Healthcare Staffing a Great Place to Be

Posted by Tim Teague on Thu, Aug 13, 2015 @ 09:00 AM

The growth or contraction of the healthcare staffing industry has typically followed the direction of the economy.13 Since hospital census typically takes a dive when unemployment spikes, the need for additional labor softens.

However, the recent rulings by the Supreme Court that essentially left the Affordable Care Act intact and will provide a buffer for such economic downturns. The government subsidized insurance plans will continue to generate revenue for hospitals despite dips in the economy.

A quick look at the macro picture of Affordable Care Act outcomes can be seen in the adjusted revenue projections of insurance giant United Health Group UNH and HCA Holdings HCA. HCA increased its revenue projections for 2015 by nearly a billion dollars, and United Health increased its outlook by $2 billion dollars.

Considering these adjustments came prior to the most recent ruling by the Supreme Court that effectively cleared the way for state expansion of Medicaid, these numbers are likely to rise.

It is likely that the continued subsidization of insurance would be politically untouchable in the years to come. Whether friend or foe of the legislation, it portends positively for the healthcare staffing industry.

Tags: Healthcare, medical staffing, ACA

The Secret to Surving the Nurse Shortage

Posted by Tim Teague on Mon, Aug 03, 2015 @ 09:30 AM

A recent study by Nursing Solutions, Inc. found that the turnover rate for bedside RNs was higher in 2014 than in any of the past five years. Their study indicated an improving economy parallels the increase in turnover fnurse_copyor RNs.
Their study examined turnover by specialty and discovered the highest rate of turnover existing in the behavioral health area, followed by the emergency department and med/surg. 

Their RN Recruitment Difficulty Index averaged 85 days, which continues to pose strategic hurdles for HR departments.

One area that healthcare providers have been slow to embrace is “cross-training” for the purposes of minimizing overtime within the organization. The main reason this philosophy has been slow to gain traction in healthcare is the myriad of credential requirements for RNs working in Joint Commission required facilities.

Today employee matching software if readily available that can scour an organization for “hidden” personnel assets that can be deployed to minimize overtime spend. When examining the skill sets of ALL employees, most organizations find that there is an under-utilization of human resources that are already on the payroll! The two keys to maximizing this lower cost alternative to overtime is instantaneous communication to all matches, and of course matching the multiple skill sets of employees to emerging needs. BlueSky has been a pioneer in making this technological advances in the healthcare HR space.

Tags: medical staffing, Nurse Shortage, overtime

Customize your VMS Portals

Posted by Tim Teague on Mon, Jul 20, 2015 @ 11:03 AM

Today, businesses require customizable and efficient workflow, especially for healthcare-staffing VMS portals.

The early days of the VMS/MSP penetration into the healthcare staffing industry, thfeatures-news1e choices were pretty vanilla. While purchasing departments had been using the process for everything from syringes to bed linens, the management of outsourced personnel was slower to catch on. Much of the hesitation was the minimal amount of documentation available in most systems for the extensive list of credentials, work histories and any Joint Commission required documentation.

Early examples of the system were simple pass-throughs of time and attendance with minimal information regarding the actual temp. The acquisition of a commodity such as syringes could be easily identified with a few required specifications. The number of requirements for personnel, however, was so complex that part of the process was usually handled outside the VMS application.

As the industry has become more sophisticated, most of the criteria for personnel have been added to the applications via portals that are viewable at the client end.

BlueSky has taken this one step further to allow subcontractors to “customize” their portal, and even allow for the end client to customize their portal to look and feel the way they want.  Although BlueSky provides a simple plug-and-play template for the VMS application, there are actually over 2,100 variable permissions that may be customized to better meet the client, or subcontractors’ needs.

