Managed Service Providers (MSP) using a Vendor Management Systems (VMS) or Workforce Management Systems have been a part of U.S. commerce for decades, starting with Ford Motor Company and moving across all market verticals.
These systems can provide operational and financial efficiencies unavailable to firms not using them. The need for a MSP can grow when demand for services exceeds supply. The U.S. nursing shortage is case in a single point. The ability to aggregate as many possible vendors for human capital is a great advantage of this system.
The fill rate, or ability to reduce hospital vacancies assists the hospital in revenue generation, adequate staffing ratios, and relief from some of the fixed-costs associated with full-time employees. When supply is scarce and demand is high, aggregating as many vendors as possible with uniform terms and conditions is the most effective model.
Without such systems in place, the time required to manage, pay and orchestrate labor demands while working independently with a large vendor pool is expensive and inefficient. This is where operational efficiencies of MSPs are most valuable. Leveraging multiple vendors on one side of the MSP, but communicating singularly on the other side for hospital management. The larger number of vendors funneled through the MSP mathematically increases the odds of meeting the high demand of healthcare workers.
Financial leverage can be realized as contract talks can be standardized across all vendors. Standardizing rates simplifies financial planning for the client. Spreading demand across multiple vendors provides pricing leverage that can’t be realized working with one supplier at a time.
One of the first start-ups to engage the contract labor spend of hospitals in the US was Shiftwise, created in 2003 in Portland, Oregon. It was originally known as Origin, Inc, acquired by AMN Healthcare in 2013.
A later player to the game was Hospital Corporation of America, a for-profit system. HCA has long known the value of managed services and has utilized HealthTrust Purchasing Group since 1999. In 2011, HCA launched Parallon, another subsidiary designed to offer workforce management solutions throughout its expansive network of hospitals. In 2016, Parallon rebranded its workforce management solution to better identify with HCA’s original GPO subsidiary, and is now known as HealthTrust Workforce Solutions.
Medefis, yet another provider of hospital vendor management solutions, also founded in 2003, owns significant market share.
What is the “incestuous nature” of these companies? To explain, it is important to understand in simple terms the relationship a VMS/MSP provider has with the hospital.
1. The VMS/MSP is the sole gatekeeper for any agency that wishes to do business with the hospital.
2. The hospital is typically forbidden to work with individual vendors; as such, vendors must only work through the VMS/MSP provider.
3. Every staffing firm is 100% dependent on the VMS/MSP to provide their services.
4. The VMS/MSP is repository for all staffing orders and is the first to receive all orders for labor across the system.
The recent spate of acquisitions of VMS/MSP vendors by staffing firms presents an interesting question. Why would a healthcare staffing firm have a desire to get into the VMS business? A review of the aforesaid items holds the key and prompts further questioning. Who owns whom? What does vendor neutrality mean?
Now, let’s talk about vendor neutrality. When the VMS/MSP providers have no affiliation with staffing firms, their sole responsibility is to provide seamless transactions between the hospital client and all subcontracted vendors. Now that the largest staffing firms have acquired these popular systems they in essence “own” every order that is generated by the hospital client. There is speculation, but no proof that these staffing firms are taking advantage of having total access to every order before any other company sees these opportunities. True transparency would be the simultaneous release of all orders to all vendors including the staffing firm that owns the VMS/MSP.
The good news is that staffing firms that had been blocked from direct access to these clients can now present their own VMS/MSP solutions to compete head-to-head with the largest in the industry. A sea change is here, and it’s driven by technology.
Learn more about the VMS/MSP relationship at blueskysynergyfacilities.com.