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Trusted Guide to MSPs/VMSs

Apr 9, 2019
Sarah Gray, RN

There is a lot to learn about life as a traveler even before you start hearing terms thrown around like MSP, VMS, exclusive contract, vendor, agency, subcontractor, vendor neutrality, etc. It can all be very confusing but is super important to understand! And because Trusted is all about bringing transparency to our nurses and this industry, we’re breaking it down!

What is a Managed Service Provider?

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

Generally, the responsibility of a MSP 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 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’ (defined below) technology.

Some MSPs are simply just MSPs, while some also own their own staffing agency. We’ll get into the details of this later. 71% of all healthcare facilities utilize an MSP or VMS to help manage their external workforce. Of this 71%, 54% of them use an MSP while 17% use stand-alone VMS technology and manage it internally by their HR team.  

Pros and Cons of MSPs

Hospitals use MSPs because it allows them to have immediate domain expertise and relationships in an area they don’t typically have internally. They outsource the specialized work that is required for sourcing, recruiting, interviewing, hiring, on-boarding, vendor management, billing/paying and maintaining compliance of engaging external labor. A hospital’s Human Resources is able to focus on internal staff while also able to benefit from employing external/temporary staff and outsourcing the management of them. Hospitals themselves then interact with a single company, or system, rather than multiple agencies. This is perceived as advantageous because working with multiple staffing agencies to fill a variety of often short-term positions on different units, and in various facilities can create management headaches and backlogs - ones that 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 from a florist, caterer, and band to the venue, hair, makeup, stylist, and more. The wedding industry is very nuanced and there’s so much to know about price comparison, quality, necessity, etc. You 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 just make your wedding day the best day of your life. Think about an MSP like a wedding planner. Except there’s no party here, just patients :)

There are also reasons that facilities opt out of utilizing an MSP. This can be for various reasons but oftentimes comes down to necessity, cost, friction, quality, and control. We’re going to stick with the wedding planning metaphor to keep things consistent!

Necessity - As mentioned above, utilizing an MSP 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, an 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 on it as a full-time role. Like hiring your mom or sibling to plan it. HR departments have built a "Manager of External Workforce" job in which replaces the MSP function.

Cost - As with any service, facilities pay a premium for utilizing an MSP. Whether this cost is translated directly to the facility, through a percentage of the ‘bill rate’ (and thus transferred to the 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. Agencies are often prohibited from communicating with the facility directly and thus must play ‘telephone’ with the MSP. 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 an MSP 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 - MSPs often make the decisions regarding what vendors to contract with, what the hiring process entails, what is required for on-boarding, and how time is tracked. Once this is set by the MSP, the facility rarely has any control over how this affects the agencies, and thus candidates, that they engage. 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 it work?

Account managers at MSPs 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 an MSP does this can vary greatly - with three situations being the most common.

1 - The MSP also is a staffing agency and exclusively fills these positions through its own agency or multiple agencies that it owns. This means that as a traveler, 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 a 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 for them to be considered for the positions. 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 staffing agency and contracts with multiple staffing agencies, or vendors, to fill the various positions.

In the case of 2 and 3, vendors receive information about job openings via a Vendor Management System (VMS) and submit candidates to the MSP through this technology.  

What is a Vendor Management System?

Vendor Management Systems (VMS) are software companies that allow MSPs to facilitate the 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 of a position, paperwork and other elements of on-boarding are managed through communications between the vendor and the MSP outside of the VMS software.

Additionally, some MSPs develop their own VMS software, while others partner with existing companies and use their technology rather than developing their own. Where this gets confusing is when a MSP also has (or owns) a staffing arm, or multiple. However, it's possible that this staffing arm is entirely separate and functions as a vendor the same way other agencies do to submit candidates to the MSP. In other words, the staffing arm, on a very over-simplified/over-generalized level, despite being affiliated with or owned by the MSP may act as a vendor just like other agencies. Though this is not often the case.

Broadly, VMS are used to streamline and standardize the business that occurs between MSPs and vendors/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 do MSPs affect me as a travel nurse?

The idea is that MSPs/VMS would allow for a neutral and transparent system that is fair to all vendors and that nurses would also benefit from improved timelines, simplified billing and time management, improved transparency and streamlined on-boarding and credentialing processes. Unfortunately, this outcome has yet to be achieved.

MSPs create efficiency in filling vacant positions because HR does not have the capacity or specialized knowledge to manage contingent labor in addition to managing internal staff. The way staffing works now, MSPs are integral in making travel nursing a viable career option!

MSPs 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 and compliance is all dependent upon the management of the MSP and the relationship with the hospital.

Although vendors (or subcontractors) interact with the MSPs, they do not interact with the hospital itself. The vendor is not able to communicate directly with 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 also makes it difficult to follow up on questions that the candidates have about jobs unless the MSP is able to provide this information readily.

Interested in learning more about this topic? Let us know by emailing us at hello@trustedhealth.com!