To ensure there’s no disruption to patient care or billable services, covering open, or even absent, healthcare positions is critical. According to Select International, a position vacancy for one physician can translate to an annual loss of $250,000 to $1.4 million. Cost efficient staffing strategies must be in place to keep services and revenue flowing. In our previous post, we discussed the opportunities for cost-containment in staffing. This post, however, will focus on a specific part of staffing–locum tenens.
Organizations typically look to larger categories, like food service or waste management, as a way to reduce costs, often ignoring the savings to be found in less typical service procurement categories like locum tenens. With purchased services typically accounting for 45% of a hospital’s expenses, a concerted focus on the lesser areas of service procurement can result in greater savings. Reducing costs associated with locum tenens is not always possible but is worth the scrutiny.
How to Realize Savings in a Locum Tenens Budget
To optimize a hospital’s locum tenens plan, many factors should be considered:
- High Competition: Many healthcare organizations have long-term vendor relationships in place and choose not to push back on pricing structures. While it’s certainly advisable to develop relationships with suppliers, that doesn’t mean pricing shouldn’t be discussed on a periodic basis. Stop overpaying. Look at current industry rates–locum tenens is a competitive market, meaning there are many opportunities to negotiate.
- Pricing Models: Pricing varies by region and availability. The most popular pricing is cost by specialty, with little visibility to actual cost structure. Does this pricing make sense for your team? Is there an opportunity to standardize? Determine how you can approach pricing to shrink costs.
- Multiple Vendors: No hospital wants to experience lapses in coverage; thus, it’s exceedingly advisable to contract more than one locum tenens provider. The flexibility of employing multiple providers may also offer more competitive advantages in price negotiations.
- Use Resources and Data More Effectively. Are their opportunities to decelerate costs and inefficiencies by reducing the need for locum tenens? Better planning and application of current personnel can decrease the amount of temporary staffing required. While significant notice of physician absences or vacancies is critical, having an understanding of a hospital’s average patient volume during specific times of the year allows for smarter forecasting.
Keep Locum Tenens Budgets in Check
There are several actions to take to lessen the financial burden caused by vacant medical positions:
- Develop a partnership with one or more preferred locum tenens providers; renegotiate pricing within the contractual relationship on a regular basis
- Add back-up providers to avoid being caught unprepared.
- Initiate a reduction plan that can eliminate the need for locum tenens within certain areas, specifically those where specialties or skills currently overlap.
When tracking purchased services spends like locum tenens, it’s important to have tools that can simultaneously identify valuable opportunities as well. Valify, a web-based solution for managing healthcare purchased services, can help. Contact us today to learn more about our solutions.