Why Selecting the Right Placement Agency Matters

By David Taylor, MSN, RN, CNOR, and Nancy Lakier, MBA, BSN, RN

Health care organizations nationwide recognize the need to attract top talent to lead their organizations. The strengths of those enterprises are its workers, and with more than 18 million, it is the fastest growing job sector in the U.S.¹

Within the sector, registered nursing (RN) is the largest occupation with the majority practicing in a hospital setting.² Current trends reveal this workforce is aging. The median age of a RN in 2020 was 52 years with 19% at 65 years or older.³ In 2020, 20% of registered nurses intended to retire from the profession by 2025. According to the U.S. Bureau of Labor Statistics the numbers of annual job openings in nursing is staggering and projected to reach nearly 195,000 every year through the end of the decade, a projected growth rate of 9%.⁴

To manage these trends organizations are going to need exceptional leaders to manage and drive positive patient outcomes. In a survey conducted by Trusted Health, nurses believe a successful career means moving into a leadership role. However, the same survey found that only 6% of nurses have intentions of moving into those roles.⁵

With so few nurses being willing to step into leadership roles, it is becoming more difficult for health care organizations to find qualified candidates to fill their leadership roles timely and are turning to talent acquisition specialists. For those who have remained, a large majority, 71% want greater flexibility and control of their schedules.⁵ As a result, many nurses are turning to travel assignments and interim leadership roles to gain greater autonomy over their careers. Subsequently, more placement agencies claim to be representing this new workforce.

It seems every recruiter, travel agency and placement firm claims they can meet all your organization’s needs. Unfortunately, that could not be further from the truth. Reputable agencies invest their entire careers focused on helping their clients identify, attract and hire the most qualified individuals helping health care organizations and leaders meet both their organizational goals while maximizing long-term success for both parties.

Exceptional candidates are hard to find and even harder to attract to open positions. Health care organizations hiring executives cannot afford to make the wrong choice when it comes to filling key leadership and business-critical roles, even for the short term. Having effective leadership correlates with better patient outcomes (reduced length of stay, lower rates of medication errors, patient falls, urinary tract infections, and pneumonia). Studies have found that exceptional nurse leaders can also have a positive impact on patient mortality.⁶ Finding the right nurse leader is critical for quality patient care.

Not All Hospitals Are the Same

A one-size-fits-all approach does not give health care executives the flexibility to decide on candidates that best fit their needs, whether it be for an interim or permanent leadership placement. These types of agencies tend to chase volume instead of strengthening their client’s leadership bench and understanding their dynamics as a partner while developing search strategies based on their unique cultural nuances. Instead, they follow rigid processes to fill open positions quickly and moving on to their next search without considering the diversity, equity and inclusion of the candidates they represent.

When they are engaging with a talent acquisition firm health care executives should consider how collaborative and dedicated those firms will be to your organization. A firm that makes it their priority to ask about your hospital’s values, culture and the strategic goals of the organization are more likely to find a leader that will integrate those ideals into their practice. Other considerations include key inter-relationships, resource and budget management and the prioritization of quality, safety and ways to drive cultural change.

Questions to Contemplate

As health care executives contemplate their relationship with placement agencies several questions that should be asked include

• What are your organization’s needs (permanent placement or interim leader)?
• What relevant experience does a placement firm possess (permanent retained or contingent placement)?
• Do they have long-term experience working with interim leaders?
• How long will it take to find qualified candidates?
• Do they have a pool of interim leaders readily available?
• How long have they been in business and what reputation do they have within the industry?
• Do they have a team of employees working for the same goal or are they an individual?
• Can the placement firm ensure confidentiality?
• How will candidates be vetted before they are presented?
• Do candidates have relevant experience and possess the skills necessary to perform at a high level?
• How flexible are their search capabilities?
• What deliverables can I expect, during the process, after placement and for the interim throughout the entire placement?
• What percentage of placements are your retained versus contingent?
• Are they willing to advertise for an organization’s prospective roles?
• Do they have access to multiple outlets (Zoom, LinkedIn, Indeed, job boards, professional nursing boards, etc.)?
• Do they have recruiters who specialize in the leadership roles or positions?
• What are the true costs? Are expenses passed through without markup?

Return on Investment

Using a reputable firm can cost an organization considerable money. Knowing the costs and understanding the process can make those costs more palatable. Interim leaders make great change agents. The right interim not only leads day-to-day, but they can also assess the strengths and weaknesses within their area of responsibility, develop measurable goals and work to ensure these goals are achieved. Interim leaders are usually not afraid to share with their executives the things that are impacting care by having routine touchpoints to confirm those details. Well respected interim leaders are commanding top salaries for good reason. A strong leader will not only earn every dollar of their salary, they help organizations become more profitable and drive change while on assignment.

