May 20, 2025
May 20, 2025
Kelly Stone
Many healthcare staffing agencies rely on Managed Service Providers (MSPs) to help them fill shifts, particularly those specializing in travel nursing and per diem staffing. While MSPs offer consistent volume, they also create dependency, compress margins, and leave agencies vulnerable to sudden shifts in vendor relationships. Staffing firms that work on building and strengthening direct client relationships will have an easier time navigating volatile market conditions and ensuring sustainability.
According to the latest Travel Nurse Benchmarking Survey by NATHO, the percentage of "travel nurse staffing revenue generated through an MSP increased to 73% in 2024, up from 69% in 2023." Clearly, a great deal of healthcare staffing agencies have built their business models around MSP partnerships.
These partnerships offer convenience but can have drawbacks that threaten an agency's long-term stability. The financial impact is immediate with vendor management fees that eat into already tight profit margins. Another constraint is the limited control over client relationships, as the MSP serves as a gatekeeper between your agency and the healthcare facilities you serve. This intermediary position makes a firm vulnerable to vendor preference shifts or contract losses, which can impact revenue streams with little warning.
In contrast, direct client relationships enable staffing firms to negotiate rates based on value, provide customized services, and retain more margin for growth over time.
Many travel nurse agencies that leaned heavily on MSP job flow during the pandemic are now struggling in a cooling market because they forgot how to generate business on their own. These firms may be forced to shut down, consolidate, or be acquired due to their dependence on MSPs.
All of these factors create a compelling case for moving away from MSP dependence. Firms that cultivate a mix of direct client accounts, technology-enabled VMS access, and selective MSP partnerships are better positioned to:
Let's explore some practical ways to develop a robust direct-client pipeline using your existing team and technology resources.
1. Leverage Your Current Talent Resources
Your recruiters and account managers already possess valuable relationship skills that can be redirected toward direct client acquisition:
2. Optimize Your Technology Stack
Most agencies already have technology that can be repurposed for direct sales:
3. Focus on Underserved Markets
While MSPs tend to dominate large urban healthcare systems, significant opportunities exist in smaller and niche areas:
4. Build Value Beyond Fill Rates
Direct clients need more than just staffing. They need and appreciate partners who understand their unique challenges. Here are some ways to add value to your service:
5. Implement a Systematic Outreach Program
Consistent, value-driven communication builds relationships over time:
Track progress through disciplined measurement to track progress and help build an effective pipeline. Begin by monitoring and comparing the percentage of revenue from direct clients with those from MSP sources. Analyze the margin differential between direct and MSP placements, as direct relationships typically yield significantly higher profitability. Look at client retention rates for direct relationships; this provides critical insight into the strength and sustainability of these partnerships, with higher retention indicating stronger relationship development.
Finally, comparing time-to-fill performance between direct and MSP positions helps identify operational efficiencies or challenges specific to your direct client approach. These metrics, evaluated collectively and tracked consistently over time, create a comprehensive picture of your direct pipeline's health and will help predict future growth.
Healthcare staffing firms that want to scale, remain profitable, and maintain operational control must reduce their reliance on MSPs. This means investing in direct sales, building and cultivating strong client relationships, adopting automation, and positioning themselves as value-driven partners.
Refocusing on a direct-client pipeline doesn't mean you have to abandon MSP relationships. But creating a balance between the two models will help ensure sustainability and enable you to see what method works better for your firm in the long run. By strategically allocating resources toward direct client development, travel nursing agencies can create more stable revenue streams, improve margins, and build more resilient businesses.
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