Cost Reduction

Savings and Efficiency Attainable by Partnering with Managed Service Providers

April 6, 2017 8:56 am

Improving efficiency in staffing supplier management, contract negotiations, and other areas can help organizations achieve substantial labor savings.

A lack of efficiency is often to blame for runaway labor costs. But efficiency is not solely about encouraging workers to perform at higher levels. Efficiency also includes labor acquisition, retention, and management as well as contract performance and compliance. Without a focus on all of these areas, healthcare systems are missing an opportunity to realize significant cost savings and program efficiencies.

Driving Efficiency at All Levels

Health systems seeking to optimize the value of their labor frequently rely on vendor-neutral managed service providers (MSPs) to efficiently source quality contingent labor and implement best practices. Specifically, a vendor-neutral MSP can guide a customer with the important tasks of supplier management, contract negotiation, credentialing, risk mitigation, and training contingent workers.

Recently, a California-based healthcare network saved more than $15 million during an initial three-year period using an MSP. These savings were achieved by finding and eliminating large discrepancies in staffing supplier billing, implementing analytical forecasting, enforcing supplier performance contracts, leveraging MSP aggregated volume to negotiate favorable rates, and ensuring employee qualification compliance.

Working with the MSP, the health system realized improved supplier selection, more favorable rates, and improved the quality of the staff provided. These changes were directly responsible for improved budget forecasting and accuracy in future staffing projections. The health system also obtained the benefits of a centralized third-party oversight team. The MSP used analytics and vendor management system technology to monitor supplier performance, leverage expertise to manage their overall spend, obtain more favorable rates, and streamline the billing process by providing one single invoice with the appropriate cost centers charged for the work.

For example, the onsite MSP team anticipated and reached appropriate staffing levels to accommodate the increases in patient needs during the winter flu season at favorable rates without sacrificing quality or patient care.

Achieving Efficiencies

The health system also gained valuable insight into the staffing suppliers’ performance, improving supplier rates, risk mitigation, training, and employee security protocol enforcement. The following were specific areas for improvement.

Requisitions. The requisition process for hiring managers was streamlined, eliminating redundant processes. This resulted in the health system gaining access to experienced program management teams, significantly expediting the hiring process.

Licensing and certifications. To enable easy access during regulatory audits, staff licenses and certifications were stored electronically. The compliance team verified that every worker was compliant prior to starting his or her assignment. Prior to the MSP, many of the workers’ files were missing critical documents.

Technology training. The employee integration process was streamlined, allowing candidates to immediately begin their assignments with increased familiarity of the health system’s technology systems and processes.

Termination and end of assignment. Termination and end-of-assignment procedures, such as the return of employee equipment and badges, were consistently implemented upon assignment completion.

Tracking. The MSP’s system tracked, in real-time, contingent worker lists to enable reporting of active head counts, candidates’ availability for reassignments, anticipated expenditures, and budget-to-actual expenditures.

Metrics. Throughout the lifecycle of the candidate, the MSP tracked the performance of the workers and their suppliers, providing objective performance metrics not found in supplier-led MSPs. This data highlighted those candidates and suppliers who were exceeding performance expectations and those who were underperforming. This helped the health system identify opportunities to leverage suppliers that were providing quality candidates at better than market rates, leading to greater savings.

Efficiency and Flexibility

Without an MSP-directed, systemwide plan, rogue spending within departments quickly erodes both efficiency and cost savings. The health system relied upon the MSP to prevent rogue spending by implementing the plan across all disciplines including IT, finance, marketing, human resources, procurement, and clinical. This resulted in an overall savings of 18-20 percent on an annual basis.

Prior to this, rogue spending through noncentralized staffing supplier relationships derailed annual budgets and unnecessarily exposed the health system to compliance and misclassification risks, potentially resulting in huge fines.

Optimizing Value

Given that health system and staffing supplier profit objectives are inherently misaligned, vendor-neutral oversight and staffing supplier centralization can improve unity between the two stakeholders. As health systems focus on optimizing the value of each dollar spent providing improved patient care, creative staffing solutions in partnership with a vendor-neutral MSP can drive efficiency and cost savings.


googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text1' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text2' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text3' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text4' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text5' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text6' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-text7' ); } );
googletag.cmd.push( function () { googletag.display( 'hfma-gpt-leaderboard' ); } );