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In the face of the VMS, Monopolies, and Low Bill Rates: Recruiters fight for you!

By Amanda Anson | Guest Articles

Oct 24

I was reading a Facebook thread this morning. Nurses were being pitched low pay packages and that they were extremely tired of hearing it.

Naturally, the post turned into a giant blame game.

Mostly blaming the recruiter for trying to pocket the money that they should be earning.

Some even blamed new nurses for being naïve and taking low pay packages because they don’t know any better.

"These new travel nurses let themselves get ripped off!" they said. It was upsetting to read.

However, the real reason ​pay packages are so low right now, in my opinion, was never completely revealed---or even brought up.

If you haven't noticed, things are really hard for the industry right now. It's a tough market! It's not like it was back in 1999 when travel nurse rates were through the roof.

If you think you're going to easily negotiate this or that, you've got the wrong impression.

To understand the problem, we need to delve into how hospitals pay agencies.

​There is the base rate the hospital pays us.

On average, the typical bill rate that I see is approximately $68 per hour.

Every single dime associated with placing you is deducted from that bill rate.

Some deductions from that bill rate might include​:

  • ​Overhead Costs
  • Drug Screens
  • Background Checks
  • Health Checkups
  • Our portion of health insurance
  • Travel Reimbursements
  • Company taxes
  • ​Workman's compensation
  • Unemployment
  • Professional Certifications
  • License Reimbursements
  • What we pay you
  • ​Etc. 

There are substantial costs that you might not have been aware of. Who knows what else comes up?

But, whatever it is, the cost is coming directly out of that $68 per hour bill rate. It quickly adds up and nothing is free!

Furthermore, everyone understands that a company is in business to make a profit.

Otherwise, why even in be business to begin with?

Each business has a profit margin and within that your recruiter does need to earn an income as well.

The base salary for the average recruiter is not good. Only about $30,000 per year.

I don’t think anyone can even afford to live off of 30k by themselves in America today!

Recruiters earn a commission off of that profit margin.

It's not a secret. It's our livelihood.

Do some recruiters hold back money so that they can earn more commissions? Sure, I bet some do.

However, as a professional with 14 years in this industry, I haven't worked with a single recruiter that doesn't try to get a much money for you.

Then, we take what’s left over for a commission. We have to survive too!

The company itself has to have a standard profit margin to stay in business and let’s say its 20%.

Most companies won’t even approve a recruiter to go below that margin.

The commission then comes out of that 20% margin. There isn't a separate pot of money for the commission. That's all we have as recruiters to work with.

​Depending on what company you work for those commission structure and percentage varies.

They can be really low from what I’ve seen with various agencies.

To be honest, it's not your recruiter's fault the pay is so low. It's not even the agencies fault!

Here's the bitter truth...

The struggle is real when negotiating bill rates, signing contracts, and providing staffing to hospitals.

I come from a strong background in client management.

Trust me when I say I know about this struggle intimately.

One of the issues I never see discussed in the traveler groups are the main players that work to get you contracts. Yes, your recruiters work really hard for you!

But, what about the client manager? Ever heard of them?

The Client Manager is responsible for so much that your Recruiter cannot control and one of those things the money!

During my 14 years, I have gone back and forth between client management and recruitment. Currently, I have a dual role meaning I do both. So fun!

I've been through the highs of industry and stuck it out along side the veterans of this industry during the lows. There's been a ton of change within this industry over the years. It must be exhausting for you keeping up especially if people don't take the time actually explain what's going on.

Let's talk about your pay rates!

I can’t begin to express my frustration regarding rates.

I have begged and pleaded with managers, directors, CNOs, human resources, and staffing!

Heck, anyone willing to listen! I'll talk to them to raise the rate!

Let's face it. Sometimes rates are simply non-negotiable. I could on and on about this until I'm blue in the face they say!

One of the challenges are the vendor management services (VMS). The VMS have really put a stamp on the market.

They have always been around which is fine.

However, lately, they have been making a big push to be el numero uno!

What does that mean?

They are essentially monopolizing the market!

They waltz into a facility with their fancy presentations and give an elaborate talk about why that hospital should exclusively work for them.

The fancy VMS pitch sounds something like, "We will be your singular point of contract. No more nagging calls from 100 different agencies! Our rates are the most competitive in the market! They will not be negotiable with our subcontractors."

The pitch goes on and on until some give in their pressure.

If the VMS negotiates the exclusive partnership with the hospital, the agency is no longer in control of any part of this process.

