.” This is an important topic with major implications for travel nurses, travel allied professionals, and Locum Tenens. 

What are Travel Nursing “Vendor Management Services?”

We’ve described the differences between Vendor Management Systems (VMS) and Managed Service Providers (MSP) and discussed some of the basic ways they can impact travel nurses in a previous blog post. However, it’s important to provide a little background here in order to fully understand the information in this blog post.

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In the context of healthcare staffing, 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.

There are two main types of Vendor Management Services. The first is known as a Vendor Management System (VMS). A VMS is a company that provides a software platform and, in some cases, onsite personnel to assist the hospital with managing supplemental staffing. VMS’s are not engaged in recruitment.

The second is known as a Managed Service Provider (MSP). An MSP is similar to a VMS, but the company is itself engaged in recruitment. Sometimes, MSPs utilize the services of a VMS to help them manage the process. Other times, MSPs have developed or acquired their own VMS.

So the main difference between the VMS and MSP is “neutrality.” A VMS is considered “vendor neutral” because they aren’t themselves engaged in recruitment. By contrast, MSPs are large staffing agencies that secure exclusive staffing contracts with hospitals and then enlist the services of other agencies to help them fill the open orders. The MSP clearly has an interest in ensuring that its own candidates are the ones landing the jobs. However, in recent years, the lines between VMS and MSP have become increasingly blurred due to the fact that many VMS’s have been acquired by large healthcare staffing companies.

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In the past, it was standard for healthcare staffing agencies to contract directly with their client hospitals. Of course, hospitals have to work with multiple agencies to get all their staffing needs met. Working with multiple agencies can be difficult to manage and so there were many problems to be solved. So, savvy tech entrepreneurs developed software systems (ie VMS’s) designed to solve the problems and hospitals started using them. Then, large healthcare staffing agencies saw the opportunity to use these systems to help them acquire “exclusive” staffing contracts with hospitals (ie MSP’s). These changes are disruptive to the status quo. And disruption causes debate.

The pro VMS/MSP side of the debate

The debate on The Staffing Stream exposed some of the more contentious issues from the agency perspective. These issues also have implications for travel healthcare professionals and we’ll elaborate on them here.

Bob Livonius of American Mobile offered a very basic reply to Colleen Mills’ lengthy list of grievances. Mr. Livonius contends that the move toward greater adoption of the VMS/MSP model is inevitable in healthcare staffing because it delivers on the “metrics”, which means it gets the jobs filled quickly and at a good price for the client. The bottom line is that it’s better for clients, which are healthcare employers in this case. He goes on to urge healthcare staffing companies to join the American Staffing Association and participate in developing a set of best practices for staffing firm and VMS/MSP relationships.

The anti VMS/MSP side of the debate

Meanwhile, Colleen Mills offered a laundry list of issues that she described as “unhealthy realities for staffing firms.” We’ll elaborate on each of them below paying special attention to their possible effects on travel nurses, travel allied professionals, and Locum Tenens.

1) “Restrictions from working and communicating directly with the end users.”

Colleen is referring to the idea that VMS/MSPs insert a middle-man between the hospital or healthcare employer and the agency. In most if not all cases, direct communication between the hospital and agency is forbidden. This is great for hospitals because they don’t have agencies calling them off the hook.

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However, this can result in delays in the interview process and a lack of information regarding a particular job’s availability. This is one reason that you’ll often come across open job postings that are actually filled already. It can also make it very complicated for agencies to address their travelers’ problems while on assignment at the hospital.

2) “Onerous and one-sided terms and conditions, not the least of which includes allowing facilities to hire your staff with no or very little compensation to you for the conversion.”

Colleen is no doubt referring to many issues when she points to “onerous and one-sided terms and conditions”. However, the specific issue she offers is actually a good thing for travelers. When hospitals are able to hire travelers as permanent staff with little or no compensation to the agency, then they maybe more apt to do so. In theory, this would give travelers more opportunities to land permanent jobs with the hospitals they contract with.

However, this is bad for agencies. They spend a lot of time and resources in the recruitment process and recruitment is a very expensive endeavor. It’s a significant blow to the bottom line when an agency loses an employee. Moreover, what’s to stop hospitals from using travel recruitment as their own personal, free recruitment tool? Put out a travel nursing job order, have agencies do all the leg work, then offer the candidate a job if it’s a good fit.

