Three Essential Qualities for a Vendor Management System

Healthcare today is facing some unprecedented challenges. With a growing demand for services and a shrinking labor pool, many healthcare organizations have difficulty meeting patient demand and maintaining a high standard of care while adhering to budgetary guidelines. Vendor management systems (VMS) can be an invaluable asset to healthcare organizations.

An effective vendor management system offers many benefits. With a contingent workforce, healthcare organizations have access to on-demand employment and are always prepared to provide high-quality patient care even if there is a significant increase in demand for service. Additionally, scaling staff up or down is easier with a contingent workforce, making operations more cost-effective according to the demand for services.

Managing a contingent workforce takes significant time and organization. A vendor management system is a cost-effective way to manage your workforce, but you need to choose the right VMS to benefit. How do you know what VMS will be the best fit for your company? Below, find three of the most important considerations when choosing a VMS for your healthcare organization.

Compliance Management

Maintaining compliance is critical for healthcare organizations and staffing. When working with a vendor management system, it is important to work with one that understands the importance of compliance. Maintaining compliance is critical for several reasons, including:

●  Patient Safety: Patient safety is crucial, and regulations are in place to ensure patient safety is not compromised. Maintaining compliance with regulations and guidelines ensures that patients remain protected against harm.

●  Legal Liability: Litigation is time-consuming and costly, and failing to comply with regulations can result in lawsuits, as well as penalties and fines. Additionally, lawsuits can damage the reputation of a healthcare organization and erode patient trust. Maintaining compliance helps hospitals and other healthcare organizations avoid lawsuits and legal liability.

●  Patient Care: In addition to patient safety, patient care is at the center of all healthcare organizations. Most healthcare providers must have the necessary training, qualifications, experience, and certifications to provide services. Maintaining compliance with qualifications for employment ensures that patients receive a high standard of care. 

●  Ethical Considerations: Healthcare providers must treat patients with dignity and respect. Additionally, they must provide care without discrimination due to race, gender, or other factors. Compliance addresses ethical considerations in healthcare, ensuring equal access to healthcare services. 

To provide safe, respectful, and quality patient care, healthcare organizations must be in compliance with all established guidelines. An effective vendor management system will locate qualified professionals for open staffing positions, and thoroughly vet each candidate. Requirements can be set based on a specific position or location to help a VMS find qualified candidates, and further candidate vetting ensures hospitals and other healthcare organizations maintain compliance.

Vendor Neutrality

Neutrality is an important consideration when choosing a VMS for your healthcare organization. If a VMS is owned by a staffing agency then it would be considered a managed service provider (MSP), and its overall design and functionality will be driven by the financial objectives of the owners. The goal of a typical MSP is to fill as many of the staffing needs as it can directly in order to leverage its client and vendor relationships.   Staffing agencies (vendors) are typically reluctant to engage with many MSP’s but are usually forced to do so to increase their business revenues.  Some healthcare organizations don’t fully understand the most common MSP objectives and may engage too quickly out of desperation to immediately supplement their staffing needs with any healthcare workers that the MSP may have readily available.  This can be costly and may not align with the overall finical goals of the healthcare organization and can ultimately impact the continuity of healthcare services.  

Vendor neutrality attracts staffing agencies nationwide to participate in VMS programs.  This type of level playing field incentivizes staffing agencies to fill positions without fear of having their candidates solicited by a competitor such as an MSP. Ultimately the recruitment results for the healthcare organizations will improve significantly and the administrative burdens will decrease through streamlined communications with the vendor-neutral VMS.  When a VMS is truly vendor-neutral, there is no hidden agenda and no conflict with potential candidate solicitation which encourages vendor participation and expands client access to high-quality healthcare services.

Management Solution is not a staffing agency and is vendor-neutral. We have extensive staffing experience, which puts us in a unique position. With our staffing industry experience, established industry affiliations, and strong negotiation skills, we help healthcare organizations create cost-effective contingent workforce programs.

Reporting Capabilities

Healthcare organizations must make decisions with the information available to them. For effective and efficient operation, healthcare systems need to understand what they spend money on and when money is spent. Without access to this data, it is hard to make sound decisions. Before choosing a VMS, you must know what type of data you need to make informed decisions.