This is the really challenging part for us as recruiters.

When the VMS has that much power, we cannot negotiate the rate, talk to the unit managers, or human resources.

Essentially, we are stuck because they make it nearly impossible to go around and talk to the people we should have access to.

Here's another downside to VMS involvement in this process.

Often times the bill rates are substantially lower because the VMS used rate negotiation as a sales tactic to reel in the hospitals.

However, there is a brighter side, with direct contracts with hospitals, we do have the power to negotiate. The problem is direct contracts few and far between today.

It’s frustrating and it takes the fun out of my job.

Believe me. I want to negotiate for you!

That’s what I was trained to do.

I want to push for the interview.

I want to get that manager on the phone and tell them why they should choose you and why they should partner with me and the company I represent. 

​Sometimes, we do have direct relationships with hospitals but again if the VMS and MSP (Managed Service Provider) have taken the client over, we are powerless. 

We have no choice but to build a strong and influential relationship with the person running the account through the VMS or MSP.

Why even bother?

We build the relationship so that when they see our company’s logo come across their screen they push your profile.

We have to follow their rules and their rates and hope that they’ve negotiated in a way that is beneficial to you.

When I do have the power, I don’t just go in begging without reason or explanation.

There are many factors for which I would ask for a higher rate and there is actually a calculation behind it.

I look at the other contracts in the area.

What are those rates?

I look at what the cost of living is.

I take into consideration all things economically related.

I research what perm staff salaries look like in the region.

What are other agencies offering to their travelers?

And then, when I finish researching and calculating – I drive home the importance of this rate and why the hospital needs to be competitive.

I’ve prevailed in this conversation with hospitals on countless occasions. I have also failed.

Why does the hospital need to be competitive?

Because they want the best of the best, right? That’s what one would think.

But right now, it’s all about the budget. And those budgets are tight because we are in an awkward place in the market.

The needs are there but hospitals are unsure of the future.

Healthcare reform has them all in a tizzy about what is going to happen and they are trying to plan for the worst. I have had conversations with many hospital who validate this belief.

There are so many variables here. The fact is that no matter how great a candidate is the selection almost always boils down to money.

Unfortunately.

It also depends on how many channels we have to go through to get to the person who is directly experiencing the pain associated with the staffing shortage.

I mentioned above that sometimes we cannot talk to the hospital directly.

If we can, the unit manager is who we really want to talk to. That is the person who knows the pulse of the unit and is aware of the staffing needs. 

In many cases, that same manager is picking up unpaid shifts out their salary. They feel the shortage just as much as the staff.

The manager is a nurse who knows how important the nursing role is and what it’s worth. They know the value of an experienced nurse to show up and in a moment’s notice and hit the ground running with little to no orientation. Money is not an object here.

In most cases today, at first, profiles usually go to someone who has no clinical experience. That person could be in human resources, nursing administration, staffing, or the dreaded VMS.

You know. The middle man. The controller of all things dear to us.

That person doesn’t necessarily know the Nurse's value.

Sometimes they don’t even know what nurses really do let alone set a foot within a hospital unit.

This person works Monday-Friday, 8:00 am to 5:00pm. They are given a job description which includes shoveling out job requisitions to every single company on their roster to gather profiles to email to the managers.

I wonder sometimes if they even look at the profile. Do they even follow up?

My impression, in most cases, is that they treat this process nearly as important as I do.

Often times, I can call and send follow up emails three times a day never hear a word back in return.

That’s because typically in their position onboarding travelers is only a small portion of their day.

They do their job by forwarding the profile and if the manager calls, they call and if they don’t, they don’t.

And, don’t even think about calling the unit to talk to the Manager directly!

We can lose an entire contract by doing so!

I’m not knocking these individuals. We all need to make a livelihood just like me.

They are just doing the job they were told. I can respect that.

​However, it does not make it less frustrating when I'm trying to advocate for my nurses and my hands are tied. 

​I can tell you how I approach this but I cannot speak for every client manager. 

Personally, I try to dig in!

I attempt to figure out what I need to do to educate this person about the importance of this process.

I try to build a relationship with them. I need them to trust me.

I need them to know that I am the person that they want to partner with.

Sometimes they don’t understand that it is indeed a partnership.

Yes, I am providing a service to them but it takes teamwork to get the job done.

Unfortunately, this relationship doesn’t happen overnight.

Just as you as the traveler know that building a trusting relationship with a Recruiter doesn’t happen overnight.