Tags: VMS, MSP, hospital float pool,

6 Points on Selling your Staffing Firm: # 5 Design your Payday

Posted by Tim Teague on Thu, Jul 16, 2015 @ 09:15 AM

Now that we’ve discussed some of the preliminaries of selling your healthcare staffing firm, it’s time to taksell your healthcare recruiting firma look at the often-used “earn out” strategy. An earn out strategy is a means by which a price to purchase a company is negotiated with

part of the payment tied to performance during some future period. This strategy typically ties the seller to the business for a prescribed period of time to assist in hitting agreed upon numbers for full payment.

What does this really mean? From the buyer’s perspective, they are, to some extent, buying an unknown.  Contracts could be ready to expire or other internal issues may be lurking that could have a serious detrimental impact on the earnings of the company being bought. If part of the purchase price is 

It is not uncommon for 50% to 60% of a purchase price be deferred as an earn out over three to five years. This provides some deferral of income on the part of the seller, and if negotiated correctly can provide an even greater sale price than originally established. If created poorly, the earn out provision could become a nightmare for the seller.contingent on the seller remaining in place to meet certain benchmarks this provides a level of security to the purchaser.

According to Inc. magazine, about three quarters of all mergers and acquisitions fall short of expectations published at time of deal, and about half of all deals result in a decrease in value for shareholders of the purchasing company.  With those figures in mind, it’s important to negotiate an earn out that is fair, but does not tie your hands behind your back. More on that later.  

Tags: Selling your firm

6 Lessons on Selling your Staffing Firm: # 4 Getting Paid!

Posted by Tim Teague on Fri, Jul 10, 2015 @ 09:03 AM

How much cash do you really get when you sell your business?

When suitors come calling to make an “offer you can’t refuse”, there is a tendency to look at that number and assume you have “hit the jackpot”.  Not so fast my friend! Whatever that number may be, by thcashe time the dust has settled from the sale, without carefully planning you may end up with half that amount!

The largest single determinant of the true value of your payday is how you structure the tax treatment of the sale. If this treatment does not become a bargaining chip in the negotiation, you either sold to an uninformed buyer, or you haven’t taken a close enough look at the structure of the deal.

To keep things simple, we will only discuss Uncle Sam’s piece of the pie and leave the state and/or local to your own investigation. In layman’s terms, when you sell your company, what is considered ordinary income, and what is considered capital gains. If you have owned your company more than a year, we can assume that these capital gains will fall under the category of Long-Term capital gains.

This example is NOT for the sale of a c-corp, and/or the sale of stock only, although a c-corp can structure the sale on an asset-by-asset basis.

The number one issue in determining what the IRS’ share of your take will be is how much of your proceeds are the result of a capital gain, and how much is considered income. This is a point of negotiation, since what is good for you, may not be good for the buyer. Don’t forget that Uncle Sam is operating on both sides of the table, so always remember the taxes are a two way street. As an example, the portion of the proceeds that are considered ordinary income would be at your highest tax rate, (nearly 40% Federal alone!), but can be expensed immediately by the seller. On the other side of this tax treatment are capital gains. The assets that have been categorized as capital gains will typically be taxed to you at a maximum of 15%, which leaves you with 85% of these proceeds. The problem for the buyer is the inability to quickly expense these capital assets.  

In more simple terms, the parts of your company that you sell as capital assets will give you 85 cents on the dollar, whereas the parts that are considered ordinary income will only generate about 60 cents on the dollar. Although there are multitudes of ways to structure a sale, if you want to maximize your net proceeds, get an experienced professional to help you sort through these issues.

Tags: Selling your firm

6 Lessons on Selling your Staffing Firm: # 3 valuation (liabilities)

Posted by Tim Teague on Wed, Jul 01, 2015 @ 10:35 AM


As we discussed last time, the benefits taken by you the owner should be carefully examined prior to any healthcare recruiting firm sale.  Another important factor: Take a close look at your company's liabilities.  

