Key Takeaways
- Data suggests, for an hourly rate of $17, staffing agencies charge a minimum bill of $25.76 to cover labor and operating costs.
- Outsourcing is an effective strategy to cut IT staffing costs as it minimizes the turnover rate of employees and eliminates training costs completely.
- Healthcare IT staffing cost is determined through pricing models, and the retainer pricing model is a great choice for companies looking to scale their business and earn profits; whereas the hourly model is one of the simplest ones.
In recent years, the healthcare staff recruitment agencies industry has grown exponentially with a rate of 2.7 percent, and with an estimated revenue of $23.5 billion by 2022. Many factors are responsible for the growth in the revenue of healthcare IT staffing agencies such as direct payroll, providing niche services, recruiting highly skilled staff, and much more.
For every dollar an employee earns, there are added costs to keep them employed, and these are called loaded costs or labor burden costs. This includes both indirect and direct costs that employer incurs for hiring people.
How Much Does Healthcare IT Staffing Cost?
The Staffing Operations Benchmarking Survey was put together by the American Staffing Association, to clarify billing rates and the profits associated with it. As per the report, for an hourly rate of $17, a staffing agency has to charge a minimum bill rate of $25.76 to cover labor costs and operating expenses. Such type of pricing helps to achieve the industry’s average net profit rate of 3.3 percent as per the above example.
Healthcare IT staffing is a challenging domain where cost is based on geographic location, supply and demand chain, talent, experience, area of specialization, and much more. Furthermore, it’s important to understand that staffing companies don’t take a cut on the employee payroll. Both employees and the IT staffing company earn a fair share. IT staffing companies provide their services to clients at a price that covers employees’ salaries and other additional services.
Outsourcing as a Strategy for Reducing IT Staffing Cost
One of the biggest expenses for a business is recruiting and retaining employees. The average cost per hire is $4,700 and the median cost per hire in the USA is approximately $1,633. Outsourcing is an effective strategy to reduce healthcare IT staffing costs. Here’s how outsourcing can be advantageous for reducing IT staffing costs.
1. Minimal Employee Turnover Rate
A company is bound to face losses if an employee drops out without giving profits. Finances go haywire and result in a negative outcome. A business might go into debt, lack a workforce to make product deliveries, or may not get more projects.
Outsourcing beats employee turnover rate due to its several staffing solutions such as temporary hires, temp-to-perm recruiting, hourly-based payments, and contract hires.
Additionally, the client company saves money by skipping tasks such as talent pooling, job advertising, interviews, and training. These tasks are conducted by the IT staffing company and they ensure that high-quality talent reaches clients. This eventually, reduces employee turnover rate, as employees who are meant to stay are hired by recruiting companies.
2. No Training Costs
Candidates recruited by healthcare IT staffing agencies are either trained by the companies themselves, or they’re highly skilled and don’t need training. According to the training industry report 2021, companies spent 63.9 hours on training per employee, and training expenses touched $1,071.
Hiring professionals through IT staffing companies helps to reduce these costs and it is a good option for healthcare IT startups. Furthermore, skilled people are more efficient in work and they enhance the productivity of a company too.
3. Risk Management
Recruiting an in-house team for risk management costs much more than outsourcing the same from an IT staffing company. Additionally, delegating risk management to an in-house team that lacks experience in risk management can lead to added expenses.
Partnering with a healthcare IT staffing company like Arkenea helps to get access to skilled risk management expertise. As a leading healthcare IT staffing provider, we have a wide talent pool and offer high-quality talent who is not only experienced in risk management but also in other aspects of information technology.
Healthcare IT Staffing: Pricing Models
1. Hourly Pay
Hourly pay is the simplest pricing model used by IT staffing agencies. The hourly rate for each service is decided and at the end of the month, employees are paid for their time invested in work.
A time tracking system is required to monitor the number of hours an employee has worked for. One of the loopholes of this model is non-billable hours, which can hamper the profits of a company.
Another downside of this model is that it’s not scalable for large projects. The hourly pay model is easy to implement and manage. However, for companies that don’t have a flexible budget, this isn’t an ideal option.
2. Retainer Based
Under the retainer model, fees are paid and negotiated upfront. Payment is decided on the number of deliverables agreed upon or the set time of working. This pricing model offers high value to companies and is a great choice for those working on a fixed budget.
Retainer based model is scalable and results in monthly profits as well. The downside of the retainer-based model is that if staffing companies fail to meet deals or mismanage hours, then it can mess up the profits.
3. Fixed-Fee Pricing
Under the fixed-fee pricing model, a flat amount is charged for the services offered by the staffing company based on the number of hours worked by an employee. This model is easy to apply and is preferred by maximum staffing companies.
This model is easy to explain to clients and is an ideal option for those with a fixed budget. However, the fixed-fee pricing model isn’t ideal for staffing agencies that wish to grow in the future.
4. Value-Based Pricing
As per this model, prices are based on the value delivered by a staffing company to its client. This model doesn’t depend on the number of hours worked, hence it is a scalable pricing model. To get the maximum benefit of this model, companies can consider collaborating with a staffing agency that understands their needs and expectations.
Additionally, consider evaluating the track record of staffing companies in bringing value to clients. This model is beneficial for companies who are looking for niche staffing services, such as healthcare IT staffing, and not general services.