Are You Drowning In Staffing Vendors?

By: Leanne Oatman
National Director of Medical Staffing, Comforce Corporation

If you're involved in healthcare administration, it's hardly a secret - we have a severe provider shortage, particularly in nursing.

As we've all seen, this shortage has triggered a landslide in the use of staffing providers. Many healthcare facilities around the country routinely use as many as – and, sometimes, more than – a hundred staffing providers.

With this many suppliers, costs have spiraled way out of control (as you probably well know!). In addition, managing all these suppliers has become somewhat akin to wrestling with an octopus.

Think about this for a minute: Even with all the added suppliers, why do so many hospitals still seem to face nursing shortages? In some well-documented cases they're forced to close beds, or decrease the number of patients they can admit.

In recent years, of course, some hospitals reported 15%-20% vacancy rates for registered nurse jobs. More nurses are retiring than are entering the profession. And nursing schools are not even close to graduating enough students to replace the ones who leave.

Where does that leave us in the future? There are all kinds of scary scenarios floating around. And when it comes to the Twenty-First Century healthcare arena, of course, there are never any easy answers.

But, now, a fast-growing trend is emerging, called Vendor Management Services. And the way in which we staff our healthcare facilities may never be the same.

The concept is so simple, as they say, it's a wonder no one (at least in our industry) thought of it before. Basically, it entails the use of one vendor – and only one vendor – to do all the management of staffing activities for all workers not actually on the hospital's payroll. All the procurement. All the tracking. All the quality-control. All the cost-management. And all the sifting though potentially thousands of applicants and hundreds of staffing companies. In sum, all the G&A attendant to working with staffing firms is transferred out of the hospital, and into the hands of one partner.

Vendor Management is not necessarily a new concept. In fact, it's long been used in numerous industries outside healthcare, such as manufacturing, information technology, financial institutions, and many more. But the healthcare Vendor Management trend – which can encompass virtually every position in a hospital - is relatively new. It's only now starting to really take off…as healthcare facilities begin to realize the benefits.

The Vendor Management company – not you - contracts with staffing suppliers to provide contract or temporary labor. Every position staffed by these workers, whether it's an RN, a secretary, a supply clerk or an accountant, is sourced through the Vendor Management company. The result? All the orders, submittals, time-keeping, invoicing, tracking, and quality-control issues are handled by one source (not you!).

Does having one supplier who can manage the contract staffing from start to finish really make a difference? Well, hospitals all over the country are starting to take a look at this concept.

But California hospitals, often faced with severe staff shortages, may be the national leaders in adopting it.

Take, for example, Hoag Hospital in Newport Beach, CA, one of the West Coast's leading healthcare facilities. As of June, 2002, Hoag was using 95 different staffing suppliers. And costs were going through the roof.

So Hoag management determined to do something about it. The hospital committed itself to one partner to manage contract staffing throughout the facility.

The results were nothing short of spectacular. In the first two-and-one-half years of the program, Hoag realized a savings of nearly $5.5 million.

But the cost-savings were hardly the only benefit. The resulting process improvements enabled Hoag to better focus its recruitment and retention efforts – actually reducing the need to use contract staffers. In fact, the hospital's utilization of contract and temporary workers decreased by 54%. And because their contracts allowed them to actually hire the staff provided by the agencies - with no additional fees - Hoag ended up with 134 new hires from the contract labor pool.

Other statistics? They've achieved a savings of 22% of their total spend on staffing. Where Hoag once worked with those 95 vendors, now they work with only twenty – through one partner. And, where they once had to deal with 2,800 invoices a year from staffing firms, now they receive one a week (from their VMS partner).

Diane Griffiths, Employment Manager at Hoag Hospital, is responsible for managing the relationship between the Vendor Management company and the hospital. And she has become a strong advocate of the vendor-management concept.

"Given the pioneering effort, huge savings and a ‘zero' drop in service," she says, "this is widely considered the hospital's most successful program in the entire value management program."

Griffiths says that the hospital's managers really like the opportunity to try people out before hiring them.

"And not having to deal with all those staffing companies has been a huge factor for us," she says. "The relationship (with the VMS provider) has had a widespread positive effect…it's been a real blessing."

A bit north, at Community Medical Centers in Fresno, CA, they originally projected a first-year savings of $700,000 with a Vendor Management program. But they've actually saved nearly twice that - $1.3 million.

"Vendor Management provides the benefit of a partner that's a one-stop-shop," says Ginny Burdick, Vice President of Human Resources for CMC. "This system can manage external resources in a much more fiscally sound manner. We were using more than twenty staffing firms before…and some of them took up to six months to bill. Now, with one partner, we have a much better understanding of where our money's going…and when our invoices are coming in.

"Our VMS provider," Burdick says, "has almost become part of our staff; they really understand our culture. And not only do they give us well-prepared quarterly reports, but they've also helped us with compliance and regulatory issues, like those involving healthcare travelers."

In addition, Community Medical Centers has hired sixteen of the nurses who originally came as temps.

The benefits for hospitals using this system include:

• You can negotiate reduced bill rates by providing larger volume to a small number of suppliers, and making it easier for the suppliers to work with the hospital.
  
• You'll have an opportunity to increase your national recruiting opportunities, as healthcare providers travel to the hospital, and choose to stay on as full-time employees.
  
• Your staff no longer has to spend so much time working with outside staffing agencies.
  
• A good VMS partner will have a Web-based system for electronic ordering, fulfillment, credential tracking, scheduling, time keeping, invoicing and reporting.
  
• The hospital's need for outside labor will actually decrease…including nursing registry, travelers, allied health, medical office support, information systems, and accounting personnel.
  
• You'll have consolidated reporting, time tracking and invoicing – reducing invoices from possibly a couple of hundred a month to just four (one per week).

Vendor Management programs can have a profoundly positive impact on a healthcare facility's staffing ratios. But if you're going to do it…make sure you do it right. Select the partner that's best for you, and your specific needs.

Hospitals, especially, need to be careful to choose companies with a long track record of Vendor Management experience - as well as an extensive knowledge of hospital staffing.

It's also important that the company you chose can make it easier for the suppliers to provide what you really need. This results in a win-win relationship for all parties…and in higher-quality staffing in the hospital.

Vendor Management is a whole new ballgame for healthcare providers. And the ones who use it wisely are the ones who will prosper.

Leanne Oatman is the National Director of Medical Staffing for COMFORCE Corporation (www.comforce.com), a $450 million public company involved in staffing and consulting for the healthcare sector. Ms. Oatman can be reached at (800) 660-9544, or at loatman@comforce.com.