Cutting Contingent Labor Costs While Delivering A High Quality Flexible Workforce
Health system costs have skyrocketed to the point that roughly 50% of hospitals are reporting negative operating margins. This is in large part due to rising labor costs, which are their single largest expense. As healthcare organizations diligently explore strategies to control these costs, interest in vendor neutral Managed Service Providers (MSP) has soared, and for good reason.
The primary driver of using an MSP to manage contingent labor has been to cover internal staff vacancy through streamlined sourcing and management of temporary workers on behalf of the healthcare employer. An effective MSP enables the health system to outsource most aspects of the complex contingent labor value chain, including vendor management, worker requisition, fulfillment, compliance, time-tracking, payments, and reporting.
The recent surge of interest in MSP vendor neutrality, however, is much more driven by the desire to improve access to flexible workers and reduce overall labor costs. In 2022, demand for contingent labor in healthcare shattered all-time highs. Despite recent softening in overall demand (which is still more than double pre-pandemic volume), expert projections that consider workforce demographics, market trends, and the workforce’s desire for more work flexibility, predict steady growth in contingent labor volume.
Staffing agencies, who are also suppliers of temporary labor, have offered MSP services for years. Because their primary objective is to place their own staff at favorable rates, more and more healthcare employers are choosing a vendor neutral MSP partner that is not owned or operated by a staffing agency who competes with them for labor.
A vendor neutral MSP creates a competitive environment, widening access to contingent labor suppliers. As a result, the vendor neutral MSP is better able to negotiate lower rates as suppliers compete against each other, while also avoiding inherent fulfillment bias. Vendor neutrality delivers a business model that offers organizations access to multiple sources of labor where all vendors have the opportunity to play on a level playing field, under one standardized streamlined process. Most MSPs today claim vendor neutrality while being owned by staffing companies. In a real vendor-neutral model, there is no favoritism towards any specific vendor, and most importantly, the MSP does not compete with the health system for contingent talent
Characteristics of a real vendor-neutral offering include:
- Expanded access to talent pools – Access to larger, more specialized and diverse pools of talent to increase the likelihood of finding the best fit.
- Prioritized & streamlined flexible labor workflows – Contract labor orders should ideally be filled by a health system’s internal resource pools (or internal agency) before sending the need to an external agency.
- No bias – Ensures decisions are made based on qualifications, experience and costs vs pre-existing relationships, affiliations, or ownership structure. If an MSP competes with the health system for employing flexible workers, the MSP is inherently biased.
- Neutral technology platform that is not locked-in to one agency – If an agency is not performing well and they are also providing VMS technology as a MSP, it will be tough to move away from that agency without significant disruption to the organization
- Flexibility – Provides the flexibility to add new vendors as needed to best meet specific needs.
- Strong Cost control – Better positioned to reduce costs through prioritized engagement and utilization of internal staff, and continually optimize rates for any external agency labor that is still required.
Beyond Vendor Neutrality – Prolucent Provides Modern Tools and Strong Experience
The team at Prolucent is uniquely qualified to assist organizations in leveraging the benefits of a vendor-neutral MSP. With decades of experience and a commitment to aligning goals, Prolucent works in partnership with its clients to strengthen control of its flexible workforce while reducing costs.
Our team created the first vendor-neutral MSP offering and built one of the first healthcare-specific Vendor Management Systems (VMS) in support of that offering (and have built other VMS platforms over the past two decades). Drawing from this experience, we set a new bar for the role an MSP can play in today’s complex healthcare workforce environment.
At Prolucent we have leveraged this experience to build a state-of-the-art next-gen VMS. This Flexible Workforce Platform (VMS+) not only harnesses the benefit of cutting-edge technology and intelligence, but also extends to oversee the management of all internal flexible labor, including internal resource pools. VMS+ equips healthcare employers with the tools they need to build and strengthen their internal flexible workforce capacity, along with outside agencies on a single, unified platform. With all flexible labor in one place, workflows and data are available to optimize the use of all types of flexible labor and prioritize the use of internal flexible resources.
Whether a healthcare organization is looking to lower contingent labor costs or build a world-class internal flexible workforce model, Prolucent can help achieve rapid results.
