Approximately 70% of healthcare organizations contract with an MSP or VMS provider for the procurement and management of contract labor. Most of these programs are managed by staffing agencies eager to box out their competition, control pricing and maximize profits in each client account.
However, one tactic that many of these healthcare MSP/VMS providers use is requiring a binding exclusivity clause that limits an organization's options, particularly when it comes to severing that partnership due to underperformance or fluctuations in the job market. Companies such as Healthcare Workforce Logistics (HWL), on the other hand, do not require such clauses for two main reasons:
Provided that most, if not all, of the needed positions are filled by the MSP/VMS, the benefit to the healthcare organization is having a single point of contact, standardization of contracts, streamlined communications and more efficient processes. The benefit to the Agency MSP/VMS provider is guaranteed revenue on every requisition filled; however, if positions are not getting filled, the value of this arrangement to the healthcare organization goes down….way down.
Unfilled positions can translate into lost revenue, closed units, and overstressed departments. As we are witnessing during the COVID-19 pandemic, when demand outpaces supply, the client bears the greatest burden, suffering a great deal more than their Agency MSP/VMS partners. The inclusion of onerous exclusivity provisions and limitations on the ability of clients to terminate existing agreements with Agency MSP/VMSs who are not performing, are commonplace in many existing contractual agreements. By holding the customer to an ironclad, exclusive arrangement, the Agency MSP/VMS is able to limit the number of suppliers that can service the client which results in above-market bill rates. Perhaps even more damaging is that by removing the ability for the healthcare organization to contract with other MSP/VMS providers, the Agency MSP/VMS imposes a distinct disadvantage to their customer when it comes to sourcing enough critically needed staff within a short time frame—risking quality patient care.
Relevant Reading: Learn about HWL’s COVID-19 Rapid Staffing Program.
An exclusivity clause is a section in a contract that restricts the signer from working with or engaging in services with other providers. Put simply, the signer is forced to work exclusively with the issuer of the contract until the agreed-upon initial term period ends.
According to UpCounsel, “An exclusivity clause mandates that the parties who have signed are legally restricted to sell or purchase goods to or from a single party. The buyer is restricted from promoting, buying, or using similar products from any other vendor or provider.”
Ask any vendor or talent acquisition manager if they would prefer to be locked into one vendor exclusively and they will fervently tell you, “No,” and here’s why; healthy competition ensures you receive superior service and attention.
Before you agree to an exclusive MSP contract consider the potential drawbacks.
Is it ever good to have only one choice of anything, especially in a volatile staffing market? Of course not. Freedom to choose is the cornerstone of a competitive marketplace keeping costs low and quality high. Making vendors compete for your business is not only a good choice for you, but it also keeps your vendors focused on your organization’s needs.
When you are free to work with any vendor you remain in control. And in this market, control is good and management is likely looking to control or mitigate what they can, when they can, in these uncertain times.
Request Market Analysis of Hiring Trends in Your Area
When it is time to evaluate MSP contracts, pay close attention to these elements:
Patient demand is not static, and neither is the availability of your healthcare workforce. With multiple vendors vying for your attention, vendors are required to balance the demand in the market with the right number of partners to ensure everyone’s success and solidify their partners’ commitment. Only with a program that gives you access to the entire market and the ability to negotiate rates freely do you retain control over costs.
Not sure where you stand? A market analysis of hiring trends in your area can guide the decision to engage an MSP. Contact our team today to learn more: info@hwlmsp.com.
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