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Becker’s Healthcare Podcast
Beyond Staffing: How Henry Ford Health Is Rethinking Contingent Labor
00:23:36
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- [00:00]
A
Hi everyone, this is Lucas Voss with Beckers Healthcare. Thanks so much for tuning in to
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B
the Beckers Healthcare podcast series.
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A
It's fantastic to have you. I was doing some research ahead of this episode today, and healthcare workforce challenges certainly continue to persist. And projections from the Bureau of Health Workforce show a shortage of up to 141,000 physicians by 2038, alongside major nursing gaps, including over 100,000 RNFDs and almost 250,000 LPN FTEs. And at the same time, and these numbers were very staggering as well, the 2024American Medical Association National Report showed that 43% of physicians report at least one symptom of burnout. More than 138,000 nurses have left the workforce since 2022. And here's the kicker to that. Nearly 40% of RN say they plan to leave or retire within the next five years. Now let those numbers sink in. Right? They're very, very staggering. As I've mentioned, with an aging clinician workforce and healthcare staffing spend projected to reach nearly 40 billion this year, the financial and operational stakes really couldn't be higher for healthcare leaders right now. So the question is, what should health system leaders do now? And we're certainly going to address some of these questions or that question. I'm so excited to be joined by Scott Reglan. He's the director of centralized staff and vendor contracting at Henry Ford Health. We'll discuss how his team is strengthening governance, improving workforce visibility, and building a whole house strategy through a vendor neutral managed service provider partnership. Scott, it's so great to have you. Welcome to the podcast.
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B
Thank you Lucas, appreciate the invitation. It's a pleasure to be with you. Thank you.
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A
So great to have you. And you've been leading contingent workforce strategy at Henry Fort Health for a while now, since 2018. I'd love to know from your perspective to how has the program evolved over the last eight years?
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Well, I'll tell you, the term Wild Wild west comes to mind because when I arrived in 2018, the system was significantly decentralized. We had an extensive array of vendors across the systems with standalone contracts, limited oversight. There really weren't any controls. We accumulated the spend and we categorized it on the financial statement, but we really didn't do very much with that and compliance wasn't terribly consistent either. Now, my position was created. I wasn't taking over for somebody when I got here. My position was newly created and they needed me, someone to come in and kind of bring all of this madness together and start the process of building a better program. So we had a, we had a couple of hurdles. The first one was, well, first we needed to centralize the program. We needed to get all of the requests from across the system coming to one office, that being my office. And we needed to then search for a new MSP partner and simultaneous to that, establish a governance model to make leaders comfortable that we were giving them the visibility that we thought they needed. And they needed to know that it was going to be expected, that they were going to be accountable for their affected cost center. So that was part one. Part two was getting the buy in from these leaders that were using contingent labor. To some of them, by and large, there wasn't a problem. This was too much of an overhaul as they saw we were fixing something that wasn't broken. Whenever they had a need, they would reach out to their one and only vendor that they worked with who would slingshot resumes over the fence. They take the first candidate submitted and they call it a day. It was, it was easy, painless, no heavy lifting. I was asking them to change. And not everyone, as they say, likes change, especially when they don't understand the why behind it. So we had to get them to that point and we did.
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A
To come back to your wild wild west analogy, you'd have to become the sheriff a little bit, right?
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In this situation, it really was, it was almost like being an air traffic controller too, because it was, you had, you had candidates coming in, you had assignments coming to a close. There really was no control over how those assignments were getting extended. Some of them were just extending. It was like a rubber stamp extending on and on and on and on and on and on. We weren't really doing anything else. So yeah, in a way I was coming in and saying, you know what, we're going to knock this off because we're just, you know, there's not one giant size checkbook in the organization. We got to figure out a better way to manage this.
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A
Yeah, and the checkbook is a, is a good point for me here as well because as we've touched on in the intro, a big piece of this is cost. A big piece of this is budget, is money tied to this. And, and certainly cost pressures tied to healthcare workforce aren't going away really. This is going to continue in this environment. Specifically, what are some of these foundational elements of a well run contingent workforce strategy for you?