Transparency and clear communication are critical factors in improving access to the labor supply and increasing the chance of finding qualified candidates quickly. A vendor management system should be able to provide an organization with all workforce data at any time. Providing real-time reporting and analytics allows healthcare organizations to carefully monitor the performance of their contingent workforce and ultimately, to make informed staffing decisions.

At Management Solution, we offer a full-service on- or off-site program to healthcare organizations. This allows our clients to consolidate and manage workforce development through a customizable web-based program. With increased access and the ability to view all workforce data, our clients can make informed decisions that benefit their organization.

Ready to get started? Contact Management Solution today to start talking solutions. 

Rising Bill Rates in Staffing Agencies

VMS programs help standardize, centralize, and streamline all aspects of the business relationship between staffing agencies and healthcare organizations that utilize their services. There are a number of costs associated with facilitating these relationships which are all included in the bill rate. Bill rates are hourly rates that healthcare organizations pay for every hour of work performed by the contingent workforce. These rates are negotiated between the VMS with the client and are determined according to the specific costs involved for a staffing agency to recruit and employ the contingent labor they provide.

Bill rates are paid only for hours worked by contingent workers and can fluctuate according to supply and demand. In times of great need when healthcare organizations urgently need contingent staff, bill rates will increase. Conversely, when demand for staff is lower, bill rates will decrease. Given the current shortage of healthcare workers and economic climate, bill rates are on the rise.

Types of Bill Rates

Simply stated, a bill rate is an hourly rate paid to staffing agencies for their employee’s work time.  Bill rates are the foundation of contingent workforce packages which determine how much money agencies have to work with on any given assignment.

Bill rates must account for costs that include:

  • Agency Internal Operational Costs
  • Advertising / Recruitment
  • Continued Administrative Support for Duration of Contract
  • Onboarding and Compliance Costs
  • Paid Sick Time
  • Professional/General Liability Insurance
  • Workers Compensation Insurance
  • Costs Related to Malpractice/Employment Litigation
  • Employment Taxes
  • Travel and lodging
  • Advance payroll funding

    A bill rate is not the same as a pay rate as many factors influence bill rates. The pay rate is what the healthcare worker will earn per hour worked. While it is often the largest cost, the pay rate is only one variable in determining the bill rate. There are three main types of bill rates: standardized, negotiated, and bid bill rates.

    Currently, the most common type of bill rate is the standardized bill rate. A standardized bill rate is a rate agreed upon by the staffing agency and the client. The second type of bill rate is the negotiated bill rate. Unlike standardized bill rates, negotiated bill rates are determined by the specific project. This type of bill rate is not currently very common but may be used in instances where a client seeks a specific skill set or specialty. Bid bill rates are the third major type of bill rate. While bid bill rates tend to be more common than negotiated rates, they are still not as widely used as standardized bill rates. A bid bill rate allows entities to submit bids for bill rates. This system is intended to help clients get the best price possible, however, that does not always mean the lowest bid rate. While a lower bill rate is more attractive, clients are often willing to pay more for candidates who fit the demands of the position.

    Understanding the bill rate means understanding the categories of pay rates within bill rates. These are important considerations for vendors, clients, and members of the contingent workforce. Significant bill rate categories include:

    • Standard Rates
    • Specialty Rates
    • Regular Time Worked Rates
    • Overtime Worked Rates
    • Blended Bill Rates
    • On Call Rates
    • Call Back Rates
    • Crisis Rates
    • Holiday Rates

    Why Bill Rates are Rising

    COVID-19 did not start the nursing shortage. The United States has experienced periodic nursing shortages since the 1990s, however, the current nursing shortage is reaching critical levels. According to a data study by the University of St. Augustine, “the United States is in the midst of a critical nursing shortage that is expected to continue through 2030.” With an increase in demand for nurses and a labor shortage, bill rates have escalated.

