Why Alternatives to Hospital Staffing Agencies Are on the Rise – Part I

Why Hospital Staffing Agencies Grew

 

Before we examine why CEOs and chiefs of staff are increasingly looking for alternatives to hospital staffing agencies, let’s explore how we got here. The healthcare industry has experienced a surge in demand for medical services, mainly driven by demographic changes such as an aging population. The COVID pandemic contributed to this demand and exposed weak points in the system, but the issue of hospital staffing shortages has been developing for some time. 

An increase in demand for healthcare workers combined with hospitals struggling with budget constraints, rising costs for everything from medical equipment to medications, and the need to invest in new technology to remain competitive have created unprecedented challenges for hospital administrators. The COVID pandemic only contributed to this existing “perfect storm” scenario. Hospital staffing agencies grew in response to this rise in demand, but most hospital leaders feel they bring far too many compromises with them to serve as a long-term solution. 

Hospital staffing agencies grew in recent years in part because:

• The COVID pandemic exasperated staffing challenges and accelerated burnout. 
• Many older physicians are reaching retirement age and leaving practice.
• Younger physicians are entering other specialties and not working as hospitalists.
• The Baby Boomer population is increasingly in need of hospital services. 

What’s Wrong With Conventional Hospital Staffing Agencies?

 

The problem with these staffing agencies is they add yet another layer to what is already a complex challenge. They exist to meet a need, but in doing so they actually raise staffing costs for hospitals at the worst possible time (not that there is ever a “good time” for this). Hospital staffing firms also insert an artificial barrier between hospitals, physicians, and other key hospital staff. 

Rather than simply meeting the staffing needs of hospitals and staying out of the way, they introduce extraneous bureaucracy, obfuscate the lines of communication, and even cause divided loyalties. Hospital staffing agencies may help alleviate one problem, but they do so while introducing a host of others. It’s no wonder why more and more hospital CEOs and boards are looking for better answers to keep their hospitals well-staffed with qualified physicians who aren’t looking to jump ship at the end of a contract. 

Hospital Staffing Agencies Are in Financial Distress

 

Another reason why the demand for better alternatives to hospital staffing agencies is climbing is that these agencies themselves are increasingly in disarray. According to Moody’s Investors Service, a total of 34 healthcare firms are drowning in debt at risk of going into default and there are more than a couple of staffing agencies on the list. In fact, at least one major hospital staffing firm, the KKR-backed Envision Healthcare, has $7 billion in outstanding debt and is in the process of filing a Chapter 11 bankruptcy. Another similar organization, Team Health, is almost certainly going bankrupt as well. 

Where Do We Go From Here?

 

Be sure to read part two of this article, where we look at the decline of hospital staffing firms and the implications for hospital CEOs and administrators. Rest assured, this isn’t all doom and gloom. Make no mistake, the staffing challenges faced by hospitals in the United States are serious and they aren’t going to be resolved overnight. However, there are better solutions for securing the physician talent that hospitals need.

In fact, Open Source M.D. was founded to service this very need. We saw a demand for a better way to staff hospitals with physicians while eliminating costly overhead and needless complexity. The Open Source MD model builds bridges between hospitals and physicians. Unlike typical hospital staffing firms, we help cultivate the doctor-hospital relationship instead of standing in its way. If you’re looking for a better way, Open Source MD has one. 

Please call us at 336-997-9840 or contact us online to learn more.