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Understanding MSPs and VMSs

Aug 27, 2019
The Trusted Team

There is a lot to learn about life as a travel nurse, even before you start hearing terms thrown around like “MSP,” “VMS,” “subcontractor,” and “exclusive contract.” 

We've written about this before, but understanding how all of these pieces (and more!) fit into the travel nursing industry can be very confusing. We’re here to break it down for you once more! Let's start with the most important stuff, managed service providers and vendor management systems.

What Is a Managed Service Provider (MSP)?

A managed service provider (also known as a MSP) is a company that manages an organization’s contingent, or temporary, workforce. Put simply, managed service providers are responsible for managing all tasks and responsibilities related to external temporary staff for a facility, hospital, or healthcare system. You can think of a MSP essentially as external HR.

Generally, the responsibility of a managed service provider is to fulfill staffing needs through a compliant process--with quality nurses--in the most time-efficient and cost-effective manner. They help identify and select the travel nurse staffing agencies who will provide candidates, set pricing across the board, facilitate job distribution, screen submitted candidates, manage relationships with hiring managers and agencies (or ‘vendors’), track and report metrics, consolidate billing and invoicing, and in most cases, select and implement "VMS" (short for vendor management system, defined below) technology.

While some managed service providers stick to only that role, others also own their own travel nurse staffing agencies. We’ll get into the details of this later. Most healthcare facilities―71% of them, to be exact―utilize a MSP or VMS to help manage their external workforce. Of this 71%, 54% of them use a MSP while 17% use stand-alone VMS technology and manage it internally through their HR team.

71% of healthcare facilities utilize a MSP or VMS to help manage their external workforce. 

Pros and Cons of MSPs

Hospitals use managed service providers because these allow them to have immediate domain expertise and relationships in an area they don’t typically have internally. They outsource the specialized work that sourcing, recruiting, interviewing, hiring, onboarding, vendor management, billing/paying, and maintaining compliance of engaging external labor requires. 

A hospital’s HR department is able to focus on their internal staff, all while outsourcing management of the external/temporary staff whom they employ. Hospitals themselves then interact with a single company or system, rather than multiple travel nurse staffing agencies. Working with a single party is usually considered advantageous, as working with a variety of agencies to fill multiple, often short-term, positions on different units and in various facilities can create management headaches and backlogs―ones that internal HR doesn’t typically have the bandwidth for.

Think of it this way―planning a wedding is a lot of work and requires communicating and managing relationships with a ton of vendors- a florist, caterer, band, venue, hair, makeup, stylist, and more. The wedding industry is so nuanced, and there’s so much to know about price comparison, quality, necessity, etc. You may know what you want, but getting there is a lot of work, and you want to enjoy your wedding day to its fullest. The solution? A wedding planner to manage all of these vendors and ultimately make your wedding day the best day of your life. 

wedding aisle msp wedding planner analogy
Think about a MSP like a wedding planner. Except there’s no party here, just patients!

There are also various reasons why facilities opt out of utilizing MSPs. Oftentimes, it comes down to necessity, cost, friction, quality, and control. Let's stick with the wedding planning metaphor to keep things consistent!

Necessity

As mentioned above, utilizing a managed service provider can help offload the specialized and large amount of work that comes with utilizing an external workforce. With that being said, some facilities or HR departments are able to manage it internally. In this case, a MSP might be unnecessary. If you’re planning a fairly small wedding or aren’t outsourcing many projects, you could probably opt to handle the coordination of the wedding yourself. Or if it's big enough and you care about quality to the point that only someone who knows you really well can perform the job sufficiently, it may justify having someone allocated to it as a full-time role (like hiring your mom or sibling to plan it). Some HR departments have built a "Manager of External Workforce" job that replaces the external MSP function.

Cost

As with any service, facilities pay a premium for utilizing a managed service provider. Whether this cost is translated directly to the facility, through a percentage of the bill rate (and thus transferred to the travel nurse staffing agencies), or both, it ultimately makes it more expensive for the facility to attract and engage highly qualified candidates. While you may score a deal on each vendor due to the relationship that the wedding planner has with them, you still need to pay the wedding planner. 

Friction

Adding more steps (and people!) to a process can slow things down. Managers get passed profiles and must then make decisions and relay that information to account managers who then communicate to agencies. Travel nurse staffing agencies are often prohibited from communicating with the facility directly and thus must "play telephone" with the managed service provider. It is not uncommon for information to be most effectively communicated by the candidate, who is in contact with both the hiring manager and their agency. Think of it this way: if you’re going back and forth communicating your vision with the florist or are negotiating the price of the band, sometimes it would just be easier to get on the phone with them directly, right? 

Quality

Utilizing a managed service provider means relying on a third party for quality and speed. Candidates don’t reach hiring managers unless deemed qualified by the MSP. This requires clear expectation setting. Wedding planners are often already contracted with vendors or have pre-existing relationships. When your wedding planner recommends 5-6 different bands for you to choose from, you’re not considering any of the other bands that may exist outside the realm of the wedding planner’s world. You’re relying on the wedding planner to get you the best vendors at the best price and ensure they’re going to deliver their best on your wedding day.

