Yesterday, the SIA released another report suggesting that by 2011, 93% of healthcare buyers in the U.S. will be using a VMS or MSP. The numbers come from a survey they did of 171 healthcare buyers. The survey results also suggested that the breakdown of these accepted offerings will be:

• 55% MSP
• 42% VMS

According to my estimates of hospitals using a VMS or MSP model, the 50% current adoption is probably pretty close to accurate. This adoption of VMS by hospitals is up 24% from last year according to the SIA. The SIA is partially basing their prediction of a jump to 93% in 2011 based on a similar growth pattern from the previous two years. However, I don’t think this jump is accurate because I think there previous year (2008) estimate of 24% was much too low.

Further, in terms of the number of hospitals, the vendor neutral VMS technology model has been much more widely accepted than agency MSP offerings. Therefore, I don’t see how in two years the MSP model will overtake the VMS model by 13%.

So, place your bets on who’s crystal ball is clearer. We’ll see what 2011 brings.

This article is brought to you by Staffing Robot, a premier source of intelligence for the healthcare staffing industry.

Also, permanent staff nurses are working many more shifts, which means there are fewer opportunities for temporary staff.

Overall, the volume of job orders within each facility has decreased and that means hospitals are also having the luxury of being more selective and holding out for more quality candidates. There’s a great pool of very experienced, very capable healthcare travelers out in the industry, and the hospitals are getting the really good players.

The recently announced economic stimulus package and proposed federal budget includes significant healthcare-related spending that will likely drive increased need for physicians and nurses, although the timing and the magnitude of that impact are certainly very difficult to predict. A large portion of the spending is focused on increasing access to healthcare services. Also, there is long-term funding toward health information technology. These drivers may increase demand for temporary physicians and nurses as hospitals implement new systems.

There’s going to be a huge shakeout in the industry. Weaker, less financially sound companies are going to go out of business, and the stronger, better run, better capitalized companies are going to survive. Some companies just don’t have the financial wherewithal to make it through a prolonged downturn. If a company doesn’t have strong cash flow or cash reserves, it’s very difficult to sustain the payroll and the operating costs associated with having a healthcare travel agency.

Predictions have the overall healthcare staffing market contracting by 5% or 10%, but this will probably be a short-term blip. Healthcare staffing is a great segment to be in because of the long-term demographics. Additionally, facilities are not only looking for quality healthcare provider candidates, they’re also looking for quality agencies. They may choose to work only with Joint Commission-certified agencies.

This article was pulled from The Healthcare Traveler.

http://healthcaretraveler.modernmedicine.com

Being in D.C. for the 2009 Healthcare Staffing Summit, you couldn’t help finding yourself in discussions about healthcare reform and its impact on the healthcare staffing industry. The highlight of the Healthcare Staffing Summit was listening to former Senator, Tom Daschle speak on the topic. Whether you agree with him politically or not, you can’t argue with his knowledge and command over the topic of healthcare, as well as his speaking ability. It was an amazing opportunity to hear him.

Here are some highlights of his speech from my notes:

• Reforming healthcare is a transformative event, equivalent to similar events that happened after WW2, the civil rights movement and 9/11.
• 50 million people are uninsured at part or all of the year and 48% of those insured are not adequately insured.
• The U.S. is the only industrialized country that has a problem with healthcare coverage for its citizens.
• Healthcare costs everyone in the U.S. about $8K per person. This is 40% higher than the next highest country – Switzerland.  22% of these costs go to administration.
• Starbucks spends more on healthcare than they do coffee.
• Ford spends more on healthcare than they do steel.
• Medical costs are the #1 reason for personal bankruptcy (over 50%) in this country.
• The U.S. starts its spending on healthcare at the most expensive part of the cost pyramid (the top) and works its way down, running out of money before everyone can be covered. Other societies work in reverse, in order to cover more people adequately at a more cost effective rate.
• Senator Daschle calls the debate about healthcare reform “the noise of democracy” which he states is “far better than the noise of violence.”
• Healthcare reform will create a tremendous demand for healthcare professionals, thereby having a positive effect on the healthcare staffing industry.
• Today we have 21^st century operating rooms with 19^th century administration.
• Primary areas of the healthcare reform bill without consensus – public option; financing mechanism of $1 Trillion; to what extent cuts should be part of funding, mandates; role of the employers; medical malpractice; insurance companies selling across state lines; federal health board.

Lately, I’ve talked to a lot of staffing suppliers that are lowering their prices due to competition, lower hospital demand and other negative affects on healthcare staffing from the macro economy.  There certainly are some good reasons to offer lower pricing but competition and lower hospital demand are not always the most the appropriate reasons.

Why should you keep your prices the same right now?