Carefully consider the tax consequences of the sale, both to you and to the buyer. In most cases a buyer will want to purchase the assets of your company, not your stock. (If you are a c-corp this may be different.) Why does a buyer not typically want your stock? Stock in the company represents all assets, along with all liabilities. 

A purchaser has no interest in the current, or future liabilities of your company. Some of the liabilities to consider are short and long term debt, notes payable to investors, the balance of any lease agreements.

It is imperative to take some time and analyze all your equipment payment agreements carefully, as some will have auto-renew provisions that require notice of cancellation 30, 60, or even 90 deements, or any other agreement that binds the company to any short or long term financial commitments. Those leased copy machines, automobiles, and rent payments will suddenly move from the income statement as monthly expenses to a current liability due at time of sale, unless the buyer has agreed to assume them, which is highly unlikely.  

One more note on current and/or future liabilities, as a staffing agency you have had dozens or even hundreds of employees that have provided services on a subcontracted basis. Any claims that arise from negligence on behalf of your staff can arise long after the sale of your company assets. Unless you sold the stock, these claims will be your responsibility, albeit through the entity you still hold. Check all your insurance policies for premium coverage periods, and whether coverage is for date of occurrence, or date of claim. Most companies can provide “tail” coverage that can protect you for a period following the sale.

Tags: Health Care Staffing, Selling your firm

6 Lessons on Selling a Recruiting Firm: # 2 valuation

Posted by Tim Teague on Mon, Jun 29, 2015 @ 10:41 AM

In the first lesson, we examined understanding why an owner would sell.  In this post, I will open the door to the question of valuation: what is my company truly worth? It is helpful to know this information when a potential buyer comes calling.14561581102_0d18f22699_o

One of the first things a buyer will do is examine the benefits that the owner is taking from the company. On first glance, many owners look at their salary, or owner draws and insurance, and then stop. In most cases, this is a long way from the true benefits that the owner receives.

Why does a buyer care what benefits the staffing agency gives the owner? You must remember that every benefit that is over and above an amount that would normally be paid to an “employee” is potential earnings that are currently going into the owner’s pocket. It’s important to take a closer look at these benefits because they should become a part of your negotiation arsenal.

From a pure investment perspective, let’s assume there is $50,000 in benefits being pulled from the healthcare staffing company by the owner that would not have to be paid to a new manager, owner, or partner. Where do you think an investor could pick up $50,000 a year as a return on investment? That’s exactly what they will get if they replace you with someone on straight salary, or salary and commission, and that’s just for starters! This must be figured into the sales price.

As a bargaining chip, it is crucial that you strip out all benefits that would not have to be paid to a regular employee. How do you do this? The easiest way is to start with pencil and paper and make a list of all things that you receive that is not received by your employees. You might as well do this before selling because any prudent investor will always do this. I have seen such a wide range of benefits it’s difficult to include them all. I have seen such extravagant benefits taken by owners as to include their “nanny” on the company payroll. I’m not sure how that would be explained in an IRS audit, but who should be and not be on payroll is a definite question during a purchaser’s due diligence. Automobiles, family or otherwise, family insurance coverage, eating out for those questionable “business purposes”, or even redecorating your “home” office could be other benefits.  

It is not unusual for potential sellers to take a close look at their “true” benefit from ownership and have second thoughts about their decision to sell. Remember, the potential purchaser is going to look at those items as a benefit as well, this will be their return on investment, and so it’s critical you as a seller look at these benefits in the same manner.  

Tags: best practices, Selling your firm

Supreme Court Health Care Ruling: What businesses need to know

Posted by Tim Teague on Fri, Jun 26, 2015 @ 09:25 AM

King v. Burwell: Follow the money to Healthcare Staffing AgenciesSupreme_Court_Health_Care

The historic ruling concerning Obamacare this week has left constitutional scholars scratching their collective heads.  A mentor of mine was told me; “you can study the roots…or you can enjoy the fruits” take your pick! 

