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 trends, Healthcare Staffing, Medical Staffing Software, VMS, MSP

BlueSky Healthcare Staffing Enhancements

Posted by Doug Word on Thu, Aug 22, 2013 @ 10:11 AM

BlueSky Medical Staffing SoftwareAt BlueSky, we are always searching for ways to enrich the user experience for our clients. We recognize that healthcare staffing is an ever-evolving industry, so our work is centered on helping staffing agencies save time and money.

With that in mind, we have two exciting new system enhancements to share.

Caregiver/Facility Radius Search

Are you an account manager or recruiter looking to match a facility contract with a caregiver in a certain range? Perhaps you are targeting a certain location for sales or prospecting jobs from facilities.

BlueSky's radius search will help you identify those caregivers and/or facilities within your defined areas. All you will need to do is enter a valid U.S. zip code and search away to find the information you seek within a given radius. This tool is great for both per diem and travel needs.

Caregiver Short Application Feature

Have you ever had caregivers on the phone while you were short on time but wanted to get them entered into your system quickly? Perhaps they had only a minute or two to spare before racing out the door. We understand your time is precious and often fleeting. Enter the BlueSky short application, where basic, yet important, information can get entered into your company's system in a snap.

The short application feature captures only the most relevant data: name, contact information, degree, specialty, recruiter and the ability to upload a resume. From there, one of your team members or the caregiver can go back in at a later date and update the full profile. Most importantly, the information is captured right away and will not get lost in a stack of papers.

Take a look at it below, and let us know what you think. Will this help your agency?

BlueSky Medical Staffing Software

BlueSky is committed to its customers and loves getting feedback!

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 demonstration, or email us at support@bluesky.com.

Tags: BlueSky Medical Staffing Software, healthcare industry, healthcare staffing and recruiting software, healthcare scheduling software, healthcare staffing agency, healthcare staffing trends, Staffing Agency, Staffing Industry, staffing software, medical staffing, per diem medical staffing, Travel Nurse Staffing, web-based staffing software

Are you scared to try new things for your healthcare staffing agency?

Posted by Jennifer Kardell on Tue, Aug 06, 2013 @ 12:47 PM

cartoonnurseelephantTrying new things is always scary whether it is in your personal life or work life. Which is understandable. Trying new things is like stepping in to the uknown, like stepping into a dark alley that you've never been in or jumping into a pool when you've never learned to swim.

Just look at this video of a baby elephant testing out the waters, pun intended.

I'm guessing the thought what does this baby elephant have to do with me and my healthcare staffing agency. Actually you can learn quite a bit from the little pachyderm. Taking a dip into the pool for the first time may have seemed scary but once he faced his fear and dove right in, he found that he loved his new discovery. A love he may not have known had he not tried. So what exactly can we learn in healthcare staffing from him: TRY. Try something new and you may find that you love your new discovery.

Don't be afraid

Don't be afraid to try new things such as:

Social Media

We have said it time and time again. Social media really is for healthcare staffing. If you are not currently on any social media platform as a company or with a personal account give it a shot. I am a firm believer in social media, not because its my job but I love doing it and the opportunities and connections I have made because of it. Another benefit, accounts are free! You can't turn down free promotion, you just have to know how to do it right. One question I often face is, "I don't want people knowing my business all over the internet". I agree, I don't either. No one really does. The cool thing about that is, you control your social media and you are in control of what information you release to the online world. If you don't want it out there, don't post about it. There are also privacy settings you can put into play if you dont want your colleagues' posts that include you to appear on your accounts. Again, YOU are in control of what YOU do. Give it a shot. Play around with it and don't be scared. If you don't try it you will never know what is waiting for you. Just like the elephant in the video, he may not have known how wonderful splashing around in a new pool was until he tried it little by little before diving in completely.

New Staffing Software

If you have a staffing software that doesn't quite "cut-it" when it comes to what you need, check into your options. Don't be afraid to switch, you have to find a match that is best for you. Jumping into a new software with out testing it is scary but at least taking a leap of faith, so request a demo. This is like dipping your feet in the water before taking the plunge. 

For instance, maybe you've been scared to make the switch to BlueSky because its new, or because it may seem like a lot of work to transfer your data over. You won't ever know until you face the first obstacle of trying and testing it out. So request a demo from us! There could be something wonderful for your staffing software waiting for you.

