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Vendor-Neutral, Vendor Managment
It Means Bigger Savings & Smaller Liablity
by
Leanne Oatman, Vice President, Sales & Client Services
RightSourcing, Inc., A Division of COMFORCE
If you procure temps and independent contractors for your organization, you know how much costs are rising in this
area. But you may not know about another thing that’s rising – compliance risks.
The risk-list is a long one, starting with contracts, insurance compliance by the firms who supply your contract workers,
lawsuits by disaffected contractors and credentialing, and going onto background checks, certificates and licenses and
proper IRS classification of these workers.
It’s a complex area…and it’s not getting any simpler.
Healthcare organizations often deal with dozens of temporary-worker suppliers – in some cases, believe it or not, more
than a hundred! Consider all the extra administrative work. Consider that each supplier has its own methods of
ensuring compliance; there’s no single standard to protect hospitals from the perils of misclassifying these workers. And
consider too, that there’s no single standard of credentialing.
The advent of Vendor Management Services (VMS) in the 90’s helped spark some changes, but it wasn’t enough. In
many cases, the vendor management company simply sent its own candidates to the hospital, ignoring those from
competing firms. The result? The highest-caliber candidates were not necessarily hired. And patient care - as well as
the hospital’s reputation – suffered.
Now, however, progressive healthcare organizations are going with VMS partners who use a vendor-neutral approach.
These partners have no vested interest in where the candidates originate. And the hospital gets to choose from among
the best candidates.
I can tell you from first-hand experience that this new model is really picking up steam across the country RightSourcing has just signed 20 new clients.
REAL COST-SAVINGS
Texas Children’s Hospital (TCH), in Houston, instituted a vendor-neutral VMS program with us in October 2009. They
saved more than $1 million just in the first year – a rate of more than 8% annually. And in certain areas, such as travel
nurses, the savings were in excess of 10%.
TCH has saved more than $250,000 on contractor conversions to full-time staff…while at the same time converting 45
temps to full-time and increasing its “fill” ratio to 99%. Just this April alone, they were able to fill 25 orders for travel
nurses. And they decreased their invoices from staffing suppliers, too - from 2,000 a year to 26.
“We began to think about changing our system a couple of years ago,” says Ed Lewis, Assistant Director of Supply Chain
at Texas Children’s. “Each of our departments was searching for contract workers on their own, and at times even
signing their own contracts. We actually had in excess of fifty different contracts from fifty different staffing agencies. We
began to realize that we did not have control of the situation.”
TCH sent out 40 requests for proposal and received 50 responses. One of the reasons they chose RightSourcing was
because of their staffing experience, along with the fact that they were vendor-neutral.
Ed Lewis says the change has been dramatic.
“We decreased the number of invoices from over 50 to one
invoice by implementing this initiative,” he says, “and we also
eliminated different pay rates paid for the same staffing
augmentation each department was paying. We now have
standardized rates. It’s made our lives much easier and our
staffing costs much lower. The vendor-neutral component has
helped to make the quality of the candidates much higher.”
For the first time, most users of this system can actually get an
accurate handle on just who is working for them as temps; their
exact rates; and what, exactly, each of them is doing in the
building. This kind of thing is not a hospital’s core competency.
DO’S AND DON’TS WHEN
LOOKING FOR A
VENDOR-NEUTRAL VMS PROVIDER
DO’S:
•
First get buy-in from your top management.
It’s also wise to note that “vendor” doesn’t necessarily translate
to “partner”…particularly if that vendor has a vested interest in
filling positions with its own applicants.
•
Ask how long the company has been in the
health care field. How many clients do they
have?
“The driving factor in our decision was about cost,” Ed Lewis
says. “But that’s not all. For the first time, we really have a
handle on how many temps are working at TCH.”
•
Ask for references from current clients and
call the references!
•
Ask how experienced they are at
implementation of these programs.
If you’re classifying your independent contractors as 1099’s, but
you’re treating them more like employees – telling them what to
do, when to do it and how to do it - you could be facing some
serious trouble from the IRS and from state authorities.
