An Rx for Contingent Workers

Healthcare MSP

How a vendor-neutral MSP alleviates challenges for healthcare organizations.

By Leanne Oatman

Today’s integrated managed services models help healthcare organizations navigate complex challenges and attract the best talent to their organization. And this is more important than ever, for according to a 2017 Moody’s Investor Services report, overall hospital operating expenses outpaced operating revenues. With labor representing the most significant portion of hospital operating expenses, these financial challenges are fueling the need for healthcare organizations to reconsider hiring models. One option for contingent labor is a vendor-neutral managed service program (MSP).

HealthcareAn MSP acts as a consultant to healthcare systems that allows hospitals to address workforce challenges by increasing access to talent, managing compliance risks, controlling costs, improving business outcomes, and enhancing patient experiences. Pure vendor-neutrality occurs when the MSP has no direct staffing interests, ensuring complete goal-alignment with the healthcare organization. There are several key elements healthcare organizations should consider before engaging an MSP to manage the contingent workforce:

  • Getting the most from data. The healthcare industry is ripe with data. With access to all of these data points, organizations need to be able to use it to draw business insights. A recent Harvard Business Review survey found that 75 percent of business executives identify talent analytics as important, but only eight percent believe their organizations are strong in this area. A critical step is to consolidate all disparate data into a complete overview from which to achieve informed decision-making. Analytics from an MSP allow organizations to assess trends and underlying patterns in contingent workforce utilization while bringing clarity to contingent worker spend, overtime expenses, average time-to-fill rate, worker quality, and staffing supply and demand fluctuations.

Using analytics to drill into the details, healthcare organizations can drive cost savings and program efficiencies through smarter workforce planning decisions. An MSP provider can also recommend cost-savings initiatives that align with industry benchmarks. By leveraging market intelligence, an MSP provider can monitor state and federal legislative updates and market rate trends.

  • Shifting the burden of supplier management. Another challenge for healthcare organizations is managing staffing supplier agreements and performance. A vendor-neutral MSP serves as a multichannel sourcing model that leverages talent from a breadth of avenues, including staffing agencies, statement of work (SOW ) suppliers, independent contractors, and self-sourced workers. Once engaged, supplier scorecards can be used to measure and evaluate staffing supplier performance. This will help optimize supplier engagement and program performance.
  • Building a private talent network. As an additional strategic lever of talent acquisition, many organizations are turning to self-sourced talent pools for their contingent worker needs. A vendor-neutral MSP partner is uniquely qualified to help healthcare organizations leverage their employer brand, prior applicants, and referred workers to build private talent pools for contingent worker positions.

These private talent pools serve as an effective way to reduce total contingent worker costs without sacrificing quality while also ensuring compliance with state and federal regulations. An MSP can help build a robust talent pool within an HR technology platform like a vendor management system (VMS). Through a VMS, a hiring manager has full visibility into the private talent pool when entering a new requisition. Workers selected from private talent pools are engaged on a payrolling basis, which provides between 15 and 25 percent savings over typical agency mark-ups. Effectively utilizing a private talent network helps reduce the time to source and onboard workers as well.

“As part of our strategy to optimize process efficiencies, in support of our organizational commitment to making breakthroughs for children every day, having the flexibility for our MSP to onboard self-sourced talent is a tremendous benefit,” says Karen Feeney, senior HR operations manager at Children’s Hospital of Philadelphia. “Our MSP enables and guides our managers to leverage payrolling for accelerating engagement of the best available talent at the best available rates, contributing to an overall reduction of our average time to fill by 50 percent this past year.”

  • Implementing SOW management. Deloitte estimates that contingent workers could comprise up to 50 percent of the workforce by the end of 2018. As this workforce segment grows, many organizations are engaging workers under more complex service agreements referred to as statements of work (SOW). While most healthcare organizations focus primarily on contingent clinical labor, there exists a significant area of opportunity for SOW in non-clinical areas such as finance and information technology (IT).

The nature of project-based work within IT departments lends itself well to SOW engagement models, specifically for projects common to healthcare organizations like PC refresh efforts and EHR/EMR implementations. While there are several benefits to leveraging an SOW contract structure, it also creates additional risks with increased costs, worker compliance, and worker misclassification. But often, an MSP can offer SOW management best practices including defining SOW deliverables, SOW supplier vetting, fostering competitive bidding, and facilitating contract negotiations. Proactive guidance from an MSP provider can also help managers and executives gain visibility into “rogue spend,” such as unauthorized purchases from higher priced suppliers that fall outside procurement policies and the MSP program controls.

  • Mitigating risk. Aside from the hard costs savings, MSPs provide healthcare organizations with significant cost avoidance through risk mitigation. The most common risks associated with contingent workers include vetting and tracking worker credentialing and compliance, independent contractor/1099 worker misclassification, and co-employment issues.

A vendor-neutral MSP provides hospitals with critical third-party credentialing and compliance audits on each worker. A healthcare-focused MSP should deliver compliance programs that ensure hospitals are properly prepared for The Joint Commission, DNV, and other healthcare regulatory agency audits.

The complexities of managing worker classification and co-employment require healthcare organizations to have the right systems and processes in place to ensure compliance. The tax and benefit risks associated with contractor misclassification or co-employment are substantial. These can include fines, penalties, and even lawsuits if workers are misclassified.

When working with a healthcare MSP, organizations can overcome inherent industry challenges. An MSP has the ability to deliver innovative workforce solutions that positively impact patient care.


Leanne Oatman is president and co-founder of RightSourcing.

Posted May 31, 2018 in MSP / Contingent Labor

Leave a Reply