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B
Yeah, I think that's a great question. And when I think about optimizing contingent labor, at least how we did it, I think there are five foundational pillars. The first I've already mentioned, we've already mentioned, and that's governance. In healthcare, decisions regarding contingent labor are going to affect your margin, and they obviously also affect patient care. So we had to put in place clear decision rights. There had to be approval pathways, and again, there had to be accountability. Somebody had to own the decision to bring on contingent labor. If nobody owns the decision, then the market's going to own it and the market gets expensive. So without governance, then your behavior is driven by urgency. But with it, then, then you can now start to let strategy take over. So that was one. The second pillar is data. Leaders obviously can't manage what they can't see. And it's not just reporting data. It's not just reporting historically what happened last week, last quarter, last year, how much did you spend? It's about providing that visibility and that transparency that changes behavior. Today. When a leader in our organization sees a contingent staffing request hit their inbox for their approval, they're going to see who requested it, why it was requested, and what it's projected to cost. They can take that information and view that option alongside over time. Nobody likes to add overtime to, to, to the mix, but are we able to accomplish what we need by having a few people work a few extra hours? We got to be mindful of internal burnout. We've got to be, we've got to use things like the vacancy rates and productivity metrics into making this decision. Now, when the data is transparent and it's shared across clinical and financial leaders, well, then our decisions are going to get better, they're going to get smarter. And contingent labor then moves from anecdotal to accountable. The third pillar, and I could probably spend the entire podcast on this, would be vendor strategy. Again, past program, multiple vendors, no cohesion, no nothing. But healthcare can't operate like an open marketplace auction. It's not a free for all, which it was when I got here. Strong programs build intentional partnerships, often with a rationalized group of vendors that you hold to performance standards. And through it, you can maintain rate discipline. And you gotta be flexible. Of course, for specialty positions and specialty markets that are a little harder to, to get the talent. But the goal isn't this constant transactional churn. It's about alignment and reliability. And I would say rather emphatically, you need to make your vendors your strategic partners. Prior to joining Henry Ford Health, I was part of the staffing world. It was fun, but I don't miss it. For the most part. I know how vendors think I know what's important to them. And I love meeting with vendors when, when either they're swinging through town or those, those that are local. And in an msp that's kind of an oddity. Not many vendors get access to an internal leader like this. But I'm, you know, I certainly am open to it because not only is it good for them, but it's good for me, their ears to the ground more than mine is nowadays. And they can help relate to me what candidates mention to them as what's driving their decisions. And that helps me make better decisions as to how to steer the program. Moving on. I would say clinical compliance is going to be another pillar and this is what separates healthcare from other industries because you're dealing with things like licensure and credentialing and competency validations and you can't treat them as administrative tasks. They're really in place as patient safety guards. And adherence to this was a little inconsistent when I got here in 2018. And any optimization effort you're going to take on that outpaces compliance. Discipline is going to introduce risk to the organization. Every decision you make, every decision that I make has to have a patient at the center of it. At some point in time, someone comes in and takes a look at how you're doing things. And when it comes to compliance, there's no corner cutting with that. You have to get it right 100% of the time and a good vendor partner is going to take on that responsibility. And lastly, I think the fifth pillar would be this idea that contingent labor shouldn't exist on its own. It's not about external labor versus internal labor. You have to align this with your internal flow pools. Maybe you have an internal travel program, other workforce development efforts. It really needs to be viewed as part of, included as part of this total workforce ecosystem. Now when those five pillars are strong, then utilizing contingent labor, like I said earlier, becomes a strategic lever. With any, if any one of them is weak, then it's just another liability on your financial statements. So, and that's really the shift. It's, you know, a well run program isn't about reducing contingent labor at all costs because a lot of people think that, oh, contingent labor is way too much, we're spending way too much, let's just get it down to zero. It's not about that, about using it intentionally with discipline in the service of, I would say both patient care and organizational stability. It's that important.
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A
And I want to drill down a little bit more on one of the pillars that you've mentioned and you've touched on it, we could have a whole episode just on the vendor relationship and the partnership piece of this. But I think especially as you've gone through your transition from decentralized model to a more centralized approach approach here, to a more strategic approach right now I'd love to know which partnerships have made the biggest impact throughout that whole process.