Companies have been hit with major fines and penalties for
these misclassifications, but that’s just the financial end. Imagine
the public relations consequences if your company is hit by the
IRS or state regulators or dragged through the courts by
disgruntled independent contractors who insist they were treated
as employees. The hit on your reputation could scar your
organization for years.
•
Ask how they make the whole program come
together, how they make it work. Ask for
details, details and more details!
•
Do ask about their “band-width.” Are they
national? Do they have resources (upon
which they can call) all over the country?
•
Do remember to ask – at the very start of the
process – if they handle payrolling as well as
compliance and regulatory issues.
Melinda McDonald is Vice President of Child Health Corporation
of America, a business cooperative of 43 free-standing pediatric
hospitals. Alarmed at rising costs for member-hospitals, she
quickly identified contingent-labor as one of the largest spends.
DON’TS:
GOT TEMPS? YOU’RE RUNNING SOME RISKS
“We started with a vendor-neutral model at the end of 2009,”
she says. “In addition to costs, as pediatric hospitals, we were
also concerned about compliance issues with contingent
workers. We’re always concerned about licenses being up-todate, thorough background checks, adherence to Joint
Commission regulations and, of course, adherence to IRS
regulations. We’re all aware of the headlines about people with
criminal records who have been working in hospitals around the
country.”
I can see first-hand the results at Child Health Corporation of
America…because RightSourcing currently manages several
CHCA facilities. Average program savings are now exceeding
15% annually. In addition to contract staff, RightSourcing is also
managing the credentials for visiting professionals, volunteers
and students. And all the hospitals are benefiting from the
temp-to-hire policy, which allows them to determine first-hand
the skills of contract staff and then convert the good ones to
full-time staff when there’s an opening.
•
Don’t forget to reassure your current staffing
suppliers – at least, the good ones - that
they’ll still be involved in your plans even
when a new system is implemented.
•
Don’t forget to ask a company bidding for your
business about how – and how often – they’ll
provide savings reports.
•
Don’t forget to ask how they do analysis on
the front end.
•
Don’t forget to make sure that these
companies think strategically. And don’t forget
to get concrete examples of how they’ve done
that for other healthcare clients.
•
Don’t forget to draw up a very detailed
contract…and to go through it with a finetoothed comb. If you want this new
partnership to last, leave nothing to chance;
make sure everything is spelled out.
RightSourcing always has a dedicated team of professionals available to the client hospital…and our clients love it. Our
team can serve as a strategic partner, helping to identify potential problems.
This helps us know our workers better. It helps with drug-screening and it helps weed out inappropriate staff, including
those with a criminal background. It helps us ensure that all temps have had their proper vaccinations. It helps speed
up the time in which we can fill orders, from
janitors to doctors. It helps us find better
people. And we can even notify a worker
whose license is about to expire.
The HR Department at Texas Children’s had a
legitimate concern about classification issues.
But using a vendor-neutral VMS partner made
these issues go away for them.
At Texas Children’s, RightSourcing does all the
screening of new 1099 workers and also does
a Risk Assessment on every temp worker,
including reviewing the background checks, to
ensure compliance with IRS and state
regulations.
WHY VENDOR-NEUTRAL?
“We wanted a vendor-neutral program,” says
Melinda McDonald, “partially because we
didn’t want to lose our existing suppliers. We
found that some companies called themselves
“vendor-neutral,” but they really weren’t.”
Ed Lewis believes there’s no real alternative
to using a vendor-neutral model.
“When your reputation is on the line every day,” he says, “you want as many qualified candidates as you can get. And
you don’t get those candidates by working with only one preferred provider.”
At RightSourcing, we’re seeing a lot of evidence that the trend toward a vendor-neutral model is here to stay. It’s all
about patient-care. Vendor-neutral companies have your best interest at heart. This model is succeeding in tying up so
many loose ends for our clients. And you can often start seeing results as early as the first week.
In short, vendor-neutral VMS offers healthcare companies the best of all worlds. Cost-savings. Protection against
liability. And a choice of quality candidates.
Ask anyone who’s already using this model. They’ll tell you it’s a program whose time has come. And, for a healthcare
system being buffeted by the winds of change, it’s none too soon.
Contact us at [email protected] or visit our website, www.RightSourcingUSA.com, for
additional information.