Outsourcing medical staffing
Hospitals turn to managed-service providers to handle all temporary staffing chores
Major healthcare staffing companies increasingly are serving as general contractors for hospitals scrambling to staff up with contingent physicians and nurses. Some hospitals say that working with staffing firms under the socalled managed-service provider model has helped them cope with severe shortages, and that MSPs have served them better than having to deal directly with individual staffing firms to locate and place candidates. MSPs can be used by healthcare providers to cover themselves in a variety of situations, from simply filling slots for a certain shift to flexing up during a massive system overhaul such as an information technology installation.
This trend comes as the healthcare staffing industry experiences record revenue and growth in 2015. Staffing firms are battling for a competitive edge. Major firms offering the MSP model include AMN Healthcare, Cross Country Healthcare and Parallon.
With the Affordable Care Act expanding insurance coverage, millions of baby boomers moving into their senior years and a large cohort of doctors and nurses retiring, providers are in dire need of medical profes-
sionals. Accordingly, contract labor costs are soaring. Nashville-based HCA reported its contract labor increased 35.5% in the third quarter of 2015 compared with the same time frame a year ago. Livonia, Mich.-based Trinity Health saw its contract labor costs balloon 15.9% for the fiscal year ended June 30.
Some hospitals and health systems are turning to the MSP model so they don’t have to dedicate as much time and resources to finding qualified professionals. Under the model, they outsource the role of dealing with staffing firms, letting the MSP handle not only recruiting, but sometimes also credentialing. MSP proponents say this allows hospitals to focus on providing care for patients, rather than scouring staffing firms for potential candidates.
Some MSPs have their own locum tenens division and can supply the physicians. Those that don’t have such a division work with staffing firms as subcontractors. All communication about the available physician and nursing spots occurs between the MSP and the subcontractor. But AMN and Cross Country say communication between all stakeholders is important.
“No one wants to call 30 agencies to get a job filled,” said Janet Elkin, CEO of Supplemental Health Care, a healthcare staffing firm based in Park City, Utah, which offers MSP services.
But some locum tenens firms say the involvement of MSPs can create logistical and payment bottlenecks that turn off healthcare professionals. An executive at one locum tenens firm alleged that MSPs sometimes engage in unethical practices to grab recruiting fees away from them.
The MSP model earlier penetrated other industries such as information technology and manufacturing, and MSP temp/contract spending remains higher in those sectors than in healthcare. According to Staffing Industry Analysts’ 2015 VMS and MSP Competitive Landscape study released in July, 36% of MSP/temp contracting spending in the U.S. is in IT and 16% in manufacturing, compared with 7% in healthcare.
Hospital systems increasingly are recognizing how the MSP model could benefit them, said Sean Ebner, president of Staff Care, whose parent company, AMN Healthcare, has provided locum tenens physicians with the MSP model since 2012. Getting talent at the right time and at the right level is the No. 1 cost for hospitals, he said.
Even so, satisfaction scores for the MSP model are dropping. According to the trade publication Staffing Industry Analysts’ 2014 Contingent Buyers Survey: Satisfaction with Staffing Suppliers, VMS, MSP, and Job Boards, the number of clients that would recommend an MSP service dropped to 18% in 2014 from 27% in 2011.
Staffing Industry Analysts projects a sizzling 17% revenue growth for healthcare staffing in 2015, compared with 7% growth last year. The firms are expected to garner $12.7 billion in revenue in 2015, the most ever. In particular, revenue for physician staffing firms and travel nurse staffing firms is expected to balloon 20% and 23%, respectively, according to the publication.
Competition among staffing firms is intense. Less than 5% of total staffing at U.S. hospitals is filled by temporary staff, said A.J. Rice, managing director at UBS. But hospitals represent a $1 trillion industry overall, so even a small uptick in the percentage of outsourced doctors and nurses means a lot of money.
As the battle intensifies over that 5% market share, companies such as AMN Healthcare and Cross Country have begun offering an MSP to rapidly fill spots at hospitals and streamline the process. Companies such as Cross Country began offering an MSP option in the late 1990s. But only in the past two years have Cross Country and rival AMN Healthcare begun offering the services of locum tenens physicians within their MSP model.
To succeed, an MSP firm often must get closely involved in a provider client’s operations, according to some hospital executives who have used the model.
About 15 months ago, the three-campus Aria Health system in Philadelphia decided to switch its model of staffing from a contract management group and instead start its own physician management operation. During the transition, there was a need to fill vacancies rapidly, said Dr. Gerald Wydro, Aria’s chair of emergency medicine.
