Q: I run a staffing firm that focuses on medical and healthcare placements. Any tips for healthcare staffing firms in 2013?
A: In October, I had the privilege of speaking at the Staffing Industry Analysts Healthcare Staffing Summit in Las Vegas, NV.
The annual Healthcare Staffing Summit brings together CEOs, owners, and senior-level executives to focus on topics of both strategic and tactical interest to the full range staffing segments for the healthcare industry ranging from travel nursing, per diem nursing, locum tenens, allied medical, to IT, finance and operations.
Although I was there to speak about Branding and Positioning on Social Media, I also brought home some valuable information that I’d like to share with staffing company owners and executives.
Lesson #1: There is a perception that the high cost of contingent labor is holding back growth of the industry.
What is the truth?
- Full-time wages for perm nurses is up 17% in past five years.
- Bill rates for temp RNs have increased only 5% in that time.
- KPMG’s study on 2011 hospital nursing labor costs found that in 2011, the cost of permanent RNs was comparable and in some cases more than the cost of temporary RNs.
As you can see from these statistics, perception isn’t reality. In many cases contingent labor can provide a cost savings but as an industry we need to do a better job of telling this story in a compelling way. In some cases, a simple cost comparison worksheet may do the trick.
Lesson #2: Lack of quality is also holding back growth.
As insurance companies move to value-based reimbursement, it’s becoming very important that temp staff provide high quality of care because profits and reimbursement depend on it. Healthcare staffing firms must take extra caution when screening potential candidates up front. Firms need to go beyond certifying credentials and basic background checks to ensure the talent they provide, will offer superior patient care.
Lesson #3: The Affordable Care Act is both good and bad for healthcare staffing firms.
On the positive side:
- The demand for temp will increase (estimated 16% increase). Individuals who now have coverage for the first time in years will seek treatment for existing ailments.
- Hospitals and physicians will be more profitable as mandated coverage will yield additional reimbursements.
- There will be more employed physicians because of the increased demand for services.
On the other hand:
- The act may impose new costs for facilities that exceed 50 employees.
- Patients may see an increase in premiums.
- The increased demand for practitioners may make recruiting more difficult.
Lesson #4: Plan ahead and scale your business accordingly.
Greg Palmer, Managing Partner of G Palmer and Associates, taught attendees how to effectively scale their businesses.
- Recruiting talent on the inside is the #1 priority. Start with your internal staff and make sure you have the optimal team in place. Reward top performers and cut ties with under performers.
- Focus retention efforts by offering staff personal growth opportunities. Examine your compensation structure and define ways that it’s different than your competitors’. Identify ways to become an Employer of Choice so that top talent wants to work at your firm.
- Compensation should include three types of pay: base, incentive, and some form of equity. If your staff feels like they have some form of personal ownership or equity at stake, performance will be at an optimal level.
- Staff should have ample training opportunities that provide them with a challenge and growth potential. Look for training both within the staffing and recruiting industry as well as more specific healthcare training in their area(s) of specialization.
Lesson #5: The most critical position additions beyond CEO are VP of Sales, CFO, and VP of Marketing. These three core areas will help drive revenue growth and increased market share over the coming year.
Lesson #6: Staffing firms need to become more strategic (both in services they offer, and how they provide them).
Most staffing companies are good at sourcing and screening. But, a top tier firm gets beyond the tactical approach of filling positions and thinks more strategically. Here are a few tips to help get started:
- Begin forecasting. Many staffing firms don’t plan ahead for peaks and valleys in workflow and demand–they wait for orders and then fill them. One company that has an exceptional track record of forecasting is Robert Half. They are usually six months ahead of the curve–proactively recruiting in areas that are poised for growth. So when orders do come in, they have already built a talent pool that is available immediately. Shorter time to fill = higher placement ratios (and more profit).
- Improve internal processes. If you’ve been in staffing for more than a day, you know there is a lot of rework. Oftentimes, internal recruiters are both trying to fill the same type of position–and are both working independently. That leads to a lot of waste and rework. Look for examples like these and streamline your processes.
- Leverage technology. Use your ATS systems and other technology to their fullest potential. Take advantage of training opportunities and make sure your entire team is comfortable with your systems. Finally, make sure that everyone uses the system in the same manner and enters data consistently.
- Pay attention to shelf life. Top candidates are sought after and have a limited shelf life. You need a process to match “A” candidates with “A” clients as quickly as possible. Instead of investing a lot of time on low margin VMS orders, focus on “A” orders 80% of your time.
Lesson #7: Disciplined activity equals results.
For every $1 worth of gross margin, you should spend 25-30% on sales and recruiting. Top companies keep 50% of their staff’s compensation tied to variable compensation. Look for ways to offer lower base salaries and higher incentives. This will attract people that are willing to “bet” on themselves and you’ll find these are the people that are most confident and will do whatever it takes to be successful.
Lesson #8: Instead of selling staffing – solve problems!
One of the sessions I attended provided the inside track on healthcare buyer plans and priorities. 70 different buyers were surveyed from across the country. 50% were general management, 17% in HR and 6% in procurement.
Respondents reported that only 20-30% of their time is spent dealing with their contingent workforce. The other 70-80% of their time is dedicated to their core job of managing other healthcare practitioners and departments.
In most cases, managing staffing is only a part-time job and they are smaller buyers. To top it off, buyer contingent labor is not really a job they want but more so a necessary evil. This might sound like bad news, but it’s not! There is an opportunity here for a master supplier to help ease the transition. There is also an opportunity to position your firm as a true partner–the key is to define the buyers biggest headaches and then solve them.
Lesson #9: Staffing firms need to understand their target audience’s needs.
Data from a recent survey of staffing buyers included some great information about why companies use contingent labor, and what they really want out of their staffing partner. Here is a summary:
Why do companies use contingent workers?
- A permanent worker isn’t available: 63%
- Non-seasonal needs: 15%
- Seasonal needs: 12%
- Other: 10%
What do firms need to focus on?
- Worker quality: 37%
- Cost: 24%
- Speed: 8%
- Understanding industry: 8%
- Geography coverage: 8%
- Skill breadth: 6%
- Ease of use: 6%
- Breadth of services: 4%
- Workforce strategy consulting: 0%
While “cost” is high on the list, it’s not the #1item that companies are looking for. The first item is worker quality. This is especially true in the healthcare industry.
Lesson #10: Spend more on marketing.
Most staffing firms only spend 0.6-0.8% of their revenue on marketing. Other industries spend on average 5-6% of revenue. Marketing is essential to the growth of any company. Companies that market continually see substantial growth each quarter. Companies that market through a recession lose less money and recover faster afterward.
If you’d like a FREE 1:1 consultation on your marketing efforts for 2013, we’d be happy to schedule some time with you. We can give you ideas on how to use marketing to help accelerate sales in the New Year!