Control

Managed service providers often make the decisions regarding what vendors to contract with, what the hiring process entails, what is required for onboarding, and how time is tracked. Once this is set by the MSP, the facility rarely has any control over how this affects the travel nurse staffing agencies, and thus candidates, that they engage with. Wedding planners often have packages, set ways of doing things, and "know best." After all, they’re the pros. While it may be a dream come wedding day to not have to make any decisions, if you’re interested in having more control over all the moving pieces, perhaps hiring a wedding planner prior to the big day isn’t best for you (especially if you’re opting for a non-traditional wedding).

So How Does a MSP Work?

Account managers at managed service providers receive information about job openings from the hospital, whether it’s from HR or directly from hiring managers. It is then the responsibility of the MSPs to fill these positions as quickly as possible with the highest qualified candidates. How a MSP does this can vary greatly, but three situations are most common:

  1. The MSP is also a travel nurse staffing agency and exclusively fills these positions through its own agency or multiple agencies that it owns. This means that as a travel nurse, the only way to work a contract at that facility is to work through an agency that is owned by the MSP.
  2. The MSP owns its own travel nurse staffing agency but contracts with multiple agencies to fill the various positions. In this situation, the MSP may be vendor-neutral, meaning each agency has an equal opportunity to submit candidates and have those candidates considered for the position. If they’re not vendor neutral, then their own staffing agency gets first dibs on filling the positions. 
  3. The MSP does not own or is not affiliated with a travel nurse staffing agency and contracts with multiple agencies, or vendors, to fill the various positions.

In the case of numbers 2 and 3, vendors receive information about job openings via a vendor management system and submit candidates to the managed service provider through this technology.  

What Is a Vendor Management System (VMS)?

A vendor management system (also known as VMS) is a software application that allows managed service providers to facilitate necessary temporary staffing for hospital systems. Essentially, the VMS creates a web space where MSPs can post job openings and vendors (like Trusted Health) can submit candidates for those openings. Each VMS is different―some allow vendors to upload documents and manage their employee profiles in the system while others only function on the vacancy-filling level and, once a staff member is selected to a position, paperwork and other elements of onboarding are managed through communications between the vendor and the MSP outside of the VMS software.

A VMS is a software application that helps MSPs to facilitate temporary staffing for hospital systems.

Additionally, some MSP companies develop their own VMS software (for example, Vizient is a MSP which owns VMS software called Contract Labor Optimizer), while others partner with existing companies (AMN works with the VMS company Fieldglass but does not own Fieldglass). 

Things can get confusing when a company is a MSP who happens to also operate a VMS and a staffing arm, but this does exist! Take the MSP Aya Healthcare, for example: it owns a VMS called Aya Connect and has a staffing arm. However, Aya’s staffing arm is totally separate and functions as a vendor that utilizes recruiters to submit candidates through Aya Connect to Aya Healthcare. In other words, the Aya staffing arm (on a very over-simplified level) is a vendor just like Trusted Health.

Broadly, vendor management systems are used to streamline and standardize the business that occurs between MSPs and vendors (travel nurse staffing agencies). With a good VMS, this business can be quite effective. Ultimately, this affects the hospitals, who benefit when positions can be filled expediently.

How Does a MSP or VMS Affect Me as a Travel Nurse?

In an ideal world, having managed service providers and vendor management systems would:

  1. Allow for a neutral and transparent system that is fair to all vendors
  2. Ensure that nurses benefit from improved timelines, simplified billing and time management, improved transparency, and streamlined onboarding and credentialing processes 

Unfortunately, this outcome has yet to be achieved in the travel nursing industry. It’s also important to understand that although vendors (or subcontractors) interact with the managed service provider, the vendor is not able to communicate directly with the hospital’s HR or with management on a particular unit. This can prevent the vendor from obtaining sufficient information about available positions. Having the MSP as a middle-man in the communication between a vendor and a hospital can sometimes make it difficult for a travel nurse staffing agency to follow up on questions that the candidates have about jobs unless the MSP is able to provide this information readily.   

The good news is that MSPs create efficiency in filling vacant positions, because the HR departments at most medical facilities do not have the capacity or specialized knowledge to manage contingent labor in addition to managing internal staff. Considering the way that travel nurse staffing works now, MSPs are integral in making travel nursing a viable career option! 

Finally, managed service providers are responsible for their relationships with hospitals. If those relationships are strong, there is good follow-up and communication resulting in candidate placements. Oftentimes the turnaround time from submittal to interview/offer and on-boarding/compliance is all dependent upon the management of the MSP and the relationship with the hospital. 

We hope this guide to MSPs, VMSs, and how these entities fit into travel nursing is helpful! If you're a recent or soon-to-be nurse graduate, check out our thoughts on surviving the new-grad era!