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B
Absolutely. I mentioned earlier that shortly after I arrived, I went on the hunt for a new MSP vendor partner as a key element that we needed. And again, I came from the staffing world. I was a sub vendor on a number of MSPs when I was in healthcare staffing. So I know how they operate. And I, and I wanted to have here at Henry Ford Health, I wanted to put in place a vendor neutral program. And to accomplish that I needed a partner that operated that way but had also the market credibility to attract vendors, not compete with them, and to provide a knowledgeable support staff to the program. This is a human resources led program and human resources is all about relationships. And a key factor leading to the success of this program has been the ability of the staff that has been provided by right Sourcing, whom we selected to cultivate trusting relationships across the spectrum of leadership in our organization. Again, we didn't have that before right Sourcing came on the scene. It was every, every person, every leader for, for themselves. So we needed to really, really get somebody that can come in and help me build it from the ground up. What was kind of funny, as we were going through the RFP process, everyone claimed to be vendor neutral. Everyone said, oh yeah, we can do that, we're vendor neutral. But in a true vendor neutral model, the MSP is not going to be financially benefiting from placing its own people Right Sourcing is free from that structure. They're free from any agency ownership. And in healthcare, especially where rate escalation can move quickly, neutrality helps maintain that discipline without sacrificing speed. The MSP's incentive has to be on program performance, not their own self placement margin. The other thing that I thought was going to work, and it did work with right sourcing is I wanted to get creative. I wanted this to be an MSP that wasn't your standard cookie cutter garden variety msp. I wanted to explore ways to get creative with the vendor panel. For example, you know, maybe we could have a Michigan based vendor pool. I like keeping the money in the state. It's good for the state's economy. The candidates are usually local and that helps with our own long term recruiting needs. And on and on and on we went. Sometimes, you know, we like to support small businesses in our community. Henry Ford has always been about that. And what's, what's key about that is some of these vendors here locally that are small businesses, they're also our customers, they're coming in our front doors, door as patients in our organization. So they are part of the community that we're here to serve and I think it's our obligation to help support the community. So I wanted a vendor partner, an MSP partner that could help, not only help support that, but help me pull it off without biasing against any other staffing groups that were in our panel. The other thing I'll say is I think neutrality helps increase trust. Our clinical leaders were overjoyed with the understanding that they were going to get candidates from a number of vendors, not just the one, you know. Yeah, they had their favorite vendor before, but I was able to tell them that, you know what, before you were only getting the best that that vendor had to offer. Now with multiple vendors, you, you get the best really that's available in the market. And the finance leaders love that. You know, we, we put the governance in place and there was executive sponsorship and that's that' in healthcare labor programs. I wanted a whole house partner and I think I got it because we've been able to broaden our partnership with Right. Sourcing across more than just nursing and allied. We've looked at it, we've got statement of work engagements going on and we're continuing to look into the crystal ball to see what labor is going to look like in the next three years and how we can move forward together with that.
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A
Yeah, you're the sheriff, right. Sourcing as the deputy on your right hand side.
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B
I think that's a good way to put it. Yep.
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A
One of the great things about this podcast for me is that I get to talk to incredible leaders like yourself that are very passionate about this work, that are very passionate about the work they do, the employees, the providers, and as you just mentioned, the community as well. You also oversee the centralized staffing office for Henry Ford's. How does all of this work connect for you personally to your personal why and really that purpose that drives you as a leader?
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B
Great question for me leading our MSP and really everything I do from my desk connects to stewardship. Healthcare resources are finite. I mean, let's face it, margins weren't all that great before COVID And since then, you know, margins in this business haven't improved very much, if at all. And contingent labor is one of the largest and most dynamic cost categories in our organization. You know, my goal is to. Is to try and manage it as best I can. And if we manage it well, then, then we can preserve dollars that can ultimately put back into serving our patients. They can go back into innovation. They can go back into the communities that, that, that we're put here to serve. I'm further by bringing clarity to complexity, because everything we've talked about so far is complex. We didn't really have a playbook coming into this. We kind of created one with the help from. Right sourcing. But staffing decisions in healthcare are often made under pressure. And when you think about it, given the program that I lead, I'm the last stop on the process for a leader. They've already tried hiring perm talent. They've looked at our internal float pools. Now, oh, gosh, we've got to go contingent labor. I better give Ragland a call. And I'm the last stop because I'm the most expensive stop. Right. And that's the way. That's the way it should work. So, you know, my role in creating governance and transparency, you know, I had to convince people that that wasn't going to slow us down. And when we get the balance right, we're able to support the clinicians, we're able to, you know, support and protect the organization's resources and really strengthen our entire workforce ecosystem. And when I think about it, in many ways that aligns with the original vision behind Henry Ford Hospital itself, which opened its doors way back in October of 1915. Henry Ford himself believed that healthcare should be innovative, and that makes sense. He was an innovator. He believed it should be efficient, and he was all about efficiency, and he wanted it to be accessible, especially for hardworking families. He didn't separate operational excellence from mission. He saw them as inseparable. In fact, and I think more than a century later, stewarding our workforce responsibly is part of honoring his vision. And I think we're doing that absolutely.