What the interim leader makes is only part of the story, and that story depends on if they are contracting their services (1099) or working as an employee (W2). In addition, the expenses incurred are passed onto the health care organization. But beware, some agencies tack on added fees to those expenses.

The Cost of Doing Business

Running a business costs money and today’s consumers do not fully understand those costs. According to the Bureau of Labor Statistics Data, 70% of small businesses will close their doors. Approximately 20% of new businesses close within the first year with nearly a third closing after the second year. After five years in business, over 50% close their doors. Less than a third of new businesses make it 15 years or more.⁷

Understanding the True Costs

Consider this scenario. An interim leader can make between $1,000-$1,250 a day. However, firms that place that interim leader may charge up to two times the daily rate. That may seem out of line until you consider the following. If they are a contractor, they assume all tax liability (~30%). If employed by a firm, that firm incurs all tax liability. Regardless, costs vary with each placement as they are subject to not only payroll taxes but operational and overhead costs as well. Average operational and overhead costs can run at 30-60%.

Operational and overhead costs can include but are not limited to the following:

• Professional services (accounting, billing, legal, payroll and web hosting fees)
• Employee(s) (salaries, payroll, benefits [PTO, health insurance, etc.] and taxes)
• Insurance (professional liability, workers comp, cyber, etc.)
• Leased space (office)
• Utilities, equipment (computers, phones and office supplies)
• Maintenance and upgrades
• Marketing (customer acquisition)
• Advertising (positions)
• Branding
• Customer Service
• Company and recruiting software licensing
• Onboarding (background checks, drug screening)
• Client processing fees and payment delays
• Travel
• Time

Niche interim leadership firms run on tight margins. Typical W2 margins run (~5-8%) where, A 1099 can run at 10-12%

Finding Qualified Candidates

Reputable firms spend decades building their pipeline of qualified candidates and should reasonably be able to fulfill an organization’s needs within 7-14 days. Less experienced firms scour job sites such as LinkedIn to quickly find and send “qualified” candidates hoping to land the contract. They do nothing more than review the leader’s resume and send forward as if they have represented them for years.

What to Consider Before Placing an Interim Leader

Interim leadership can be tricky. A large swath of candidates who enter these roles are not always worth the hype placement agencies claim. Its critical placement firms that vet their candidates’ experience before presenting for consideration. Reputable firms have robust pools of applicants and can typically present several qualified candidates within 3-5 business days.

Reputable firms working directly with human resources (HR) can ensure interim leaders are ready to work the first day they arrive by providing key components of the onboarding process before they arrive, saving the organization on average 10-14 days.

1. Background check
   • Criminal Search
   • Education
   • Employment
   • Drug screening
   • I-9
2. Health screening
   • 2-step PPD
   • MMR
   • Varicella
   • Hepatitis B
   • Tetanus diphtheria pertussis
   • Influenza (seasonal)
   • COVID-19
3. Professional license verification
4. Reference checks (3-5)
5. Map of campus
   • Directions
   • Parking locations
6. First day reporting details
7. Organize information technology (IT) sign in and set up

Last and very important, once the candidate is placed, does the firm stay involved both with the interim leader and the executive to ensure the interim is meeting expectations, progressing with the work plan to achieve objectives. If not, the firm should be partnering to resolve them.

Conclusion

Strong nursing leaders can make a difference in terms of safe patient care, quality and improved financial outcomes. Health care executives who engage strategically with a reputable placement firm that understand their needs can place the right leaders who will have a direct impact on their hospitals’ and its brand. To avoid the high failure rate of interims and permanent leadership placements, executive health care personnel shouldn’t be afraid to partner with niche firms and may even want to prioritize using them over others.

References

1. https://www.cdc.gov/niosh/topics/healthcare/default.html
2. https://www.ncbi.nlm.nih.gov/books/NBK52843/
3. https://onlinenursing.cn.edu/news/nursing-by-the-numbers
4. https://www.ncsbn.org/workforce.htm
5. https://uploads-ssl.webflow.com/6154ac78893abf1d1530f251/6195636233fd254e29acb129_2021_Nurse_Career_Satisfaction_Survey.pdf
6. https://online.nursing.umich.edu/blog/how-nursing-leadership-improves-patient-outcomes/
7. https://www.entrepreneur.com/starting-a-business/the-true-failure-rate-of-small-businesses/361350