The more companies fighting for your business would naturally drive the cost of the product down. Or does it? The locum market has become saturated with companies all fighting for the same pool of candidates. This has given the provider an advantage in negotiations. While it would seem natural that the prices would be more competitive with more companies, this has been shown not to be the case.
A smaller pool of candidates has created a situation where locum companies continue to offer the provider more to beat out the other locum company. This in turn leads to the locum agency passing that cost to the facility. The facility really has no choice since the available supply is limited and there probably aren’t enough alternatives. Here are some real world examples. Names have been changed or hidden to protect the innocent. Locum Agency X was going to pay a CRNA 200/hr which was a reasonable rate for the area. However another agency Y started marketing the position at 215/hr. This in turn caused Agency X to raise their rate to match the other agency. Ultimately the facility/group lost because the cost had to be passed on to them. This was also the case in another area where the going rate was 190-200/hr. A competing agency marketed this position at 210/hr therefore raising the rates to be competitive. Once again the provider was the winner. The facility ultimately absorbed the cost. In another large facility the going rate for a locum CRNA was 175/hr. This was a very desirable area and there were no difficulties in filling these positions. Ultimately the anesthesia group dissolved and the hospital took over the anesthesia services. There had been 1 locum company servicing this facility for the past year. The rates had held steady with minimal increases in cost to the group during that time. However a new management group started by the hospital took over the services and opened the locum bidding war by bringing in multiple big box agencies. The rates for the CRNA went from 175 to 220-230/hr. The cost to the hospital would be an additional 20-30% on top of that. This led to an enormous increase in staffing cost. Locum cost per provider increased by at least 50%.
This leads me to another issue. When locum provider companies advertise high rates for an area it tends to cause other companies to do the same. This continues to drive the cost up for the facility/group. There are some companies actively advertising rates that tend to be 10-15/hr higher than what the average cost for the area. This creates the psychological effect that this is now the norm. When providers inquire about a position after seeing these elevated rates they will only be satisfied if your rate matches their expectation. Now the competing companies must also increase their rates to match. All of this has led to a very lucrative time for a provider. However the facility or group is now faced with overwhelming staffing costs at the same time they are continuing to deal with lower Insurance/medicare reimbursement.
So what is the answer? The answer to the overall staffing equation is multi faceted. The solution to controlling locum cost may be broken down to a simpler answer. First, a facility/group should develop a close working relationship with the locum agency. They should view it as a partnership. This partnership would work together to form a unified solution to the locum staffing issue. The rates for the area would be researched closely and full collaboration between the facility/group and locum agency should begin. In an ideal world you would hire this one great company to work with closely to help you solve your staffing problems. Instead of getting dozens of presentations from multiple companies with rates that range all over the board, you would work hand in hand with your trusted advisor. The locum agency would learn everything they need to know about your practice environment. They would deep dive down way beyond schedules. What is your practice like? What type of skill sets are required? What is the workflow like? They would speak to medical directors and chief CRNA’s to get an on the ground view of what they need. Bringing in a company to work with side by side will open the lines of communication and help facilitate the process. A locum agency that aligned itself with your goals and expectations would have a far better chance of success. Rodney Dangerfield once said it’s a dog eat dog world and I am wearing milk bone underwear. It seems like all the locum agencies are competing against each other as if we are being chased by wild dogs running down the street. The way to help control this chaos is to control your own narrative. 10 agencies throwing you people left and right at rates all over the board allows your story to be told for you. By taking control of the situation and aligning yourself with one company who is working for you with common goals lets you tell your own story.
The staffing crisis will not end anytime soon. Locum agencies need to take over the role of trusted advisor and put an end to the free for all that is going on in the market. They need to become a resource for knowledge and expertise in the area of staffing. Locum agencies should put their clients first and help them come up with solutions that are beneficial to all.