VMS in Healthcare Recruiting and Staffing: A Double-Edged Sword

As a healthcare staffing startup, we are constantly learning to pivot and find the best ways to maximize our business outcomes. One of the most intriguing business models is becoming a VMS vendor. I am yet to decide whether I love it or absolutely hate it—it’s a mixed emotion.

As a small vendor, I appreciate that my sales budget is significantly lower since the VMS system does that for us. We receive a curated list of open job requirements from various hospital systems, which might otherwise take major effort to get our foot in the door. On the flip side, the competition is fierce, and there are numerous challenges in closing deals through VMS—not to mention the VMS fee and some monthly subscription costs as well.

While some companies completely shun the VMS model, others embrace it and strive to make the best of the situation. Direct clients also vacillate between having in-house recruiters versus using the VMS to handle their permanent and locum requirements. Here’s my analysis of the VMS way.

What is VMS (Vendor Management System)?

A Vendor Management System (VMS) is a technology platform that automates the process of procuring and managing temporary or contingent workforce. It helps healthcare organizations track workforce deployment, monitor compliance, and handle billing and invoicing through a centralized system.

Advantages of VMS for Healthcare Organizations (HCOs):

  • Efficiency: Automates staffing processes and reduces manual tasks, saving time and effort.
  • Cost Control: Enables competitive bidding, which can drive down staffing costs.
  • Transparency: Provides real-time visibility into staffing metrics and performance.
  • Compliance: Ensures that credentialing and licensing requirements are met consistently.
  • Streamlined Communication: Centralizes communication with vendors, reducing complexity.

Disadvantages of VMS for Healthcare Organizations (HCOs):

  • Impersonal Approach: Lack of human touch and personalized interactions with staffing vendors.
  • Complexity in Integration: Can be challenging to align with existing HR and IT systems.
  • Data Overload: Managing large volumes of data can be overwhelming without adequate resources.
  • Vendor Performance Issues: Limited direct relationships can impact the quality of hires.

Advantages of VMS for Staffing Vendors:

  • Access to Multiple Clients: Opens up opportunities to work with various healthcare systems without needing direct sales efforts.
  • Efficiency in Submissions: Automates candidate submission and invoicing processes, reducing administrative burden.
  • Fair Competition: Offers equal access to job openings, creating a level playing field.
  • Revenue Potential: High volume of opportunities can lead to consistent business if executed well.

Disadvantages of VMS for Staffing Vendors:

  • Reduced Margins: Competitive bidding often drives down profit margins, making it hard to stay competitive.
  • Lack of Relationship Building: Minimal direct communication with hiring managers hinders relationship building and client rapport.
  • Administrative Burden: Constant updates, data management, and compliance tracking can be time-consuming.
  • High Fees: VMS fees and monthly subscription costs can quickly add up, impacting profitability.

Final Thoughts

The VMS model undoubtedly comes with both opportunities and challenges. For a small healthcare staffing startup like ours, it feels like a balancing act between leveraging efficiency and managing the inherent hurdles. The competition is tough, and staying profitable can be daunting. With strategic planning and a keen understanding of the system’s dynamics, it’s possible to make the most out of VMS while minimizing its drawbacks.

Whether you love it or hate it, the VMS way is here to stay. The key lies in finding a way to make it work for your business rather than being overwhelmed by its complexities.