Mobile Apps

Very rarely do you see someone, or even know someone with out a mobile phone these days. Half the time people have their phones attached to them at all times. Which is a wonderful way to stay connected at all times. However, mobile devices are not just for calls and text messaging any more. There are tons of apps available for users on both for Android users and Apple users. There's pretty much an app for about anything you need in life. Apps to help edit photos, apps that keep all your reward card info, apps that help you with your health and nutrition, the saying is true, "There's an app for that."

Here at BlueSky we have our own mobile app that makes life easier for caregivers to view their schedules, submit time and apply for jobs. All this at their finger tips at anytime anywhere. This alone should be enough to help you conquer your fear of using mobile and mobile apps. You can grant more access and make things easier for your caregivers by using our mobile app. Learn more about our app here.

Trust us, your caregivers will be loving the app access just like the elephant is in the above video.

Thinking out side the box

See, you thought I was crazy relating a baby elephant in a pool to healthcare staffing, and you may still think I'm crazy BUT you did learn something new and hopefully smiled at the site of him diving in to the pool. So take a note from the little pachyderm and try something new! Dive in, roll around, find a new discovery and enjoy it! Even I learned something new from this, I learned that thinking out side the box helps you relate healthcare staffing to elephants in a pool. Definitely a new one for me.

Tags: healthcare recruiting and staffing software, healthcare industry, healthcare staffing industry, Healthcare, healthcare scheduling software, healthcare staffing software, healthcare staffing agency, healthcare staffing trends, Staffing Agency, Staffing Industry

What should the healthcare staffing industry expect from the ACA?

Posted by Doug Word on Tue, Jul 16, 2013 @ 10:04 AM

healthcare newsThe Obama administration announced earlier this month that it will allow businesses an extra year to comply with the Patient Protection and Affordable Care Act (ACA).

The law was originally slated to kick in Jan. 1, 2014 but the date for compliance has now been pushed back to Jan. 1, 2015. It will then mandate employers with 50 or more employees to offer minimum-value insurance and cover 95 percent of those workers through so-called employer shared responsibility requirements.

What should healthcare staffing agencies expect from this adjustment and from the ACA itself?

The announcement gives employers time to study whether or not complying with this facet of the law is in their best interest and plan accordingly. They will still have the option to “play,” meaning comply, or “pay” the government-mandated fine for non-compliance when the time comes.

The delay will benefit larger organizations that were prepared to remain well above the 50-employee threshold. Reporting requirements to the Internal Revenue Service (IRS) can now get pushed back a year for employers, insurers and other reporting entities without fear of penalty.

The reason behind the administration’s announcement to allow employers an extra year to prepare for implementation centered on the “complexity of the requirements and the need for more time to implement them effectively,” according to the Department of the Treasury.

Treasury also put forth two goals: (1) simplification of the new reporting requirements consistent with the law, and (2) adaptation of the health coverage and reporting systems.

Industry analysts have differing views on the influence of the act itself.

Justin Junkel, vice president of finance and analytics at Pinnacle anticipates four major developments as a result of the health care law:

  1. Companies will transition lower-skilled workers to shifts of less than 30 hours per week.
  2. Staffing firms will increase markups or bill rates to offset the costs of providing healthcare coverage and the associated administrative expenses.
  3. Health plans will adjust their costs to fall closer to the ACA minimums.
  4. The overall cost of healthcare coverage will rise over time, as companies make process changes to comply with ACA requirements.

Junkel also noted, “The ACA will result in cost increases for staffing firms, due to the requirement of providing healthcare coverage to previously uncovered employees or paying the taxes associated with not providing affordable coverage.”

Jeanne Knutzen, founder and CEO of the PACE Staffing Network, said:

“We are anticipating that the costs to become fully compliant with the law will require most staffing companies to ask for a two-to-four percent increase in client bill rates, just to break even; anywhere from 16 to 35 cents per hour.”

The ACA could help the temporary staffing industry in this way: some companies will want to remain below the 50-employee marker and turn to agencies with temporary and part-time labor.

Jay Hancock of Kaiser Health News said, “By requiring employer coverage only for those who put in at least 30 hours a week, the act appears to create an incentive for companies to do less with permanent workers and more with part-timers, which are the main focus of staffing agencies.”

