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What Is an MSP in Staffing?  Your Ultimate Guide to MSPs

Updated October 2023

What Is an MSP in Staffing?

Generally speaking, a Managed Service Provider (MSP) is an agency that specializes in outsourcing certain operations in order to cut costs and improve performance for organizations. MSPs act as an alternative to the on-demand outsourcing and the break/fix outsourcing models. While on-demand and break/fix models bill the customer when work is done, MSP takes a more holistic approach and works under a subscription model.

When it comes to staffing, MSPs are effective at managing a company's staffing and human resources needs. The workforce, both temporary and full time, is managed by the MSP’s team of experienced professionals, according to the client’s requirements.

MSPs work as a complete solution for your HR and staffing needs, including procurement of the workforce and management of staffing, invoicing and payments. Coupled with a vendor management system (VMS), the MSP gives a complete picture of each contingent worker in the organization.

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What is a Managed Service Provider


What Is Included in an MSP?

MSP services are very diverse and often include information services, business to business integration, supply chain managed services, logistics, transportation, marketing, media, energy, communication or environmental services. MSPs are prevalent in human resources and staffing functions, particularly in the healthcare sector.

In a managed service model, the client retains direct oversight of the system being managed (staffing), while the MSP provides the managed service and manages the quality, availability and cost criteria. The service criteria are detailed in a service-level agreement that specifies the performance metrics of the commercial relationship.

Find out how a market analysis of hiring trends in your area can guide the decision to engage an MSP.

A quality MSP also guides clients to compliance with all government requirements, labor regulations, and credentialing through a consistent, rigorously designed process. MSPs are also experts in providing guidance on hiring and management of the workforce with effective talent analytics tools.


Should you Use MSP in Your Organization?

Most MSPs are geared toward medium-to-large organizations which can meet a volume threshold necessary for the program to be reliable and self-sufficient. MSPs for staffing and human resources typically require a minimum budget. That being said, MSPs are not only adept at maintaining legal compliance and improving various functions, they also stay on top of industry trends, market movements, emerging technology, and more, so the organization can make informed, strategic decisions. This not only helps the business stay competitive, but fosters growth and future success.

Here are some questions you should ask before deciding on an MSP for your staffing needs:

  • Does our human resources and staffing department adequately mitigate risks and control costs?
  • Are we meeting labor regulations and legal requirements regarding staffing?
  • Are we staying compliant with ever-evolving labor laws?
  • Do we have an effective talent management and acquisition program?
  • Do we have a rigorous vetting and reviewing process for our staff?
  • Do we use a robust VMS to achieve spend visibility and benchmark metrics with easy-to-use reporting?

If the answer is NO to any of these questions listed above, your organization should consider an MSP for staffing with consideration of your organization's goals, special requirements and, most importantly, whether the program can help you achieve your objectives on budget within the desired time frame.

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What are the Benefits of MSPs?

Companies and organizations that use a flexible approach to talent spend are often overwhelmed with the details of workforce management. It's not uncommon for hiring managers to outsource their talent acquisition, leaving human resources departments unaware of who joins and who leaves the organization. Moreover, human resources departments may be overwhelmed with management issues, such as compliance with labor and legal regulations and industry-specific requirements. 

This disjointed approach can lead to increased costs, poor performance, further legal issues and penalties. Risks include physical safety concerns, cyber security breaches, regulatory adherence issues, high labor costs, and fraud, among others.

Here are some of the benefits of MSP staffing implementation:

  • Managing talent with enhanced access to talent and help with talent acquisition
  • Decreasing procurement costs, improving efficiency and monitoring controls through greater visibility of spend and spend analysis
  • Streamlining all recruitment processes
  • Reducing process complexity
  • Lowering costs of hiring, human resources management, invoicing and other areas
  • Improving regulatory compliance and adherence to industry-specific requirements
  • Improving staff turnover rates


How to Determine an MSP's Price

There are two main pricing models for MSP implementation — client-funded and supplier-funded:

  • Client-funded models – The client organization or company pays a fee to an MSP partner. The fee may be fixed or variable, and is billed monthly, quarterly, or yearly, depending on the contract terms. Client-funded models may seem more expensive, but they can be more beneficial, as the supplier is often required to deliver a higher quality of talent more quickly.
  • Supplier-funded models – In this model, a percentage of invoices billed by the supplier of the actual service is held back by the MSP. The percentage can be fixed or variable, depending on the contract, and it is used to cover the program costs. This model, also known as “percentage of spend under management”, is popular because there are no direct costs to the client. The negative aspect is that in low mark-up markets, some MSPs may be unwilling to participate or may hold back their best talent from certain clients.

Other MSP Pricing Models

Additional pricing models include gain-share and cost-plus. In gain-share models, an MSP shares in the demonstrable return-on-investment from its good performance. In cost-plus models, the costs are transparent to clients, helping them to manage risks.


Benefits of MSP


What are the Staffing Challenges in the Healthcare Industry?

With staffing being the biggest cost in healthcare organizations, especially due to industry over-reliance on contingent/travel staff, it's critical to both find the best workers in the industry and to manage them properly. A good MSP staffing program for healthcare organizations reduces the cumbersome and expensive issues that can happen during talent acquisition, hiring, invoicing and talent management. By engaging with an effective MSP, your company will learn how to spend money the smart way: streamlining and simplifying the staffing process, increasing efficiency and productivity, while adhering to regulations.

Read: Top Issues Confronting Hospitals in 2024

So, how do MSPs overcome staffing challenges in the healthcare sector? Simply put, MSPs improve efficiency on multiple levels through a holistic and expertly managed approach.

  • MSPs have access to a diverse network of healthcare professionals, vendors and suppliers. These are combined with excellent recruiting and acquisition strategies, which guarantee access to the right type of professional for the organization.
  • MSPs employ a complete workforce optimization and continuous improvement plan, maximizing workforce investment.
  • MSPs are a strategic partner for all staffing and human resources needs.
  • MSPs provide data and analytics, as well as reports to optimize workforce planning, scheduling and forecasting.


Staffing Challenges in the Healthcare Industry


HWL Is the Light at the End of Your Tunnel

HWL's broad service offerings include MSP, VMS, Locums management, internal agency creation, advisory services, and much more. Our company was designed from the ground up to help healthcare organizations contain costs, create long-term sustainability, and provide higher quality of care.

If you're suffering from excessive staffing costs as many are in the healthcare space, give us a call to book a demo and find out how our customized solutions can help you attain your goals.





June 29, 2021/By Trevor Strauss, FACHE
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Author: Trevor Strauss, FACHE

Trevor Strauss serves as a Vice President for HWL and has been designing new solution design 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.
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