So AMN Healthcare stepped in with its MSP model to help Aria with recruitment, credentialing, onboarding and scheduling, Wydro said. “We needed much more than a few locums doctors,” he said. “We needed a whole system.” The process took a year, Wydro said. AMN placed a manager on-site for several months. The company also embedded credentialing specialists within Aria’s credentialing office, Wydro said. AMN created a large pool of physician candidates from which Aria was able to fill open spots. The hospital system didn’t have to worry about making a lot of phone calls to locate physicians.
In addition to the more streamlined process, doctors located by AMN were much more engaged than regular locums tenens physicians, Wydro said. He believes that was because the MSP was embedded at Aria, and AMN staff members were committed to the health system every step of the way. “If we would have used five locums companies, we would have failed at this,” he said. “We also would have failed without on-site MSP leadership.”
It’s more expensive to go with the MSP model, Wydro acknowledged. So systems must decide if the model will improve their ability to provide safe and effective care, making the extra expenditures worthwhile.
Aria’s patient-satisfaction scores from Press Ganey for its emergency department rose while the MSP was in place, according to numbers supplied by Aria. The score hovered around 76 in July 2014, when AMN’s MSP took over. It hit 86 in November 2014, and was at 84 in July 2015 when the system stopped using the AMN physicians.
Whether hiring an MSP can save a hospital money depends on the hospital, said Joanne Spetz, an economics professor at the University of California at San Francisco. If a facility faces significant fluctuations in its staffing needs, having a contractor help manage staffing can be efficient, she said. Also, there could be advantages related to having the contractor take responsibility for screening and credentialing. “But, if you have a strong HR depart-
Some locum tenens firms say the involvement of MSPs can create logistical and payment bottlenecks that turn off healthcare professionals.
ment and relatively stable needs, you may be less likely to benefit from this model,” she said.
Boston Medical Center used Supplemental Health Care’s MSP two years ago when it was preparing to convert to an Epic Systems Corp. electronic health record for inpatients, said Nancy Gaden, Boston Medical’s senior vice president and chief nursing officer. Supplemental recruited workers to cover for Boston Medical’s staff nurses while they were training on the new Epic EHR. Supplemental also augmented the nurse staffing after the new system went live, allowing staff nurses to see fewer patients during the post-launch period of reduced productivity, Gaden said.
Boston Medical was attracted to the MSP because of its ability to ramp up quickly, she said. The hospital was looking for 100 or more nurses and was seeking coverage for all three shifts. Supplemental’s model was a cost-effective way to gear up in the short-term and was very targeted, she said. “Most of the time, it’s been great,” Gaden said, offering a caveat on MSPs: “They aren’t magic, they can’t clone people.”
But some locum tenens firms are not happy about the MSP model. Melissa Byington, president of Comp-Health’s locum tenens division, said situations arise when a staffing subcontractor submits a physician job candidate to the MSP, which rejects the candidate. The same physician is then contacted by the MSP company’s in-house locum tenens division, and the physician gets the job, with all the fees going to the MSP’s locum tenens division, Byington said.
Payment also can be a problem, Byington said. If the tem- porary doctor has a payment dispute with the hospital, the MSP will hold off on paying the doctor until a decision is made. The hospital’s accounts receivable department has to review the paperwork, which slows the process, Byington said. An MSP does not allow any communication between the subcontractor and hospital, so the subcontractor is left in the dark while remaining on the hook for paying the physician, Byington said. And subcontractors don’t have deep pockets like the larger MSP companies do, she said.
The lack of communication can also cause friction with physicians who are job candidates, Byington said. A candidate may have general questions about a hospital’s operations, but the candidate and subcontractor have to wait on the MSP to get the answer from the hospital, she said. When the candidate is forced to wait for an answer, which can take weeks, the candidate may move on to a different staffing company, she said.
“If I’m a good doctor, I’m not going to wait three weeks for an answer,” Byington said. “I’ll take my skills elsewhere to a new staffing company, and maybe I don’t go back to the same hospital again.”
Bob Murphy, president of workforce solutions at Cross Country Staffing, which offers MSP services, acknowledged that while it’s common to hear complaints about having a third party between the hospital and the staffing company, most subcontractors view MSPs favorably as an extension of their sales force. Murphy said subcontractors see the MSP as being able to add a lot more options to what they offer.