MSP vs Vendor

Now that you have a general understanding of how the money flows from the hospital to the agency to the nurse, I want to add one more twist to the scenario. Most (but not all) hospitals prefer to work directly with only one agency. By doing this, the hospital is able to make communicating their needs easier and the entire process runs more smoothly for themselves. Whichever agency the hospital chooses to work directly with is called the Managed Service Provider (MSP). Being the MSP for a hospital comes with more power and the potential to make more money as an agency. 

When a hospital decides to start working with only one agency, multiple agencies will bid against each other in an attempt to become the MSP for the hospital. The hospital will choose whichever agency has the best bid and they feel is the best fit to be the MSP. 

Once an agency becomes the MSP, the hospital will inform the MSP of all their contract needs. The MSP will then attempt to fill as many as the positions as possible using their own travel nurses. However, if the MSP cannot fill all the contracts in a timely manner, the MSP will then open the contracts up to other agencies. The other agencies are called Vendors. If a vendor submits a travel nurse for a contract and the MSP uses that nurse, the MSP will charge that agency (Vendor) a vendor fee for using their contract. Vendor fees can vary depending on whatever the MSP chooses to charge. 

Being able to charge a vendor fee gives the MSP more power because charging a fee to vendors means the vendor cannot offer their nurses as high of pay for the contract making it harder for the vendors to compete with the pay rates of the MSP. In most cases, the MSP will be able to offer you the highest pay rate for the contract. However, that does not mean that the MSP has to offer the highest pay if they are wanting to keep more of the profit. 

It is not always easy to find out which agency is the MSP for each hospital/hospital system. Most vendors will avoid telling you that they are not the MSP for a particular hospital because they know you will likely try to find the MSP and take a contract with the MSP agency for a higher pay package.