Another workaround for the industry could be a regulation the IRS created last year known as the "look-back/stability period safe harbor method.” It essentially gives employers of “variable hour” labor, like staffing agencies, 12 months to determine whether or not an employee is a temporary worker or full-time worker deserving of health care benefits.

Bernard Wolfson of MEDCITY News noted, “The Affordable Care Act probably presents the biggest challenges to employers in industries that use a lot of part-time and seasonal workers. Their hours can vary dramatically from week to week or month to month, making it difficult to calculate who is eligible for benefits and who is not.”

The emerging consensus is the ACA is a complicated law that has the potential to impact companies positively or negatively once it is implemented. Companies that will be influenced now have more time to get out in front of the issues associated with the act, but understanding and implementing a strategic plan for the future is essential.

Tags: healthcare staffing industry, Affordable Care Act, Healthcare, healthcare staffing trends, Staffing Industry, Affordable Healthcare Act, ACA

Social media serves as a benefit to your healthcare staffing agency?

Posted by Jennifer Kardell on Thu, Jul 11, 2013 @ 12:15 PM

facebook youre doing it wrongAnother blog about social media? Yeah we're going there. Social media still seems to scare some in the healthcare staffing industry. Don't be scared! More than likely you have a Facebook, Pinterest, Twitter, Instagram or some kind of online social presence for your personal life. The thing is, it's just as important for companies to have a social media presence to promote themselves just as you do on your personal accounts. If you use social media correctly, it can work to a great marketing aspect to your company. Seriously! Think about it, social media is free, helps you gain leads (FOR FREE), build great customer relations (free!) and you can market your company and what it has to offer, again, FOR FREE! As a company how can you say no to any kind of free promotion? That's right you can't. We can get into why marketing and social media are vital to the success of your company at a later point, let's just get you on social media and give you some tips on how you can make your staffing agency one of the "cool kids" online. Now I'm just sounding like a Brad Paisley song....

Moving on!

Oil and Water

A common misconception is that there is no place for social media in healthcare staffing, WRONG! They do go together believe it or not. Sometimes social media can be a hard sell, and we understand. When people ask a social media guru what they do all day they expect them to say, "I just play on Facebook all day"...not exactly. Although it may seem like "just playing on Facebook", its a benefit to the company and an easy way to see how competitors are reaching out to their client/consumer base.

Another, more important thought is, how can social media thrive in the healthcare industry when everything is so confidential and ever changing. That's actually what makes these two a perfect combination. You don't have to tweet about clients and their personal information. You can actually take an experience you have had and turn it in to a positive learning experience for someone else. For example, as a physician you could tweet or post on facebook small tips about your profession that educate the general public without giving away all your secrets. It could be as simple as a dentist posting about benefits of flossing. Simple as that.

Still need more proof? Let us share 5 tips on why social media IS for healthcare staffing.

Don't limit yourself!

When it comes to social media there are numerous options, don't limit yourself to one! The more accounts you have the more presence and influence you will have. Social media is actually pretty simple I promise. Yes, having numerous accounts may sound like a hassle but there are programs out there that help you link your accounts so you can type your message in one place and it can be posted on all your accounts. Although, it's not always the best idea to say the same things on all your social media platforms because one of your social media bases may not find it necessary to follow all your different accounts. For example, if you post the same thing on Twitter all the time that you do on Facebook, why would your followers on Twitter feel the need to "Like" you on Facebook? Keep your "fan base" on their toes and post different info bits on all your social media platforms sending your followers to see info they can't see on just their favorite social media outlet.

Make your social media work FOR you

I could sit here and write a lengthy blog on each different social media outlet and list hundreds of ways each platform can be used to benefit your brand, but lets face it...Ain't nobody got time for that! Here is a list of a few ways to expand your social media outside of the box.

Your turn to speak out! Connect with us!

What ways have you used social media that are out of the box?

Are you connected with us online?

Facebook  |  Twitter  |  Pinterest  |  Instagram  |  LinkedIn

Tags: healthcare recruiting and staffing software, healthcare industry, healthcare staffing industry, healthcare scheduling software, healthcare staffing software, healthcare staffing agency, healthcare staffing trends, Social Media, facebook, twitter, Social Media isn't scary

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