    Why is there such a critical labor shortage in the healthcare industry? Multiple factors are contributing to the current healthcare labor shortage. Some of the most influential factors include:

    • An Aging Population: According to the World Health Organization, one in six people in the world will be aged 60 or older by the year 2030. Additionally, 19% of people over the age of 55 have three or more chronic conditions according to the CDC. Longer lifespans and multiple chronic conditions greatly increase the demand for healthcare services.
    • An Aging Workforce: An aging population means more people are approaching retirement, and the healthcare industry is no exception. According to a 2020 article published by The Journal of Nursing Regulation, the median age of all registered nurses is 52. An aging workforce means fewer registered nurses are employed by healthcare systems, but also contributes to the current shortage of experienced and qualified nursing instructors. As nursing programs struggle to find qualified nursing educators, the number of students enrolling in programs is reduced.
    • Burnout: Age is not the only factor driving the mass retirement of healthcare professionals. One in five healthcare workers affected by the pandemic has quit their jobs. The mental and physical toll the COVID-19 pandemic took on healthcare workers was great and accelerated burnout among employees.
    • Working Conditions: Healthcare workers are increasingly citing working conditions as a reason to leave their jobs. Labor shortages often mean additional overtime and increased workloads and responsibilities.

    In addition to the critical shortage of healthcare workers, operating costs are up across many industries. Inflation drives up many costs related to running a business from overhead costs like building leases to pay rates for talented nurses and healthcare professionals. Bill rates can include many factors, some of which include:

    • Work Performed by VMS/MSP
    • Liability and Insurance Coverage
    • Medical Malpractice Lawsuits
    • Employee Onboarding
    • Pay Rate of Healthcare Professionals
    • Travel Reimbursement
    • Non-Taxed Per Diems
    • Non-Taxed Housing Stipends

    According to the Bureau of Labor Statistics, the projected number of open positions for registered nurses from 2019 through 2029 is 175,900 annually. As hospitals and other healthcare systems operate with negative margins, the prevalence of contracting with staffing agencies is forecasted to continue.

    While the bill rates have been rising, there has been a call for federal oversight of pricing policies among travel nursing agencies. During COVID, many hospitals experienced a plummet in profit levels. With the pay for travel nursing reaching an all-time high during the pandemic, The American Hospital Association (AHA) notified the Federal Trade Commission of concerns over potential price gouging. The AHA and other lawmakers have urged further federal investigation as bill rates continue to rise.

    With the number of factors influencing the bill rate, staffing agencies maintain that the included costs are increasing not due to price gouging, but to meet demand. Addressing the factors contributing to the nursing shortage is one of the most significant ways to maintain, or lower, bill rates.

    Benefits of Using VMS in a Candidate-Driven Labor Market

    According to a study published by St. Augustine University, “the United States is in the midst of a critical nursing shortage that is expected to continue through 2030.” With a labor shortage and an ever-increasing demand for healthcare services, healthcare staffing is currently in the midst of a candidate-driven market. Vendor management systems are poised in a unique position to facilitate expedient hiring, which is critical to obtaining a qualified and skilled workforce in a candidate-driven market.

    Administrative tasks related to maintaining a workforce require significant investments of time and money. This can lead to a drawn-out recruitment process during which qualified candidates lose interest. Hospitals and healthcare systems want skilled and qualified top talent. An efficient and timely recruitment and hiring process are necessary to attract quality candidates in a candidate-driven market. With the shortage expected to continue through 2030, the landscape of healthcare staffing has changed significantly. In a candidate-driven market, it is more important than ever to place candidates efficiently.

    What Created a Candidate-Driven Market?

    What Created a Candidate-Driven Market?

    A shrinking labor pool and an increase in demand for services have led to intense hiring competition among hospitals and other healthcare systems. The current nursing shortage began long before COVID, but the pandemic worsened the problem. In the aftermath of the pandemic, one in five healthcare workers has quit their jobs. Many healthcare employees who left their positions have also left the profession entirely.

