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Locum Tenens gets a facelift as new online staffing models arrive – Fall 2014

By Andrew Karpie, M.S., Principal Analyst at The Research Platform and Affiliate at Staffing Industry Analysts

Locum Tenens have long been a fixture in the healthcare workforce as a way of providing temporary physician coverage to hospitals and clinics. However, the attractiveness of this solution may be fading now that newer “online staffing” platforms are emerging as powerful alternatives to traditional staffing models. In healthcare, the escalating use of contingent labor physicians, amid a deepening physician shortage, demands a more modern, cost-effective and technological solution. One company, founded by a physician with extensive Locum Tenens experience, has launched such a solution – a free online staffing platform that allows hospitals to build their own float pools of temporary physicians. The company also brings a perhaps long-overdue shift in branding, whereby “Locum Tenens” is now referred to as “Freelance Medicine” and “Locums” docs become “Physician Freelancers.”

Locum Tenens businesses are temporary staffing agencies, specialized in finding, engaging, placing and paying suitable physicians in short work assignments within different facilities. Staffing Industry Analysts estimates the U.S. healthcare industry will have spent about $2.5 billion on Locums in 2014, growing by more than 100 percent over the last 10 years. According to Staff Care’s “2014 Survey of Temporary Physician Staffing Trends,” 90 percent of the healthcare facilities surveyed indicated they made use of Locum Tenens (however sparingly, in some facilities, due to cost). While Locums as a sourcing practice is widespread, its use within facilities tends to be limited – predominantly to fill-in for absent, permanent physicians. Of those surveyed, 86 percent reported “Cost” as the biggest drawback to using Locums, followed by “Familiarity with department/practice,” which was cited by 46 percent of participants.

Locum Tenens agencies, like temporary staffing firms in other industries, operate a business model that has met the test of time. This business model, however, appears cost-heavy and lumbering in an age of professional social networks, analytics and online self-service. What Amazon did to retail, now Uber is doing to taxis and Airbnb is doing to lodging. A similar trend has been emerging in the staffing world, where companies like Elance-oDesk, and many others, have been introducing “online staffing” models that eliminate the friction, overhead and cost of traditional staffing agencies. This is accomplished by using technology to enable contingent work arrangements in a way that is more streamlined, direct and optimized through data analytics. Such platforms are now enabling an increasing number of contingent work arrangements, especially with professional workers like software developers, expert technicians, data scientists, consultants—even attorneys.

In staffing, technology is increasingly compressing the links of the contingent workforce supply chain, and new more efficient and effective “direct” staffing models are taking root and showing signs of transforming traditional temporary staffing organizations and processes. The lower cost, improved performance and user satisfaction of this new, more direct “online staffing” model is actually expanding the use of contingent workers as more organizations can afford to access them and more workers are willing to offer their talent through online media.

Healthcare staffing, even with its compliance complexities, will not be immune to the viral diffusion of technology and online staffing models. In fact, conditions are emerging that may make healthcare staffing even more susceptible to these vectors. On the facilities side, the contingent labor force will likely become an even more integrated part of staffing plans. The physician workforce is aging (52 percent are age 50 and over) and large numbers of physicians will be retiring in the next five years, driving up turnover and worsening the physician shortage. Moreover, one impact of ACA is the expected need for more physicians, further exacerbating shortages and turnover conditions, even as cost control pressures intensify across the industry. As facilities seek to cope with these conditions, having more access to contingent physicians – with a lower cost to access them-should be of interest.

On the provider side, a shift in attitudes, already evident in professional workforce segments outside of healthcare, will increase the number of workers choosing to forego traditional full-time employment and to provide their knowledge-based labor services as independent professionals on a variable basis. This shift is partly generational, but is also a response to the general trend toward a more ‘flexible workforce” across many businesses. Among some physicians, this shift toward independence may also be connected to disenchantment with the now dominant work arrangement model of “employment” with hospitals and clinics (versus private practice). These physicians who are “in pursuit of independence” may find new online platform-based staffing more appealing than traditional Locum Tenens.

Interestingly, the kinds of supply and demand conditions mentioned above are often catalyzers that encourage the emergence of technology-based platform models – sometimes as “disruptors” to traditional industry business models. In any case, new platform-based, “online staffing” models have the potential to enable more facilities and more providers to enter into contingent work arrangements with greater efficiency and flexibility.

This potential is already being actualized by the first online-platform based physician staffing service, Freelance Physician, launched in the past year by Locum Tenens entrepreneur and innovator, Jennings Staley, M.D. “There are only so many ways to get more out of a limited resource,” Staley asserts, “and we believe technology that makes freelance medicine opportunities easier to access by local physicians is a great way to increase use of this limited resource. With our platform-based ’online staffing’ model, hospitals are able to set their rates and build their own local float pool with greater availability, quality and visibility, reaching different types of candidates, as compared to traditional models. Physicians like the convenience and transparency of being able to manage their work online, choose assignments and rates that appeal to them, and be in direct control over their professional activities.”

“We realize,” continues Staley, “that not all clients are prepared to deal with a new technology interface—even if it is easy to use and delivers benefits when adopted. So we offer options with other levels of support and can also help clients transition to a more direct process. We are seeing many facilities that were unable to afford Locum Tenens providers now coming to us asking for help,” Staley reports. “While traditional Locum Tenens agencies require 6-7 shifts a month from a facility for an account to be profitable, the efficiencies of the ’online staffing’ model drive this number down to 1-2 shifts. This translates into lower transaction costs for facilities, as well as other benefits of an innovative model. To cite one example, our approach allows us to provide a free direct-hire candidate pipeline without placement fees. Most people find that spending less for things that used to cost a lot is change they can get used to.”

We all know change is happening. Significant parts of many industries across the economy have been transformed by online platform-based models, and the emergence and use of such models is on the rise across the staffing industry. Healthcare staffing, and in particular temporary physician staffing, also appear primed for change and adoption of a platform-based alternative to traditional Locum Tenens.

© 2016 Association of Staff Physician Recruiters. All rights reserved.
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