3) “Reduced margins: bill rates are reduced by $8 to $10 per hour, and the VMS/MSP charges you 3 to 4 percent of sales and other incidental fees.”

Bill rates are the hourly rates that agencies bill their client hospitals for their employees’ time. Therefore, bill rates are the fundamental factor upon which pay rates are based. Lower bill rates result in lower pay rates.

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My experience confirms Colleen’s contention that MSPs lead to reduced bill rates. I have yet to see any new MSP relationship result in increased bill rates. In fact, cost reductions are one of the major selling points that VMS’s and MSP’s advertise. Morevover, MSPs do indeed charge a 3 to 4 percent fee for services which serves to further reduce the amount of money that sub-vending agencies have to pay.

4) “In many cases you must provide an unreasonable amount of unbillable orientation.”

Most travelers are unaware that agencies are often unable to bill hospitals for a certain number of “orientation hours.” For example, the agency may be unable to bill a hospital for 4 to 12 hours of  “orientation time.” This is another issue that puts downward pressure on pay rates.

More unbillable hours means more cost for the agency and less money for them to pay. My experience confirms Colleen’s contention that MSP relationships often lead to higher levels of unbillable orientation. For example, when American Mobile took over from Nursefinders as the MSP for Kaiser Permanente, they tacked on some online on-boarding modules that could easily take 12 hours to complete on top of the 4 hours of unbillable orientation that previously existed.

5) “Significant penalties for failure to complete a contract, even if for a legitimate reason, such as death.”

Agencies are charged penalty fees when one of their contracted employees fails to complete a contract. MSPs often negotiate very favorable terms for hospitals in an effort to win the hospital’s business.

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This represents another cost for agencies which can in turn put downward pressure on travel nursing pay rates. However, I’m not sure that this would be any different with or without MSPs.

6) “Documentation requirements that may run afoul of federal laws.”

As we’ve mentioned previously, the documentation requirements for travel nurses have shot through the roof in recent years. Many hospitals require extensive background checks, education verification and credit checks in addition to the mountains of paperwork they require. Some of these requirements may indeed violate federal laws and they are very expensive.

7) “The risk of private and critical information being accessed by strangers.”

All documentation must be run through the MSP or VMS. This increases the potential for private information to be compromised. The more hands information passes through, the more likely it is to be compromised.

8) “Your staff must learn yet another staffing software program.”

On the surface, this issue may not appear to impact the traveler directly. However, if an agency’s staff is unfamiliar with the software system used to submit submission profiles, report time, bill the hospital, and submit documentation, then there could be major ramifications for the travel nurse. They may miss out on job opportunities, may not get paid correctly, or may have their assignment pushed back or cancelled due to a documentation oversight.

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Some of these software systems are complicated and a healthcare staffing agency’s internal staff turnover makes it difficult to develop the kind of expertise necessary to operate efficiently. And training employees on complex software systems takes time and money.

9) “Contingents become exposed to covert efforts to “poach” them from their home agency.”

“Contingents” are travel healthcare professionals. The concern is that the healthcare staffing agency is turning over all documentation for their candidates to a competing healthcare staffing agency, the MSP. There are clauses in the contract between the MSP and the sub-vending agency designed to prohibit the MSP from soliciting the sub-vending agency’s candidates. However, these clauses are almost impossible to enforce. And given the number of touch points between the sub-vending agency’s candidates and the MSP, the concern is understandable.

Let’s use American Mobile’s MSP relationship with Kaiser Permanente as an example again. When a travel nurse signs a contract to work at Kaiser, they must complete the online on-boarding modules through RN.com. The nurse must create an RN.com account to complete the modules. If the nurse forgets to uncheck the contact box in the process of signing up for an RN.com account, then they have just authorized RN.com’s parent company, you guessed it, American Mobile, to contact the nurse. Moreover, when the nurse shows up at the American Mobile onboarding orientation, the American Mobile representatives will pitch them on American Mobile’s Agency PRN staffing services. Below is RN.com’s contact approval clause. I think you can see the cause for concern.

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This is clearly a debate with implications for travel nurses, travel allied professionals and locum tenens. It will play a huge role in the future of travel nursing. Travel nurses should be aware of these issues in order to better navigate the system and get the most out of their time as travel nurses.