    There is no single cause of the current labor shortage. Multiple factors influenced the healthcare professional shortage, including:

    • An Aging Population: The World Health Organization states that one in six people will be 60 or older by 2030. An aging population affects the labor market in two ways: increased demand for healthcare services and healthcare workers aging out of employment.
    • Excessive Turnover: Turnover rates increased significantly following the COVID-19 pandemic. Turnover not only affects the ability of healthcare organizations to provide care, but it also affects the remaining employees. As healthcare employees leave their jobs, the remaining workers experience higher patient loads and more responsibility – without a pay increase. This results in exhaustion and burnout, causing even higher turnover rates.
    • Lack of Nursing Educators: According to the American Association of Colleges of Nursing (AACN), “faculty shortages at nursing schools across the country are limiting student capacity at a time when the need for professional registered nurses continues to grow.” Between budget constraints, aging faculty members, and increased job competition, finding qualified nursing instructors is becoming increasingly difficult.

    Why Placing Candidates Quickly Matters

    To remain competitive in candidate-driven markets, speed is essential. Understanding why a quick hiring process is necessary can help you to identify candidates and fill positions with more qualified individuals quickly. An expedient hiring process is attractive to both businesses looking to hire and those seeking new employment opportunities. When faced with an extended hiring process, many candidates will choose to remain in their current position or move to another opportunity.

    In-demand candidates can afford to be more selective. This means you must act more quickly during the hiring process to attract and retain top talent. Not only do highly qualified candidates tend to make hiring decisions more quickly, but they also tend to view a fast hiring process favorably. To candidates, a lengthy hiring process can negatively impact the assessment of your corporate culture.

    In addition to attracting top talent, a swift hiring process can be fiscally beneficial. With a shrinking labor pool and an increased demand for skilled workers, candidates may often receive multiple bids. Extending an offer quickly can avoid a bidding war, allowing you to attract top talent at a lower salary cost.

    Why Placing Candidates Quickly Matters

    How a VMS can Help Healthcare Organizations Find Top Talent

    Finding the right talent in a timely fashion can be difficult. Hospitals and other healthcare systems have difficulty adapting to the growing demand for skilled and talented professionals. With a shrinking labor pool and time constraints due to other operational duties, finding the perfect candidate for placement is difficult. Fortunately, an experienced VMS can help. VMS’s innovative technology can streamline the entire recruitment and hiring process.

    There are several ways in which a VMS can help with expedient hiring, including:

    • Tracking Talent: When using a contingent workforce, it is expected that professionals will come and go. The right VMS will maintain meticulous records of the professionals they have placed, which can make it easier to rehire top talent. A VMS can automate tracking of candidates whose performance exceeds expectations, making it easier to rehire valuable individuals. This helps not only provide adequate staffing levels but also reduces the amount of time spent training and onboarding. Additionally, because all employees are tracked, you can eliminate candidates who are ineligible for rehire. Some employees attempt to return to positions by using different staffing agencies, and a VMS that tracks everything can identify this and automatically rule out those candidates.
    • Experienced Suppliers: Suppliers with more experience tend to do a better and more efficient job at finding the right candidates for open roles. When using a VMS to handle an extended workforce, you can reduce waiting times for locating candidates by specifying the exact skills each open role requires. Staffing suppliers use the guidelines from the VMS to streamline the hiring process.
    • Competitive Rates: The more administrative time it takes to find, hire, onboard, and subsequently offboard contingent workers, the higher the rate. Reducing time spent dealing with administrative tasks allows you to offer more competitive rates to attract top talent. With bill rates on the rise as a result of increased demand for talent, it can be hard to stay competitive. Working with a VMS to streamline and centralize the hiring process can help save money that can then be used to help offer more competitive rates.

    With a shortage of labor expected to remain through 2030, industry forecasts suggest a continued increase in demand for talent

    With a shortage of labor expected to remain through 2030, industry forecasts suggest a continued increase in demand for talent. Creating a contingent workforce is an efficient and cost-effective way to get the staff necessary for daily operations. A VMS can be an invaluable resource when building a contingent workforce. By streamlining the entire process, a VMS saves hospitals and other health systems a significant amount of money and time required to recruit top talent.

    In a candidate-driven market, the speed of the hiring and placement process is more important than ever. Working with a VMS can facilitate easy and efficient hiring, helping you build the workforce you need when you need it. At Management Solution, our vendor-neutral approach and experience managing contingent workforces help you get the top talent your healthcare system deserves.