Healthcare staffing is complicated and messy. It is a multi-billion dollar industry in the US — short term staffing making up majority of the revenue. Hospitals employ short term staff because flexible staffing gives hospitals ability to optimize fixed and variable staffing costs, moreover, seasonal uptick in certain regions increases the local supply and demand gap. Currently, hospital use Vendor Management Systems (VMS) that contract with many different staffing firms around the country who then source, interested healthcare workforce by online and offline outreach, process is pathetically manual and inefficient. Short term staffing jobs are not posted in the open job market, rather given to the VMS and staffing firms to fill. Current model comes at a very high price for the hospitals and bears a general lack of trust among healthcare workers, due to the absence of monetary transparency. The disruption in the current model is inevitable, companies like StaffDirectly are on the forefront of that disruption; proposing a model that is smart, efficient, transparent and serves the needs of the emerging millennial population. Here are some of the reason future of healthcare staffing will be different and better in 5 years;
- Inefficiency and market fragmentation of current healthcare staffing industry
Healthcare staffing is a hugely fragmented market in the US and much of the market is dominated by a handful of staffing firms, some of them public and many of them privately owned and operated. Majority of the top firms are inclined to act as a one stop shop for hospitals seeking to manage all their staffing needs. This approach has given birth to complacency and almost a monopoly in the market. As a result, there is a lack of motivation to innovate the existing model — as current model is favoring the staffing firms. By acting as the middle men; they control the supply and in-the-time of high demand they can charge premium rates. The growth strategy to increase the market share among big firms, universally, has been mergers and acquisitions, rather than innovation or better products.
In recent years, some companies have started to make a shift from just a staffing firm to being Managed Service Providers (MSPs); to help healthcare facilities manage their personnel needs, however, this move yet again justifies the argument of having more control on the existing, broken, recruiter dependent model. It is not serving any good to the healthcare worker, facility or the industry. Market fragmentation causes workers and facilities to contract with multiple firms, because a single firm cannot fulfill all of their temporary staffing needs. Disruption is inevitable but it is not going to happen internally by the big players, as their focus has only been on the growing demand for temporary staffing and how they can maximize control of the market, instead of serving the workers and the facilities by leveraging technology.
2. Mobile leveraging
Healthcare industry, historically have been the late adopters of new technologies. Understandably, they only adapt to proven market models and technologies, due to the nature of their highly scrutinized operations. Mass adoption of mobile in the consumer market is a thing nobody talks about anymore — it has become part of our lifestyle. However, hospitals have just started to integrate mobile to streamline their internal staff communications, and patient data access. Mobile still have potential to fix many of the current inefficiencies in the healthcare operations — healthcare staffing will be one of those operations. Healthcare staffing is divided into four main categories, Allied health (Physical Therapists, Radiology technicians), Per Diem (Nurses to fill daily shift needs), Travel Nurses (Nurses to fill expected increase in patient census), Locum Tenens (Physicians to fill low supply of internal staff or increase in patient census). Access to workforce, cost and procurement times vary substantially depending on the category.
Current healthcare staffing model fills a unique customer need and is dependent on the demand characteristics, however, lacks a sustainable worker-facility connection, and has very high lead times due to inefficient sourcing and communication, as well as a complex on-boarding process. The inefficiency restricts the wide access to the new interested qualified workforce, in-turn causes a limited pool of workers leading to unfilled jobs for healthcare facilities. Leveraging mobile will create a sustainable connection between the facilities and the workers. It will have a marketplace for the interested workforce; a streamlined on-boarding to make it easy for the qualified workforce to join contingent marketplace and an enhanced communication platform to reduce the procurement time to zero. Mobile has the ability to do that and will do that.
3. Emergence of millennial healthcare workforce
Millennials are entering the healthcare workforce in huge numbers. Between 2014 and 2024, nearly 440,000 new Registered Nurse (RN) jobs are expected to be added, while more than 600,000 existing RN jobs will need to be filled due to RNs leaving these positions. These leaving RN make up more than 50% of the nurse population in the U.S. and will be replaced by new millennial nurses. This generational shift in the healthcare workforce has been anticipated for many years, and much of the focus has been on the supply and demand of the workforce — completely ignoring the lifestyle preference and behavioral shifts of the upcoming workforce.
Emergence of internet and mass mobile adoption, have completely changed how people interact, work or make career choices. Much of this shift among millennials have been emphasized by having higher autonomy in personal and professional life, fulfillment, having control, and using technology to leverage operations and connections. Millennials have a tendency to turn over more often than other generations — they seem to be more adventurous in all aspect of their lives. So, having a healthcare staffing model that lacks transparency, and gives very little control to the workers, has a potential to heighten the frustration among millennial workforce and historically frustration has lead to disruption. The future of healthcare staffing will be more inclusive, democratic,integrated and autonomous.
4. Emergence of on-demand economy
On-demand economy has seen a fast growth in the last decade. With the birth of companies like, Uber, Postmates, Instacart, and TaskRabbit; the basic definition of what it means to be employed has changed and the boundaries of employment has shifted from a workplace to anywhere we want. On-demand economy has been on the forefront of this work evolution and seemingly a popular work option among millennials. It seems like a no-brainer economically; service seeker goes directly to the servicer. The exchange is more efficient, transparent, free of hassle, and not to mention — cheaper.
Healthcare staffing is going to experience this on-demand market shift. Currently, healthcare facilities use Vendor Management Systems (VMS) to manage staffing agencies that recruit and provide the contingent workers. Facilities sometimes have to use multiple firms to fulfill their staffing needs. Facilities spend millions every year to tackle the issue of short term staffing — and still lack a sustainable contingent workforce, year after year. With emerging market shifts and acceptance of on-demand workforce as a substitute; the existing model is under imminent jeopardy. The obvious choice available for hospitals is; go directly to the source, if there was a marketplace or platform that will act as an Uber or TaskRabbit for the facilities and the workers.
5. Cost
Healthcare staffing is very costly; facilities spend huge sums of money to fulfill their staffing shortage, whether it is per-diem, travel nursing, allied health or locum tenens, all add to the operational costs. Heightening regulatory and economic pressures are forcing healthcare facilities to optimize their cost efficiency and reduce readmission rates. Healthcare facilities has a base fixed labor that is supplemented with a variable labor to align with patient census fluctuations and staffing costs. With the increase in baby boomer population, expected shortage in healthcare staff, and increasing restrictions in insurance reimbursements; current staffing model will be under scrutiny — it will be unsustainable and too expensive for hospitals, as labor cost currently amounts to more than 55% of the total hospital expenses. Hospitals are going to be looking for more cost efficient staffing models that can help them predict their staffing needs and take away the burden of high cost.
6. Emergence of Contingent Workforce Management Systems
The conventional relationship between the employer and employee is evolving as technology, globalization and regulations continue to evolve the labor markets. With the rise of millennial workforce, freelance economy is also on the rise. Independent workers/contract employees are expected to grow to 24 million by 2018 from 17.4 million currently. Existing healthcare staffing is a closed job market model; temporary jobs are not posted in the open job market, rather they are sent to staffing firms to fill, which leads to mismanagement and confusion, in turn; unfilled jobs and staffing shortages. Managing these short term employees is a manual process, leading to high lead times, and unsustainable connection between workers and facilities for future needs.
With the rise of freelancers and short term contractors, there has been emergence of a management system that is smart, streamlined, and cost efficient. New Contingent Workforce Management System (CWMS) allows organizations to manage all their contingent workers themselves. Above mentioned market shifts and cost are going to urge healthcare facilities to evolve their current staffing process and adapt to a more streamlined and cost efficient model.
