Vendor Management Systems in the Healthcare Consolidation Era

Consolidation is the name of the game in modern healthcare. The largest healthcare systems in the country are gradually acquiring smaller competitors in an attempt to build ever larger portfolios. Smaller operations hoping to avoid being gobbled up are entertaining their own acquisitions in hopes of gaining strength. In essence, it’s David and Goliath meets the healthcare sector.

All of this consolidation brings up an interesting question in regard to healthcare staffing: how will the emerging vendor management system (VMS) fare going forward? It is a valid question given rumors of a number of heavyweight staffing companies looking to acquire independent VMS providers.

• About the VMS

A VMS is essentially a software package provided by a managed service provider (MSP) for the purposes of efficiently managing a particular asset. Neither VMS products nor MSPs have to be related to healthcare. In fact, both were birthed in the IT sector. Healthcare just took what IT was doing and modified it for its own purposes.

In a healthcare setting, a VMS like Vista Select acts as a staffing management hub. It brings all of the data and software tools required to manage staffing to a central, cloud-based environment accessible by staffing agency, hiring facility, and clinician.

It is also important to mention the fact that some VMS products are proprietary while others are vendor neutral. This is really where the sticking point lies. If a top-tier staffing agency moves to acquire a vendor neutral VMS, will that VMS remain vendor neutral after the acquisition? Common sense would say ‘no’.

• Consolidation and Vendor Neutrality

The whole point of consolidation is to increase one’s market share. If you run a top-tier staffing agency and you are looking to buy smaller competitors, your goal is to secure a larger share of the market – whether you absorb the acquisitions into the parent company or operate them as subsidiaries with their own brand identities.

Acquiring a VMS would not change that. You still wouldn’t want it to be vendor neutral because the system could then be used to do business with competitors. That defeats the whole purpose of acquiring the VMS. It defeats the whole purpose of consolidation.

This understanding raises an entirely new question: will the vendor neutral VMS even survive the consolidation era? There is a good chance it will not. By its very nature, consolidation strengthens the proprietary model while simultaneously weakening the vendor neutral model. It wouldn’t work if it didn’t.

• The Future of Staffing

While there are no guarantees one way or another, it is entirely possible that consolidation eventually results in a relatively small number of players controlling healthcare staffing through their own proprietary solutions. They would divvy up the market according to geography, size, or whatever factors they deem important. Each player would be responsible for providing staffing solutions to their customer pools.

Such a system would not be mandated, of course, nor could it be. But market influences tend to shake things out that way. As consolidation shapes the market, the market organically responds in such a way that every player finds its place once the dust settles.

Consolidation might also lead to changes in how locum tenens providers find assignments and negotiate contracts. Rather than working through independent staffing agencies, they might find themselves interacting with MSPs via their VMS platforms. Everything would be done online with very little direct human contact.

It will be interesting to see what happens to the healthcare VMS as consolidation plays out. How it fares in the coming years will shape healthcare staffing and management for the foreseeable future.