MSP/VMS in Healthcare Staffing: How it affects the industry

Posted by Tim Teague on Mon, Nov 20, 2017 @ 05:48 PM

As a follow up from my prior blog, “The Incestuous Nature of Healthcare Staffing VMS/MSP", I thought it may be instructive to dig a little deeper into the real-world consequences of this growing model. This blog will hopefully help the
reader decide if this practice is in fact a zero sum game. It is critical to measure the considerations of both the candidates being placed around the country, and the temporary staffing firms subcontracting their talent through these arrangements.

This focuses on three areas of the staffing industry and how they are impacted by VMS/MSP proliferation.

1. Direct Impact on the “Supply Side” – Agency Affiliation with the MSP

The first item concerns the agency affiliation through the various Managed Service Providers (MSP's). This is a two-edged sword. Acquisition of new clients is one of the most expensive and time-consuming activities of a staffing firm. Since most MSP's hold contracts with multiple clients, the temp firm connecting with the MSP can, by proxy, provide candidates to the hospital client. This assumption is based on the MSP “clearing” the agency to connect. Most MSP's are interested in leveraging their reach to candidates, as clients are always mindful of the “fill rates” provided by the MSP.

The downside to this is firms that previously had agreements with the client hospital no longer can communicate or negotiate with the client. The fees charged for these pass-through invoices can also be a downside. A benefit to this arrangement is smaller staffing firms can leverage the MSP’s to indirectly work with clients they may never have acquired. There has been an uptick of staffing start-ups devoted to utilizing the MSP model to pass through candidates. However, many times they find they are placed in a lower “tier” for job releases, as they do not have the database of candidates the larger firms enjoy.

2. Direct Impact on the “Demand Side” – Hospital Engagement

The second item of interest is demand, or, the orders for talent requested. The client advantage is “one-click” distribution of requests is pushed to dozens of available vendors. What used to take non-stop phone messaging and communication now becomes a one-stop-shop. This funneling of orders through a broadcast network is an efficient model for maximizing fill rates. Many of these VMS platforms have been around for years and hospitals are very familiar with their execution. Many in the industry have complained that since many in the staffing world are paid on commission, the orders that come through the system could be “cherry picked”. Recent lawsuits have brought that into question including claims that candidates coming through the system are poached. This will ultimately be a question for the courts to decide.

3. Direct Impact on the Financial Outcomes of Subcontracting Agencies

The final item of discussion is the financial impact of the MSP model. The fees that
are associated with the MSP model are in some ways similar to the percentages that
agencies are charged for their workers compensation coverage with one major difference. The insurance fees are usually calculated as percentages of actual payrolls, whereas the VMS fees are applied to the gross revenue generated. The MSP fees are calculated for each invoice and are subtracted from the gross.

On the surface, it seems like a pretty fair percentage considering the time and effort required to acquire a new client. The basic accounting principals for staffing firms has not changed since its inception. The gross margin is the amount that is left after all labor costs for the temp staff have been calculated (i.e. a bill rate of $100 with total costs of labor at $75 will yield a gross margin of $25, or 25%). Examining the financials of the largest staffing firms in the industry show gross margins anywhere from 25% to as much as 32%. Overhead (office staff, rent, supplies, etc.) for these firms can run from 8% to 12% of total revenue. Smaller companies may not enjoy the economies of scale of larger companies, and are also tied to a bill rate they did not negotiate with the hospital.

If a smaller company with fewer resources can only manage a margin of 25%, along with operating expenses of 15%, their profit as a percentage of revenue might only be 10%, calculated as Billing Total – Cost of Labor – Overhead. If vendor management fees are pulled out of revenue at 5%, earnings are now cut in half, with VMS fees taking 50% of profit! This is probably a worst-case scenario, but it not unusual for VMS fees to take as much as 33% of earnings. (To calculate the amount your company is currently losing to VMS Fees, click here.)

Considering the impact to profit, and working against fixed billing rates, the agencies only have two choices to recover profit levels; cut overhead, or cut temp labor pay. Cutting the wages of the temp workers to offset the impact of the VMS fees creates an invitation for the temp workers to move to greener pastures. In the MSP world, it makes sense that higher pay rates should be available at those agencies that do not have to pay those fees, hence the big sucking sound of candidates moving to the agencies holding the MSP contracts who do not pay those fees.

It will be interesting to see how the market evolves over the next few years within this paradigm.


BlueSky Medical Staffing Software and VMS was built for the healthcare contingent staffing industry and allows agencies to streamline and automate their entire process, while simultaneously reducing speed to market, ensuring higher quality placements, and helping you get the right people at the right time. Ready to become your own MSP with BlueSky's VMS? Request a demo today.

Tags: Healthcare Staffing, Medical Staffing Software, VMS, MSP, healthcare staffing trends

See You At Staffing World 2016?

Posted by Emma Everett on Fri, Oct 14, 2016 @ 04:19 PM

Conferences are such a great way to see our clients face-to-face and keep a very real pulse on our industry.  ASA's Staffing World is just a little over one week away and the BlueSky team is excited to see some new and familiar faces.  Hopefully, we also get a little time to enjoy beautiful San Diego!

Please come visit us in booth #930 to share your latest insights, pain points, and feedback on our platform.  I will literally have some tea on me, so this post is not in jest.  


 Tweet this to help us get the word out about BlueSky at Staffing World 2016.

We hope to see you at ASA's Staffing World in just a few days! Feel free to schedule time with us or be completlely spontaneous in stopping by our booth #930.