Elasticity. If you were awake in high school economics class you know elasticity is a fancy word that suggests prices should increase when demand increases and lower when demand decreases.  Many things are elastic in their pricing such as milk, tires, televisions, etc.  However, if you were awake and paying attention in your high school economics class you would know that staffing services are not elastic.  Lowering your prices isn’t going to make hospitals place more orders for your staff and often times, if the hospital is in need of the staff you have, high prices won’t keep them from buying.  It’s about patient care, acuity and staffing ratios.  The need for temporary healthcare staff is often present or absent regardless of price.  Yes, it’s true that hospitals are able to hire more staff right now and pay them less than they were a year ago.  Again, however, lowering your prices isn’t going to suddenly make the hospital start sending you more requests for staff.  It just means they’ll pay less when they do have a need.

You’re sending the wrong message. Lowering your bill rates right now suggests your prices were too high to begin with.  Further, you’ll force your clients to suggest that if you can operate with lower bill rates now – certainly you can do it when the economy picks back up.  Once you’ve sent this message it is quickly received and difficult to recall.  Getting your prices back up to where they should be will be a long, uphill battle that will prove to be even more costly in the long run.

Your costs have increased. Most likely, you’re like every other staffing supplier and your costs of doing business have increased during these challenging economic times.  Therefore, cutting your prices is a sure way to hurt your business even more.  Hopefully, your clients value your business enough to understand all of this.

It devalues your services. Are your services any less valuable than they were last year?  If your prices were already a bit too high then the answer might be yes.  However, if your prices were market competitive then don’t send a message to your clients suggesting otherwise.

It’s not all about price. Simply lowering your bill rates because demand is lower or because your competition is doing it places too much focus on price and hurts the healthcare staffing industry as a whole.  Lets face it – you’re not making and delivering widgets here.  We’re talking about staffing healthcare professionals.  Price should not be the primary factor in the decision making process for your hospital clients so don’t let the conversation go there.  Quality, experience, and skill set are much more important factors to consider.  Therefore, if these factors have not changed why should your prices?
When should you consider lowering your prices?

Volume. If a client is offering you more of their business it can make sense to reduce your bill rates in exchange.  For example, staffing suppliers earning “First Tier” or “First Call” agreements with hospitals often increase, if not double their business.  Another example is receiving guaranteed orders or multiple positions for special projects that hospital is involved with such as implementing electronic medical records or opening a new unit.  Offering lower rates in these instances makes a lot of sense.

New business. Often times to get your foot in the door at a hospital you may need to provide them with discounted rates on a position or for a specific time period.  If doing so wins you new business this too can make a lot of sense.  Just make sure the agreement regarding the discount isn’t evergreen and has specifics delineating the services to which the discount applies and when it ends.

Better payment terms. Hospitals may offer to pay you faster or up front in exchange for lower bill rates.  To some healthcare staffing suppliers, receiving your money faster or up front is more beneficial than maintaining your current bill rates.  Therefore, lowering your bill rates in this case can be advantageous.

Add more services. Instead of lowering your bill rates it might be easier or more cost effective to add more services and keep your current price points.  Perhaps you can offer increased staffing hours, more support, recruit for new modalities, provide additional orientation assistance or an automated order requisition process.  Most likely your company is already set up to deliver on these services and therefore, won’t increase your costs while still allowing you to hold on your bill rates.

Change fees other than your bill rates. Take a look at your late cancellation, orientation and buy out fees.  Often times healthcare staffing suppliers are able to adjust these prices more easily while still preserving their bill rates.  There’s a good chance these things happen less frequently so the impact to your margins won’t be as severe.

Again, every business is different and I understand the pressures that exist right now due to the economy.  However, I also think it’s important to look at your pricing from a logical perspective and not be reactionary to competition and lower demand.  Educate your clients on how the pricing for your business works so they better understand.  Sell your services at the necessary price to keep your business strong and only offer lower bill rates when it makes sense.

This article is brought to you by Staffing Robot, a premier source of intelligence for the healthcare staffing industry.

According to some articles, there are 100,000 registered nursing positions currently open at hospitals across the country and new grads are confident in their job search.

Other articles are suggesting that the shortage is still so drastic that the only way to solve it is through legislation and importing internationally trained nurses.

But then there was this story from the Washington Post reporting that the current economy has somewhat lessened the nations shortage of healthcare professionals.

The article suggests that many nurses are postponing retirement or returning to the workforce for financial reasons. Combine this with the other economic factors negatively affecting the healthcare staffing industry and suddenly there are fewer available jobs.

The article also points to low vacancy rates at hospitals in certain regions, although this only provides us with a snapshot of one particular area of the country.

So what gives?  Is the economy affecting the shortage or not?

My take is that, although some regions are experiencing a glut and there is certainly a slow down across the board, the shortage is still very real.  Perhaps the Washington Post was just looking for interesting headlines but I think it’s fair to say that most people believe the economy will turn around and when it does, the shortage will still be here.

The biggest issue still seems to be getting new nurses into the workforce.  The Washington Post article also speaks to this, citing the average age, high educational requirements and relatively low compensation for nursing school instructors as being a major barrier for getting more students in and through these programs.  Until this changes, it seems that nothing will really resolve the shortage – not even the economy.

What’s your take? Is the economy affecting jobs for healthcare professionals in your region?

This article is brought to you by Staffing Robot, a premier source of intelligence for the healthcare staffing industry.