Get industry news, client announcements, product release info, and HWL Insights directly in your inbox!

CFO’s Guide to Managing Locum Spend

The real-time reports that a VMS provides give insights to help healthcare CFOs reduce locum costs and increase quality while saving time.

Locum tenens healthcare providers can be lifesavers for organizations who need additional providers, even though they come with a higher price tag than fully employed providers. Given an aging population and an aging physician workforce, the need for Locums is expected to continue to climb.


According to a recent survey conducted by Staff Care, use of Locum Tenens specialists has accelerated in the last few years, determining that “21% of healthcare facilities reported using Locum Tenens surgeons in 2019, up from 11% in 2016. And overall, 85% of hospitals, medical groups and other healthcare facilities used locum tenens doctors in 2019.” With the large number of healthcare organizations using Locums, and the many disparate departments within any given organization using Locums, managing high Locum spend has become a high priority for CFO’s.  


Unfortunately, many organizations have no insight into how many Locum vendors the individual facilities and various departments are using. Add to that the fact that too often, one vendor will have many different contracts with varying terms and rates - even within the same department. 


It’s impossible to get a handle on a problem you can’t define.


Are You Paying More Than Market Rate?


Too often a single facility will have multiple contracts with the same vendor, and with varying rates. A Market Rate Analysis is the process that studies all rates being paid for the same service in a given area and determining a competitive range of rates that are high enough to be competitive and get orders filled without overpaying when the supply is sufficient. This  critical component to managing Locum spend should be conducted to ensure rates are competitive and suppliers are committed to providing healthcare providers at the negotiated rate structures. Agency providers are not likely to volunteer to reduce rates when organizations are overpaying. Periodically conducting market analysis is the best way to force transparency and identify successful rates for the market and realize potential cost savings. 


Gain Control Over Your Locum Spend


CFOs can begin to take control of Locum spend by engaging with a vendor-neutral vendor management system (VMS) technology. A vendor-neutral VMS will give organizational leadership a clear view of where and how often each department is using temporary help. A robust VMS helps leadership teams to swiftly translate utilization data into action—resulting in reduced cost per Locum and provide insights to focus efforts and prioritize the hiring of qualified permanent staff. 


Regulating Locum availability and balancing the need for standardized rates and contract terms is delicate; however, vendor-neutral workforce solutions provide a unique opportunity for significant financial savings through increasing the pool of vendors with both rate standardization and process centralization.


Reduce Contracts with Managed Workforce Solutions & VMS Technology 


Hospital CFOs face many challenges in regard to managing Locum spend. From a lack of consistent process for sourcing, onboarding, and paying Locums - to the lack of visibility into Locum usage and spend, the process of identifying and selecting a solution can be complex. This is where a managed workforce solutions company with a proven track record and a powerful VMS can save you time and money. Here’s how:


  1. Vendor-Neutral Evaluations
    Use advanced data analytics to determine which current vendors are in your best interest to continue relationships. All vendors should get the orders at the same time and pay the same admin fees.

  2. Manage Standard Agreements
    Develop, distribute and execute standard agreements with all vendors qualified to provide services.

  3. Establish Pre-Screening Standards
    Create requirements for initial candidate screenings to be conducted by agencies.

  4. Configure VMS and Deliver Real-Time Reporting
    Setup the VMS to provide real-time dashboards and reports which are delivered to key stakeholders allowing for enhanced visibility into utilization, vendor performance, and quality of staff. A robust VMS will deliver actionable business intelligence that is monitored against KPI’s with files all in one central location.

  5. Train Vendors
    Train each contracted agency on how to use the VMS to efficiently identify needs and submit qualified candidates.

  6. Program Management
    Coordinate all aspects of ongoing, day-to-day program oversight and support for your staffing offices and talent acquisition teams. The VMS team can also work to expand and refine the vendor panel as needed.

  7. Fee Structure
    HWL operates as a vendor-funded model.  The healthcare provider organization pays nothing for the services that HWL provides.

    A workforce solutions company with a pulse on current market dynamics and knowledge of advanced data analytics can provide a VMS that streamlines Locum activity. The real-time reports that a VMS provides give insights to help CFOs reduce locums costs and increase quality while saving time. These insights also help to sharpen recruiting priorities which will achieve further gains in cost savings and quality.


For more information on the many benefits of hiring a Locum read, ‘How Do Healthcare Provider Organizations Benefit from Locum Tenens?


HWL’s Three-Step Approach to Managing Agency Spending


  1. Dynamic Sourcing Process that combines market-based pricing analysis, proprietary real-time market demand data, and unique insight into agency delivery capabilities.

  2. Vendor Neutral Approach to agency management that creates an open-marketplace for agencies to compete with each other to deliver the highest qualified professionals reducing time-to-fill and ensuring the best match for the healthcare provider organization’s needs.

  3. Advanced Proprietary VMS Technology with customized workflows for all disciplines and the ability to optimize utilization of internal resources, reducing dependency on an outside agency.  


Through a combination of proprietary next-generation technology and customizable MSP services, HWL delivers a vendor-neutral Total Talent Acquisition solution that lowers overall labor costs while reducing administrative burden. 


From the credentialing team to hospital leadership, everyone benefits from the HWL solution. Even patients, though they may not know it, are receiving better care from higher quality temporary providers and floor managers with more time to dedicate to patient care.

For more information about Locum management or to request our services contact us.

May 14, 2020/By Trevor Strauss, FACHE
Share this entry

Author: Trevor Strauss, FACHE

Trevor Strauss serves as a Vice President for HWL and has been designing new solutions and driving go to market strategy within healthcare workforce and human capital delivery for organizations since 2008. His expertise comes from having lead deal teams from inception through implementation across the entire labor continuum from search to enterprise-wide workforce and technology solutions. His passion is helping organizations reposition themselves to create the future they desire to meet their operational and financial goals, while ensuring patient care delivery. He received his BS from Lock Haven University, MBA from East Carolina University, and is Fellow of the American College of Healthcare Executives. He is based out of Atlanta, GA and can be reached at tstrauss@hwlworks.com or 770-298-0122.
Find me on:
Please feel free to keep the discussion going in the comments section below.

More HWL Insights in your Inbox!