Mastering Staffing Contract Negotiations in the Medical Industry

Dawn Pascale

With many challenges prevailing, healthcare organizations often turn to staffing agencies to fulfill their workforce needs.  In 2022, 88 percent of healthcare organizations reported that they used locum tenens physicians or other locum tenens providers during the last year.  With several Locum Tenens agencies to choose from and no clearly defined or governed rates in the industry, negotiating a bill rate can be complex and overwhelming. 

To master staffing contract negotiations with healthcare staffing agencies, it begins with having a comprehensive understanding of several unique dynamics. 

Understand Your Objectives

First, establish clear objectives and expectations you have for the staffing agency.  The healthcare organization should clearly define its staffing requirements, including the number and type of professionals needed, specific qualifications or certificates necessary, how long the assignment(s) will last, temp to perm conversions, credentialing timeframe, overtime pay etc.. The staffing agency, on the other hand, must present its capabilities, expertise, and provide a realistic expectation in fulfilling their clients’ needs.  Both parties should have a mutual understanding of the goals they seek to achieve through the staffing contract.

The clarity should extend to the Bill Rate the healthcare organization is willing to consider. However, while healthcare organizations often face budgetary constraints, it is prudent they find a balance between cost-effectiveness and providing adequate staffing levels. The negotiation process should involve discussing flexible Bill Rates based on provider experience, and payment terms that are reasonable and sustainable for both parties. The staffing agency may offer competitive rates based on factors such as the size of the staffing agency (boutique firms can  offer better pricing due to lower overhead), duration of the contract assignment, volume of staff required, hiring local providers versus out-of-state and specialized skills needed. 

Remain Compliant

Negotiation should focus on ensuring compliance with legal and regulatory requirements. The medical industry is heavily regulated, and healthcare organizations must adhere to strict guidelines regarding staff qualifications, certifications, background checks, drug-screening, licensing, workers compensation and malpractice. During contract negotiations, it is crucial to address these compliance issues to avoid any legal or reputational risks. The staffing agency may offer competitive rates based on which party will handle credentialing, drug-screening and other special requirements.  

Stay Flexible and Communicate Clearly

Flexibility is a key aspect of staffing contract negotiations in the medical industry. Healthcare organizations often experience fluctuating staffing needs due to seasonal demands, patient influxes, or unforeseen circumstances. The contract should allow for adjustments in staffing levels or types of professionals required based on these changing needs. This flexibility ensures that healthcare organizations can maintain optimal staffing levels and continuity of care, even in dynamic situations.

An effective staffing contract negotiation should also establish clear communication and accountability channels. It is vital to outline the responsibilities of both the healthcare organization and the staffing agency regarding ongoing support, issue resolution, and performance management. Regular communication channels, reporting mechanisms, and performance metrics should be established to monitor the quality and effectiveness of the staffing arrangements.

Concerned About the Negotiation Process? Call an Expert

MedSource carefully aligns the interests of all parties involved, providing a reasonable Bill Rate to our clients that need temporary or permanent staffing. Our goal is to meet your workforce needs so you can enhance patient care and maintain financial sustainability. Contact us today to find out how you can meet your hiring goals in Chicago, IL, Milwaukee, WI and beyond.