In recent posts to the discussion about VMS and MSP in the healthcare arena, several perspectives have been expressed. In case you are wondering, I am firmly in the camp that there are too many obstacles to a level playing field when small business agencies must deal with predatory MSP and opportunistic VMS. So let’s examine in more detail the differences between the two, particular to healthcare staffing.
A vendor management system (VMS) is simply a software solution to managing several aspects of supplemental staffing needs. The software assists primarily in such areas as scheduling, needs list/job orders, fill rates, due diligence/tracking on credentials, and contracting, etc. Metrics reporting for analysis is easily accomplished and numbers help clients determine future needs/wants.
There are generally two ways to proceed with VMS — by the client purchasing a software program, customizing it to their needs and managing the contracting in house or, to obtain the services of a company such as Shiftwise and allowing that third party to manage the software and contracting aspects of vendor management. Obviously the first method mentioned would be preferential because it provides a direct relationship between client and agency and better communication to problem solving. The third party approach means obstacles like communication issues, increased risk exposure, invoicing and payment problems, and a burdensome fee structure on the agencies already suffering from rate suppression and leaving almost pitiful margins to operate. The clients are often unaware of “incidental fees”, the risk the agencies take in sharing proprietary information to the VMS, the potential identity theft issues posed, wage suppression concerns for the agency staff to name just a few problems. The good news here is that generally vendor neutrality exists with VMS.
Management service providers (MSP) — now there is a destructive entity for sure. Operated by a COMPETITOR and managing all supplemental staffing processes for the client. Problems are many, such as determining who gets what in terms of the assignments (meaning they get first crack at filling a need and the sub-contractors gets the leftovers after the MSP has feasted). Then, outright “poaching” of staff with promises of more work, wage suppression due to diminished bill rates for subcontractors, document demands that are onerous and break federal statute in regards to privacy issues, restrictive terms and conditions in contracts, indemnity clauses leaving the sub-contractor out on a limb, and I could go on. I don’t know of any other industry that allows a larger competitor to control an independent business owner. Heck even big oil doesn’t get that privilege from the small wildcatters in the oil and gas industry. Why? Because they don’t stand for it!
In a nut shell, VMS as a pure software solution can actually have a positive impact on streamlining and organizing the partnership between client and agency, third-party VMS is an obstacle to client and agency relationships. The clear and present danger however, the predatory MSP poses a distinct threat to the healthy survival of the small to medium healthcare staffing agency.