Will Vendor Management Systems (VMS) prove successful in temporary physician staffing markets?
That depends on how you define success. Indeed, VMS has seen huge success in certain labor markets in the past decade, and now recently penetrating the high demand, high-talent, low-supply segments like temporary physician staffing. Having spent nearly 10 years working as a locum tenens physician and the last 5 owning my own version of a locum tenens agency, I have enjoyed studying the evolution of this industry from the perspectives of both worker and administrator. There is indeed a growing faction of healthcare workers who prefer to be freelancers, driven by the initial wave of aging physicians who are retiring yet wish to stay clinically active on a local basis. These physicians (and many nurses and advanced practitioners among them) are less inclined to engage with a traditional locum agency for a variety of reasons, most importantly, they want to work for themselves, and not feel brokered. The reality is, most buyers of locum tenens services actually never stop to wonder why they are asking an agency for their pricing anyway, when it is the physician they are hoping to hire. As if an agency has doctors at their fingertips, working for them, employed by them, just waiting to answer the phone and say “yes” to an assignment at the rates set by this amazing agency. This is currently how locum tenens is transacted, and buyers of its services are very slow to see it any other way. Enter Vendor Management Systems (VMS), now being pushed out by the largest staffing firms as their enterprise solution built for the locum tenens industry to make things “simpler”, and contain costs. It amazes me how many large health systems have fallen for this rather old school corporate cost-savings move paired against their painful locum staffing costs as an innovative solution. I have never met a physician recruiter who is happy to hear from corporate that they have a new VMS platform they are supposed to use in place of their current vendors whom they have worked with for years. Most administrators don’t have time to see beyond the expense reports and quickly assume the business of brokering highly coveted healthcare human capital can be influenced like the tangible goods business, but they are mistaken. There is one simple reason why VMS will never work in the locum tenens business, and any who chooses it will experience this slow and painful conclusion. The reason: providers choose their rates based on constantly changing variables (aka the laws of supply and demand), and thus the workers themselves determine pricing, not agencies. When you allow an agency to determine the cost for a highly skilled worker (that they don’t even have vetted yet), that costs is ALWAYS going to be multiples higher than the actual cost. Put simply, locum clients save money when the workers are allowed to bid on the work assignments, not when agencies set prices. Allowing agencies to bid on your jobs is just plain foolish. Adding your jobs to a VMS platform which adds a 4 or 5 percent (I recently heard of a VMS that Mayo is using which charges 5.4%!) service charge to your locum vendor for using the VMS just adds that much more cost to your equation. Think about it. What the temporary healthcare staffing industry needs is not an archaic VMS platform to heard all of your agencies together and drive costs up. Rather, what we need is an online free marketplace that allows the workers themselves to browse and bid on all assignments. Such as a platform offered by Freelance Physician, our proprietary Human Capital Management (HCM) software.
If the local providers themselves are not competitively bidding on your work offerings, and instead you place that job on the VMS platform you are now forced to use, there is absolutely no way you will lower your temporary healthcare staffing costs.