When it comes to pricing, the healthcare staffing industry has it backwards.  I know every business is different and it’s hard to know where to set your price points when creating bill rates for your healthcare professionals.  Especially in this economy.  I also understand that the gap between logic and reality can be light years apart and that you have to do what you have to do to stay in business and make your clients happy.

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.

Clearview Staffing Software is a Platinum Sponsor of the Staffing Industry Analysts 2009 Healthcare Staffing Summit in Washington, D.C.

Apparently, it depends on who you ask these days.

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.

Using temporary healthcare staff gets a bad wrap. At best it’s often considered a necessary evil by many hospitals. Yes, there are several potentially negative things such as high costs, internal political issues, additional risk and managing a time consuming/manual process.
However, if used effectively, temporary per diem or contract (traveler) staff from healthcare suppliers can be incredibly beneficial and advantageous to your organization.

Here are my top 10 reasons for effectively using temporary healthcare staff at your hospital:

1. It doesn’t have to be time consuming. There are several ways to automate the management of staff from healthcare suppliers. Everything from job requisitions, credential management, timekeeping, invoicing and reporting can now be automated. The methods for doing so can be as simple as better using email and expanding existing staffing or timekeeping systems to partnering with a staffing supplier that offers Managed Services or a healthcare VMS company.

2. Last minute needs. Your census changes daily, sometime hourly. If a major fluctuation occurs you can’t hire to your census. Having contracts with valued staffing suppliers that can assist you in these times can ensure you are properly staffed when you are in need.

3. Increase your hospitals revenue. Unmet staffing levels can lead to turfing patients, which can lead to unfilled beds. Unfilled beds can lead to a lack of revenue for your hospital. Therefore, ensuring proper staffing levels or even increasing your staffing levels in order to take care of more patients can help your hospitals bottom line.

4. It’s not always more expensive. Lets face it. Employees are expensive. Depending on what metrics you are using – employers can spend up to an extra 35 – 50% on top of an employees salary for benefits and other overhead costs, not to mention costs associated with attrition. So, with that, consider the typical markup of a healthcare staffing supplier (35 – 50%). Remember, the client only pays for time worked and orientation costs (in some cases). There are no associated recruitment, hiring or attrition costs. Therefore, using temporary staff in a well planned and managed way can actually end up saving you quite a bit of money. Lisa Amorao from ATR has a post specifically on this topic in her company’s staffing blog.

5. Maintaining steady usage ensures you have staff when you need it. If you infrequently contact your staffing suppliers they will place you in a lower priority. However, if you maintain a steady relationship with them you ensure they can meet your needs when you most need it. Further, if you’re a hospital that has an in-depth orientation process it’s a good idea to keep orientation slots open and candidates moving through them so that when you do request temporary healthcare professionals you have a pool of staff ready to go in your area – not sitting through orientation.

6. Use more travelers (contract staff). Hospitals that primarily use travelers have more control over their staffing needs. Working with travelers requires more planning and preparation but can help you fill in anticipated staffing gaps due to seasonality and other occurrences. The bill rates for travelers are typically lower due to a longer guarantee of work or from differences in economic factors in different parts of the country. In addition, using travelers allows you to work with individuals who will be at your facility longer and therefore have a greater understanding of your practices and become more efficient in their patient care delivery. Finally, if you find the traveler is someone you would consider hiring – do that. Work with the staffing company to offer the caregiver a new job.

7. Avoid costly overtime pay. The amount your hospital spends on overtime can end up being much more expensive than using temporary staff. I’ve worked with several hospitals that were attempting to reduce their spending on staffing by cutting back on outside staff. However, because these hospitals were inappropriately managing their overtime hours they ended up spending more money than before.

8. Avoid staff burnout. There is a lot of talk about nursing burnout these days. Hospitals have cut back on healthcare supplier usage, however, there is still a nursing shortage. Therefore, in a lot of cases, that means hospitals are asking their staff to work harder. Doing so can be an effective solution in the short term. However, eventually your employees will start suffering from burn out and need reprieve.

9. Starting new projects. Implementing an EMR system? Opening new units? If so, most likely you will become quickly understaffed as your internal staff are dedicated to these new initiatives. Planning ahead of time to cover these projects by partnering with good staffing suppliers will ensure adequate coverage.

10. Insert your reason here. I’m leaving number 10 open for others to provide. Feel free to chime in.

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

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