Despite the interest in the reasoning behind the ruling (the roots), today I would rather look at the outcome (fruits). 

To summarize, the complaint was that states should not be required to accept the insured that were being subsidized via the minimum standards set forth under the Affordable Care Act. The ruling effectively forces states to comply with the availability standards to all state residents. Striking down this portion of the law would have negated insurance benefits for millions. Upholding the law promises that these individuals, and those that follow will have coverage, and will be subsidized if they meet the criterion, no matter what state they reside in. 

The immediate impact is that individuals that would have been denied coverage will now be insured, providing additional reimbursements for the healthcare providers. For those that carefully watch the markets, nearly every publicly traded healthcare company’s stock surged. (i.e. Aetna, United Health Group, Cigna, Corp., Humana, Anthem, HCA, Community Health, etc. …….) 

In short, there will be more reimbursed dollars in the healthcare system, greater capacity for profitable census growth, and continued increased demand for healthcare workers. The future looks good for the healthcare staffing industry. 

Tags: Obamacare, Affordable Care Act, ACA

6 Lessons on Selling your Recruiting Firm: # 1 the why

Posted by Tim Teague on Wed, Jun 24, 2015 @ 09:58 AM



Ever wanted to sell your healthcare staffing agency?

There are many reasons why owners come to a point that the thought of selling their medical recruiting firm is on the table: retirement, exhaustion, debt and change of career are just a few of the reasons.

If you have never sold a business before, there are several aspects of the process that may surprise you, or may even make you take a harder look at the reasons for selling. In many cases it can be a nice payday for years of hard work. In other cases the reality doesn’t come close to meeting the perception.  

Having been on both sides of the table, I will share some of my experiences in upcoming blogs, and give you the details of some real-life scenarios to show you exactly what you will face when going through the process.  I will also touch on some financial and legal hurdles to watch out for.

In the meantime, if you haven’t taken a hard look at the reasons why you want to sell, do the work of putting it on paper. 

Tags: Selling your firm

Is your low-hanging fruit killing your healthcare staffing agency?

Posted by Tim Teague on Thu, Jun 18, 2015 @ 02:00 PM

Working Hard-1When I started my first healthcare staffing agency over two decades ago, it began in a tiny office with payroll that was funded by my prior company stock options. In our hurry to generate revenue, we were anxious to earn business from anyone that would listen to us, and populate our database with candidates as quickly as possible.  Some of the hard lessons I learned was about the “true cost” of revenue.

Competing against well-established medical staffing recruiting firms, our first foray into the market faced two two familiar obstacles. How to attract clients (Demand), and how to attract candidates (Supply) We found that many clients had annual agreements with their staffing firms, and were reluctant to let a newcomer break their contract cycle. Despite this hesitance, we did find some that seemed to be more than happy to open their doors to us.

The second problem was building a database of candidates to provide services. Once again, it was difficult to attract applicants that were comfortable in their environment of known contracts and contact personnel. Again, despite this obstacle, through the law of large numbers, we were able to begin building our database.

Now, for the bad news. Without adequately checking the credit worthiness of the original clients signed, we found that they WERE low hanging fruit because their payment history was ROTTEN! We learned the hard way that some accounts are just not worth the continual exasperation of trying to collect long past due invoices.

This mistake alone was enough to sink a lot of companies, but the reality quickly became worse! Without extreme measures in place to adequately qualify candidates, we found we had our hands full of no-call, no-shows, and DNRs! The candidates we had released to the market had already had their issues with other firms, and we became the last resort!

It was largely the result of those original EXPENSIVE mistakes in 1994 that my partner and I determined to build a healthcare staffing and scheduling application that would automate and investigate everything we were doing , and prevent us from being our own worst enemy. The product has seen more than 40 major revisions since then and we continually challenge our 12 developers and project managers to keep making the software product better and better to help our clients hire the best.

Tags: healthcare recruiting, Health Care Staffing, best practices

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