Embracing Change in the Consolidated Healthcare Staffing Market

The days of a local doctor’s office and small independent hospitals are diminishing. Regulatory and administrative burden has created a market environment where clinical providers need to consolidate services to operate efficiently. As value-based care becomes the focus, hospitals will seek economies of scale to support services across the system. An American Hospital Association-sponsored study indicates market consolidations decrease costs and expand patient services: Mergers are associated with a 2.5% reduction in operating expenses. Due to increased efficiency and profitability, mergers will continue to occur and will shape the healthcare staffing landscape of the future.

Within the healthcare vertical, mergers and acquisitions are occurring at a rapid pace. Since 2014, over 100 transactions have occurred per year. Large healthcare organizations are a significant component of this activity. According to Kaufman Hall, in 2017, 10 mergers and acquisitions involved organizations with net revenue of $1 billion or more in 2017. The CVS/Aetna and Express Scripts/Cigna mergers represent four Fortune 100 companies creating vertically integrated providers. United Health Group’s acquisition of Davita will create the largest single employer of doctors within the US. 43,000 doctors will be affiliated with one organization. Advocate and Aurora Healthcare are merging creating a top 10 healthcare system that canvases the Chicago, Milwaukee, and Green Bay markets. The merger will cover 500 healthcare facilities and 70,000 employees. Bon Secour and Mercy are merging, creating the fifth-largest Catholic healthcare system. We are seeing geographical, vertical integration, religious, and skill focused mergers within the healthcare market.

The merged healthcare entities will work off of clear goals, sharing best practices, while continuing to seek ways to control costs and improve patient care.  Medical, nursing and procurement leaders will place an increased importance on examining technology and processes that enable the organizations to reach their goals. With the healthcare talent shortage, we can expect a continued emphasis on talent acquisition technology options and vendor management systems (VMS) will remain a core tool leveraged by healthcare entities.

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The VMS will continue to be vital for managing contingent labor due to their ability to increase efficiencies, minimize risk, and access talent. The visibility and transparency into the comprehensive data provided by the tool enables decision makers across the organization to monitor costs and address patient care gaps. VMS technology allows hospitals to have better control over health care experiences and outcomes.

Fortune 500 healthcare companies have workforce solutions which are fairly mature, but are still evolving and seeking disruption to improve where they are at today. As the fragmented healthcare market consolidates, more and more healthcare delivery organizations will become enterprise-level organizations. As enterprise organizations, responsible for optimizing a workforce of thousands of employees, they will obtain additional subject-matter expertise and continue to make significant investments in talent acquisition technology. According to SIA, 79% of buyer companies are utilizing VMS technologies, and 62% of companies have an MSP in place. SIA considers a buyer company as any company that purchases staffing services and has a contingent workforce program; typically, these are enterprise-level companies. The healthcare market as it exists today is in flux, perhaps even immature as it relates to talent acquisition within the fragmented entities.  With the dynamic growth of the enterprise healthcare market, we can anticipate more entities utilizing VMS technology to manage talent acquisition.

In my next post, I’ll cover why VMS technologies will continue to be at the forefront of healthcare.

Christopher Mills

Christopher Mills
Christopher Mills is an enterprise workforce consultant for ShiftWise. He can be reached at Christopher.Mills (at) shiftwise (dot) com.

Christopher Mills

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