Tags: Staffing World, Conferences, Trade Shows, Healthcare Staffing, American Staffing Association

5 Halloween Costumes for Healthcare Staffing

Posted by Julie Moore on Mon, Oct 27, 2014 @ 12:25 PM

Now, you probably have your work Halloween party coming up this week and want to make sure you have something appropriate but different, right?  Well the BlueSky team brainstormed and came up with a great list of costumes specifically for healthcare staffing. Check them out!  

1.  Travel Nurse

This is probably the easiset thing to do as a recruiter.  All you need to do is grab some scrubs, a stethoscope, a globe and then make a Google Pin hat out of some cardboard. 

2.  BlueSky Man

For those of you who were at the Healthcare Staffing Summit 2012 in Las Vegas you got to see Rick Ault, our implementation specialist dressed up as BlueSky man.  Its a pretty simple costume with a blue spandex suit, blue mask, blue cape, and of course have BlueSky running on your iPad. 


3.  BLS Card

For those medical staffing credentialers that want to do something simple yet funny to all of their coworkers then dress up as a BLS card.  You can make the card body sign by printing out a large American Heart Association BLS Card, pasting it to cardboard and then hanging it from your body.  


4.  Prophecy Healthcare’s Anita Nurse

We love Prophecy Healthcare and Anita Nurse.  She is the fun loving teddy bear that they have been giving out at shows for the past several years.  You may even have an Anita Nurse sitting on your desk.  For this costume you need a bear outfit, a stethoscope, a surgical mask and a nurses hat.  


5.  Jason Lander from Staffing Robot

Finally we save the best for last and if you know Jason Lander from Staffing Robot then you know he has a certain recognizable style. Since he works with so many healthcare staffing agencies I thought this was very appropriate.  All you need is a fedora, jeans, vest and of course some cool shoes.  This is quintessential Jason.


We would love to see you and what you decide to dress up as for your office halloween party.  Please tweet pictures of your costume to @blueskymss #healthcarestaffinghalloween.  We look forward to hearing from you!

Tags: halloween, Healthcare Staffing

Introducing ... BlueSky Lite!

Posted by Doug Word on Thu, Oct 03, 2013 @ 03:22 PM

describe the imageAre you tired of using paper for credentialing? Would you like a seamless transition to an electronic system? Is your agency perilously close to outgrowing the use of spreadsheets in credentialing?

If you answered YES to any of these questions, then BlueSky Medical Staffing Software has been reading your mind, because we are here to announce a solution!

Introducing … BlueSky LiteWe will present this new product to the industry for the first time during the 2013 Healthcare Staffing Summit in Chicago.

Our top-notch credentialing system will assist with the following:

  • Storage for Multiple Electronic Files

  • Creation and Generatation of Caregiver Profiles

  • Automation of Notification Emails for Expiring Documents and Credentials

  • Credentialing Reports

BlueSky Lite offers additional support with these features:

  • Orientation Tracking

  • DNR Tracking with DNR Report for Joint Commission

  • HR Notes

  • Reminders

Want to learn more about the other exciting features BlueSky Lite has to offer? Contact our team today at Sales@blueskymss.com to schedule a no-obligation demo, or call 615-349-1985. Your life as you know it, is about to change!


Don't forget to visit us at the 2013 Healthcare Staffing Summit!

You can find us in Booth No. 101!!

Tags: Healthcare Staffing, BlueSky Lite, Credentialing Software

New BlueSky Updates!

Posted by Doug Word on Fri, Sep 13, 2013 @ 03:20 PM

describe the imageAt BlueSky, we have more enhancements to announce that will save our clients time and increase their productivity. They will also help to further establish BlueSky MSS as THE source for cutting-edge technology in the medical staffing software sphere.

One exciting update we want to feature is a change we made to the Pay overtime calculation.

This stemmed from an issue agencies faced when they had a contract with a facility -- particularly those in California concerned with daily overtime -- but oftentimes were faced with the problem of pay and bill weeks that did not coincide. Our developers recognized this discrepency and wanted to make things easier for our clients.

describe the image

So we found a solution to match those pay and bill periods allowing for overtime.

What this means:

  • Agencies no longer have to manually override overtime payroll and invoicing.
  • There will be no discrepencies in overtime calculations if a facility has a different bill week than pay week.
  • OT calculations for the contract will match the facility contract.

Previously, either the agency or the caregiver might have received the short end of the stick. With this new tool, reconciliations are much easier for payroll and invoicing teams. Now, the pay and bill will add up. Keep in mind, however, that is update pertains to contract work only and does not apply to per diem shifts.

Other new upgrades include:

  • Gross Margin has been added to the candidate search.
  • A vendor contact is now available in Vendor Notes and in the Note grid.
  • Facility- and Unit-required documents have been added to Placement.
  • Radius Search for caregiver and facility
  • Revamped Email Template Editor!
  • And much, much more!

Thank you again for your feedback. Our upgrades are the direct result from the feedback of our clients! As always, if you have any questions please forward them to support@bluesky.com. We are here to help!

Ready to experience positive change with BlueSky Medical Staffing Software? Our goal is to save you time and money by housing all of your credentialing, scheduling and caregiver documentation in one easy-to-access location. You can count on our experts to provide answers to all of your burning questions. Call us at 615-349-1985 to schedule a demo, or email us at support@bluesky.com.

Tags: BlueSky Medical Staffing Software, Healthcare Staffing, BlueSky Demo

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