You have 10 Recruiters calling you every day and each of them saying the exact same thing.

The same goes for this point of contact pushing profiles.

They are getting bombarded with phone calls from agencies, following up, asking about needs, wondering about interviews, and trying desperately to find a topic that sparks up a conversation that may lead to an actual relationship.

They don’t trust us either. It’s like dating and it takes time.

And if they choose not to pick a handful of agencies that they trust then that means they shotgun all the needs out to 25+ companies – or more!

You think, “What happens next? What happens to my information?”

Their email blows up and now they’ve got 50+ profiles (that’s a low estimate) sitting in their inbox.

Now is when the part you don’t want to hear happens. They start to narrow down their search and sort by price first and experience second.

They then cherry pick who they think can proceed. THIS MAKES ME CRAZY!

How do I know this you ask? Because I ask! I’m not afraid to ask questions.

 I am not afraid of confrontation. I need transparency just as you do.

Because in the end, this all trickles down from the hospital to the client manager to the Recruiter to you.

And if you are asking your Recruiter for answers, they are asking me.

Your recruiter has absolutely no power in this. I wonder if travelers realize that.

Honestly, I highly doubt it. 

But, how could you? Often times, these issues aren’t discussed in an open forum.

Trust me when I say your recruiter is fighting for you.

They are so passionate about you that it will often cause fights within the office. It’s that serious!

They want answers and when the client manager cannot answer them – off with our heads!

Do you know how many times I have heard, “Seriously Amanda? You want me to pitch that pay package?”

They will send 5 follow ups a day, stop me on the way to the bathroom, track me down on my lunch, stand at my cube while I am on the phone, demanding updates.

Recruiters are some of the most passionate people out there but you don’t see that because they try to stay calm and collected so that you remain calm and collected.

There are VMS, MSP and 200+ other competitor companies and all after the same thing.

They want that hospital to pick them as their go to.

So, as I said, many other agencies go in with these crazy low rates to give them the competitive edge and I just sit back and scratch my head.

Unfortunately, it works and often times (not always) no matter how great you are, or how great the company I represent it, or how great I am counts.

That other agency locks down a nurse who is willing to go for a lower rate (no matter the reason) and we just got beat out.

We have two choices in this. We either drop our rate to be competitive or we stop pitching those jobs.

We pitch the jobs. Why?

Because of the patient. The fact is that these hospitals still have sick patients who need to be taken care of. So, we continue to offer these jobs.

I am sure that you would agree that the sick patient on a busy Med Surg floor with a N:P ratio of 1:7 because of staffing shortages should not suffer because of politics.

Any good Recruiter who is doing this job because of something bigger than just placing nurses will pitch you all options.

Don’t be offended. Just decide.

I always encourage the nurses I work with to take one lower paying, crap job once a year - for the patient. Not for the company.

Find a Recruiter you can trust. And, then, be open enough to trust them.

About the Author

In 2004, Amanda Anson unknowingly launched a career in healthcare staffing when she was only 20 years old. She is now a senior recruiter and has a background in client management and business development. Watching this this industry quickly evolve, Amanda spent her days in dual roles by managing hospital accounts and recruiting nurses. Amanda's career path and mentality changed when she stopped managing hospitals and started working for and with nurses. Her ability to listen improved and her connections with her travelers grew stronger. Amanda is an excellent educator and caring traveler advocate that firmly believes in the nursing quote, "We all breath the same air, we all bleed the same blood, and we all have to provide."

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(4) comments

Maria last month

All said, it’s still US, the nurse on the front line, our license, our backs, hands, knees and ankles… our livelihoods and us that have to live with it if something happens to our patients because of inappropriate and unsafe staffing! Not to mention we are the ones living in a studio and missing time with our family to make ends meet….no sympathy, we should all let the damn vms and hospital administrations go work bedside then let’s see what happens….greedy imbeciles!

Reply
    Andrew Craig, RN last month

    I agree with you! I hope with the growth of Traveler Talk we can make real change in this industry.

    Reply

Very well written. I always enjoy a refresher course. More than not, I have learned over the past 10 years of my travels, that companies, take more then 20-25% of the bill rate. But that being said, I would hope that all travelers, Nursing, Occupational/Physical/Speech therapist, etc. read this.

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    Andrew Craig, RN last month

    Thank you for reading the article. I’m sure Amanda will be happy to hear you found it useful! 1o years! That’s awesome. Are you a nurse as well?

    Reply
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