Locum Tenens and Healthcare Contingent Workforce Management: An Innovator’s Dilemma (Part 1)

locum tenens

After a long period of business as usual, the entire healthcare industry has begun to change dramatically. In this two-part series, we examine some of the changes occurring in the temporary physician contingent workforce segment (locum tenens) and what may lie ahead. We do this through the eyes of a standout innovator and entrepreneur who has been developing an online “work intermediation platform” (WIP) approach to temporary physician staffing.

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Enter the Innovator

Dr. Jennings Staley is a physician with a unique background in and perspective on the healthcare industry’s contingent workforce. Near the beginning of his career, Staley served the U.S. Air Force as an internist treating active duty and retired troops over a number of deployments, including a tour in Balad, Iraq, in 2006 as a combat hospitalist. Like a lot of physicians in the U.S., a number of locum tenens agencies approached Staley and ultimately convinced him to use his earned leave to provide coverage for them as a hospitalist in rural Midwestern towns.

Staley has an entrepreneurial streak, and he began to see locum tenens staffing firms as inefficient yet important to hospital staffing plans. So he decided to start his own locum tenens staffing firm in 2010 called Elite Hospitalists, with the conviction that he could not only win big clients but also improve the process for all stakeholders. Staley said his strategy centered around bringing automation and transparency to an otherwise old-school process of brokering physician labor to the highest bidder and burdening all parties with inefficient transactional workflows, such as those for credentialing paperwork and scheduling. His solution: online software that would ultimately curate and deploy thousands of freelance physicians through an innovative WIP he custom designed and built in San Diego.

What the Hell is Locum Tenens?

Now back in time to locum tenens. The Latin term can be translated as “one who holds a place.” For some time now, locum tenens has referred to temporary physicians and the staffing firms that provide them to hospitals and clinics. These staffing firms operate traditional supplier models which, as in other sectors, have not changed much over the last 30 years. Since contingent workforce management discipline in healthcare has lagged behind that of other industries — for example, vendor management system (VMS) adoption is significantly far below that of other industries — management of healthcare temporary suppliers has been lax.

Staley told us that while locum tenens staffing suppliers business and process models haven’t changed much over the past 30 years, the nature of locum tenens has.

According to Staley, decades ago locum tenens was really about long-term assignments designed to fill in for an absence, and most of the opportunities physicians heard about were offered in underserved rural facilities. About 20 years ago, the healthcare world started to change. Large healthcare provider organizations began to replace physician private practices and physicians became employees.

This shift from independent practice to an employee model created a change in the way staffing shortages are managed, from physicians being responsible for each other, as in the days of group practice, to physicians being responsible for only the shifts they were under contract to fulfill. Any changes in today’s staffing schedules, where everybody works their shifts only and not a day more, creates significant strain on a department, one that is often imposed on the most junior members — that is, until they say “no thanks.” At this point the hospital turns to outside sources to fill shifts, often with little lead time, a task Staley thinks traditional locum tenens agencies are ill equipped to perform.

Over time, more physicians have become disaffected by physician employee models, leading to an increased populations of physicians, both old and young, desiring a different way of working. Older physicians are aging and exiting from their full-time jobs and working in locum tenens assignments, creating both supply and demand. Additionally, many younger physicians dissatisfied with the physician employee model have become interested in other ways of working. According to the Staff Care 2015 Survey of Temporary Physician Staffing Trends, 21% of physicians surveyed in 2014 began working locum tenens directly after completing their residencies, up from 14.3% in 2012. Moreover, anecdotal information suggests an increasing number of physicians in residency who are turning to locum tenens — for example, on weekends — to supplement income.

According to Staley, the physician-as-employee model has led to the challenge of dynamically filling shifts, often on short notice. Traditional locum tenens agencies are not set up to do this effectively and efficiently. Doing so requires pools of available local physicians who can be accessed and engaged at effectively spot market prices. All of this requires an online platform approach. Thus there is a growing number of physicians who are interested in working on a contingent basis; however, they want to do so on their own terms and exert their own control over their availability and pricing.

Intermediation between demand for and supply of temporary physicians is undergoing a significant change, Staley said. It may seem like mere semantics to some, he added, but we believe that this work intermediation model is no longer locum tenens staffing. Rather, it is more a process of engaging freelancers such that what were previously “locum docs” are now really “freelance physicians.”

Is the World Changing?

Given the main trends described above, we should not be surprised that use of locum tenens physicians continues to rise. According to the Staff Care survey noted above, 91% of healthcare facility managers surveyed reported they used locum tenens physicians sometime in 2014, up from 73.6% in 2012. Correspondingly, 42% of healthcare facility managers reported they are now seeking locum tenens physicians, up from 32% in 2012.

This growth has also carried over to locum tenens staffing suppliers, which are seeing record-breaking revenues this year. The battle for talent to meet this enormous demand has never been more fierce. Staley reports that his agency has a tough time “keeping up with the rate hikes,” which many locum firms resort to in order to win over the available freelancing physicians.

“I tried to warn clients a couple of years ago,” Staley said, “that they didn’t have to pay $500/hr for an ER physician, if they would only just allow us to build them a local float pool in advance of their needs. But they didn’t listen.”

Staley has the perspective that locum tenens staffing is itself a big part of the problem. According to Staley, healthcare facility managers need to access more temporary physicians faster and at lower transaction costs, but locum tenens staffing models are not changing, because they are slow and have high fixed cost structures. Some suppliers, far behind other industries, are just now starting to adopt VMS and managed service providers (MSP); however; Staley thinks such approaches will not be effective for physicians.

One of the dirty little secrets of the locum tenens world, Staley said, is that many physicians don’t like working through locum tenens staffing suppliers. Add it all up and there is a problem in how intermediation of rising supply and demand, with changing needs and demographics on both sides, is occurring. Staley believes that different technology platform-based models will become increasingly important — even necessary — and hence his belief in the future of the freelance physician and an era of freelancer management systems solving the talent crisis for the healthcare industry. Physicians don’t want to be brokered. They are entrepreneurial, autonomous and put off by lengthy wait times and paperwork. Everything that VMS does to the locum tenens physicians’ experience is counter-productive and thus makes the problem worse..

In the second and last part of this two-part series, we’ll hear more from Staley about what he is doing in his business and what he thinks will be happening in locum tenens — including the rise of VMS and MSP — in the coming years.

Please follow Andrew Karpie on Twitter @andrewkarpie

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First Voice

  1. Greg Welch:

    Over the recent years, there are case studies that show that there’s been an increase in locum tenens employment opportunities. The healthcare industry has been changing quite dramatically. The rollout of Obamacare has also something to do with this, more patients having coverage and seeking treatment. With the ability of providing care in private offices, it seems that less doctors are interested in working in hospital settings. Hospitals need to incentivize the medical professionals. Locum tenens are increasingly being utilized in hospitals and other health organizations and there is no sign of these trends being reversed anytime soon. With the boost in the number of insured and aging patients, doctors and hospitals can both benefit from the uprising demand for locum tenens work. For doctors, the trend will translate to higher wages and a greater ability to choose the assignments they want. If the hospitals plan strategically in their hiring procedure, they can ensure that they are well-staffed with quality physicians in this trending healthcare landscape. This article gives a great insight and perspective into the trends and some good ideas to think about.

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