Managed Service Providers (MSP) / Vendor on Premise (VOPs)
Summary of Model:
In the healthcare staffing industry, the Managed Service Provider (MSP) model is a modern variant of the Vendor on Premise (VOP) model. Essentially, both models provide the same service of healthcare vendor management. One distinction often made is that a VOP may only be on-site for one particular location but a MSP may manage a client's multiple locations from a central point.
MSPs function as intermediaries between the client and sub-contracted staffing suppliers. The MSP often uses a VMS Technology Solution to manage this service for the client. In some cases, a client may contract directly with a VMS technology provider for the application and separately with a MSP for the on-site or centralized management. The MSP manages all aspects of the procurement process including supplier selection/recommendation, staff procurement, and compliance oversight.
- Recruitment assistance
- Temporary staff procurement
- Internal staffing management
- On-boarding and orientation process management
- Supplier management
- Contract negotiation/standardization
- Compliance oversight
- Time keeping and invoice management
- Clients benefits from the full service management of their staffing process by a third party. MSPs can become a completely integrated part of a client's environment acting as a financial and management partner. Such a situation can create great efficiencies and cost savings for the client.
- Improved efficiency in staffing process.
- Cost savings.
- Aggregated data reporting services.
- Improved fill rates.
- The client has a long implementation cycle to reconfigure their entire staffing process with a new management team from the MSP and/or fully educating the MSP on the client's practices and needs.
- Lack of client direct control that still requires client reliance, contracting, oversight, and management of the MSP.
- Supplier sub-contractor resistance. Most suppliers don’t like the idea of working directly through one of their competitors. Specifically, suppliers have a difficult time sending all of their staff information directly through another supplier. In addition, often times the MSP compresses the rates of the sub-contractors or charges them service fees of 5% or more. Many of these relationships have resulted in lawsuits that ultimately destroy the benefits of the MSP model for all parties involved.
- No vendor neutrality. Suppliers providing vendor management services often have conflicting goals with their clients. The typical goal of a healthcare client is to reduce, if not eliminate, supplier spending and ensure the highest quality staff at the best rate for every assignment. However, the goal of the supplier is to constantly increase their margins while filling more and more of the client's business. This often means, filling as many of the client's shifts with staff from their company whether or not their staff are the most qualified or at the best rate.
- Suppliers that have strong relationships with their clients and the bandwidth to provide MSP services are in a great position to deliver such services. Even though vendor management technology exists, allowing clients to be their own vendor manager, many clients still look to have an outside company take full control over their staffing process.
- MSPs can form mutually beneficial partnerships with VMS technology providers. The process of providing vendor management services is manual and labor intensive. Implementing a technology solution to manage this process is the best way for an MSP to streamline their workflow and ensure they control their costs when delivering MSP services.
- In the last 1 – 2 years the MSP model has grown in popularity.
- MSPs face threats from other suppliers offering the same/similar services. According to a recent survey conducted by the Staffing Industry Analyst, 22% of suppliers currently offer MSP services and 38% plan on offering such services within two years. Therefore, more and more suppliers will be offering the same/similar services making differentiation a challenge.
- MSPs are most largely threatened by companies offering VMS Technology or Internal Resource Pool Management solutions. Offering direct client control and vendor neutrality, the VMS Technology Solution model has had considerably higher adoption rates in the market and shows no signs of slowing.
- Hospitals still largely view staffing suppliers in a negative light and work diligently to reduce if not eliminate their reliance on these suppliers by implementing Internal Resource Pools and partnering with Internal Resource Pool Management companies. MSPs will need to figure out how to better position their offerings and better sell clients on the benefits of their staffing services.
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