Despite the relief travelers bring to short-staffed nursing units, dealing with multiple staffing companies can be exhausting for hospital administrators. Enter vendor management, a slimmed-down approach that is gaining favor in the healthcare industry.

If acute care executives were to take an informal poll of healthcare organizations across the country, it probably would not surprise them to discover that a majority have contracts with supplemental staffing companies. Neither would it come as a shock to learn that some of these facilities have commitments with multiple travel agencies—often as many as 10, 15, 25, or more. Whenever an organization has to handle so many vendor relationships, there is a phenomenal amount of paperwork and logistics inherently attached. Now, however, hospitals and travel agencies are working hand-in-hand to streamline the process with an approach called vendor management.

The precursorWith the severe nursing shortage of the mid-1990s, acute care managers and recruiters came to rely heavily on per diem clinicians and longer-term travelers as viable temporary staffing sol- utions. Administrators found themselves calling on more agencies in order to find enough staff to reach expected fill rates, achieve staffing requirements, and sustain quality of care. By 2003, a substantial segment of the industry was juggling overgrown numbers of travel contracts. "We began to see facilities falter under the administrative burden and cost of utilizing large numbers of travel nurse staffing providers," states Jonathan W. Ward, executive vice president for Cross Country Staffing, based in Boca Raton, Florida.

At the time, Unity Health System in Rochester, New York, was working with more than 40 staffing organizations. "Everyone in the facility had a relationship with different companies and approached travelers, per diem staff, and internal float pools with their own approval processes. There was no central ordering source," explains Gail Dede, managing director of work force and career development. "Instead of operating as a health system, we were functioning in silos, and that meant a lot of time was being consumed by different vendors, which generated extra costs."

The situation prompted an exploration into alternative staffing approaches, such as vendor management systems (VMSs). "Coordinating with multiple staffing agencies to fill positions in all specialties can become overwhelming, which is when outsourcing becomes a desirable option," asserts Don DeCamp, chief operating officer for CompHealth Group (CHG), located in Salt Lake City, Utah. "There is a growing need for vendor management within the healthcare industry," states Craig Wolf, vice president and general manager at Aureus Medical Group in Omaha, Nebraska. "Hospitals want their employees to focus on more of their core competencies so they can be more cost-effective and derive the highest efficiency from their staff."

Simplicity worksHow a VMS relationship functions is actually rather simple; instead of myriad employees interacting with dozens of staffing companies, they deal directly with one—and just one—agency. The client facility conveys its staffing needs to the company providing vendor management services, which then assumes the responsibility of filling all of the positions, as well as handling the credentialing, background checks, and quality assurance of supplemental staff. In addition, the hospital receives only one invoice at a pre-established rate.

Although the vendor management formula reduces the points of contact, it does not require that company to be the sole supplier. Within a tier-like system, a VMS provider contracts with various other agencies, known as affiliate providers. These subcontractors then bill the VMS. Credentialing processes of these companies are scrutinized and audited by the vendor manager to ensure consistent levels of quality.

For the most part, a VMS does not preclude any employment contract between nurses and their agencies. Travelers remain employees of these organizations and communicate directly with their recruiters when they have questions or complaints. The facility, however, only interacts with the vendor manager. If it has a complaint or question, it is up to the VMS provider to rectify the situation or seek out answers.

"The advantage of a VMS," notes David Alexander, president of Soliant Health, based in Tucker, Georgia, "is that it contains costs and cuts the number of contact people, often from 30 to 5 or less." Recognizes Mr. DeCamp, "Vendor management creates an opportunity to consolidate a number of companies, understand a facility's true costs, and decrease credentialing workload." Though he admits CHG does not offer a VMS option to its clients at this time, the firm partners with other staffing agencies to provide this product.