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A
Much like a Model T, still relevant, still present, which is so critical. Scott, it's so fantastic to have you again. Thank you so much for all of your insights. I want to turn the floor over to you. Is there anything else you want to share? Anything else that we haven't touched on, maybe that might be useful for our audience as we close our episode today?
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B
I appreciate that. I would say if I could offer any advice to any healthcare leaders out there who've never stood up an MSP program. Or maybe they're looking to make sweeping changes to theirs, like I had to do when I got here. I would say this. Start with clarity before you start negotiating contracts. Whether you're in a high performance academic medical center like ours that has multiple hospitals and varying levels of acuity and specialty services and such. Contingent labor isn't just a procurement function that can be grouped alongside other supply chain objectives and GPO models. Some systems try to do that, but I don't think it belongs there. In my view, it's so relevant and important and touches patient safety and physician alignment and nursing culture and financial performance. It really has to be kind of on its own. So before you, before you think about who to partner with or negotiating rates, define what you want your program to look like. Define your philosophy. Is contingent labor just going to be a bridge? Is it a surge valve? Or is it going to be truly an internal structural component? Without that clarity, I think you're going to find that your program will drift into this transactional churn I talked about earlier where, where it's more reactionary than it is strategic. And, you know, absolutely invest in governance early. You know, local autonomy is going to be crucial. Once you get the buy in from leaders and, and the understanding of the approval pathways, you're. You're going to be your. The program will almost sell itself. But, you know, without that enterprise visibility, your costs are going to fragment. You're going to have diverging standards across the system, and everything will just start to. To erode. And MSP should create alignment, it should create transparency, and that'll help you steer clear of these potholes. And I would add just one more lesson from my experience. Integration really, really, really matters. When we entered our joint venture with Ascension Michigan now some 18 months ago, our challenge wasn't simply merging our program to theirs or theirs to ours. In reality, the contingent labor program from Ascension and the sites we were adding was in need of significant stabilization itself. And our task really was to integrate their hospitals and their vendors and workflowers workflows into the model that we had already built. So that meant inheriting all their suppliers. It meant validating all their compliance. It meant aligning rate structures and making sure that nothing fell through the cracks, all while being ready to provide uninterrupted staffing support to the Ascension sites. Right on day one, we had to be ready to go. We could not have pulled that off if we didn't have everything in place that we've been discussing here. Those pillars that I mentioned earlier. Now, granted, we had time to prepare. We didn't just wake up one morning and start the joint venture. We got ready for it. But experiences like that reinforce an important lesson. Standing up an MSP program is one thing. Designing it, though, so that it can absorb complexity and it can scale across organizations and remain operational through major transitions, well, that's what truly defines a resilient workforce infrastructure. That's not to say we didn't encounter any challenges. There were plenty, let me tell you. But the foundational pillars were in place that I talked about earlier, and that's what allowed the model to absorb the complexity. So the test of the workforce model isn't how it performs on a normal day, whatever that is in healthcare nowadays. It's whether it holds together during moments of major change. And we experience that successfully. And if I can, I'll just close by bringing us back to what I noted earlier about putting patients at the center of everything we do. Because in this business, we have to understand, everyone needs to understand that excellence in patient care begins long before the patient walks in the door. It begins with how we lead.
- [23:16]
A
Scott, it's so great to have you. Thanks again for your time and your insights today. What a great conversation. Thanks for being here.
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B
My pleasure. Thanks again. Appreciate it.
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A
And we also want to thank our podcast sponsor, Right Sourcing by Magna Global. You can tune into more podcasts from Becker's Healthcare by visiting our podcast page@beckershospitalreview.com.