Healthcare Recruitment DAO

The WHO estimates that there is a global shortage of 4.3 million physicians, nurses, and other health professionals.

England alone would need the equivalent of an additional 46,300 full time doctors simply to reach an equivalent standard with today’s OECD EU average of 3.7 doctors per 1,000 people.

Data published in 2020 by the Association of American Medical Colleges estimates that the U.S. could see a shortage of 54,100 to 139,000 physicians by 2033.

These shortages are buffered by hardworking staff, sometimes internally but increasingly through external agencies.

The global healthcare staffing market size is expected to reach USD 62.8 billion by 2030, with a CAGR of 6.89%. Higher flexibility of working hours, better pay and greater exposure to various healthcare systems across different locations are factors expected to result in an increase in the number of individuals choosing locum tenens as a career option.

One in every thirty UK locums, for example, earns £120 per hour, almost £110 more than the average £10.88 paid to a full time GP, with the average needing to work far fewer hours than substantive post holders to match monthly earnings.

Many of the shortfalls in staff are filled (albeit temporarily) day to day. Data based on 50 UK NHS trusts suggest that, in May 2021, an estimated four in five registered nurse vacancies and seven in eight doctor vacancies were being filled by temporary staff, either through an agency or using their ‘bank’ (the NHS in-house equivalent of an agency).

While some level of temporary staffing can provide welcome flexibility to the employer and employee, even where vacancies are filled, there can be negative consequences.

A Langbuisson Healthcare Workforce & Recruitment UK Market Report estimated the UK temporary healthcare and recruitment market to be worth £4.32 billion, and while efforts have been made to manage the cost of temporary staff, it can still be a huge drain on overstretched finances. As at the end of 2019/20, it was reported that NHS trusts reported spending some £2.4 billion on agency staff. The issue, however, is showing no signs of abating.

In December 2019, total locum FTE was estimated to be 1217.9 compared with 33,996.6 for total GP Full Time Equivalents. Locums thus represented 3.3% of total GP FTE.

Currently there are 356,304 doctors on the UK GMC Register. However, The Nuffield Trust estimates of NHS workforce numbers, in March 2022, calculated that across NHS hospital, community and primary care settings, there are 164,000 doctors in total (accounting for only 46% of doctors on the register).

The issue is not confined to the UK either.

The U.S. healthcare staffing market size was valued at USD 24.1 billion in 2021 and is estimated to expand at a compound annual growth rate (CAGR) of 5.6% from 2022 to 2030. Pay differences are similarly partly incentivising the increase. The annual average salary of full-time nurses ranges from USD 50,000 to USD 60,000; however, per diem nurses can get as high as USD 90,000 to USD 100,000.

Recruitment and retention of long term quality staff that are a good cultural fit can be time consuming and expensive. Pre-employment checks for temporary staff are similarly cumbersome.

The process of vetting doctors and ensuring compliance checks are done prior to employment is in dire need of reform.

About half a million patient engagements are lost across the UK per year due to pre-employment and identity checks as junior doctors take time out to complete these tasks.

In a Freedom Of Information request made in 2017, the average cost for these pre-employment checks was estimated to be £50 and 30 minutes per doctor at one hospital in the UK. With an estimated 50,496 junior doctors as of March 2022, this equates to £2.524,800 and 3,156 days of work every six months for UK HR departments. This estimate does not include nursing staff which adds significantly to the total.

Truu (a UK blockchain company) reduces this process from 2 months to 2 minutes with their digital passport and credential sharing technology.

With many doctors registered across multiple locum agencies in addition to their training posts, the potential cost saving for a credential sharing platform is certainly worthy of consideration. Portable credentials can reduce time to placement and time away from clinical duties, negating the need for locum doctors at the bi-annual changeover time most UK hospitals experience.

As mentioned previously, temporary employees cost significantly more than permanent staff. This come, in part, as a result of the premium that recruitment agencies charge for placement. As a general rule, a recruitment agency will charge between 10-30% of the base annual salary.

There are 998 Recruitment Agencies found in the Health Care industry in the UK alone, and over the five years through 2022-23, industry revenue is anticipated to increase at a CAGR of 5% to reach £1.2 billion in the UK. Though these agencies clearly fulfil a role and are able to command high margins for it, it does beg the question of whether this mature and saturated industry is ripe for disruption.

With staff shortages unlikely to disappear anytime soon, there is no doubt that companies matching demand with supply will continue to flourish. The question is whether there is room for innovation that can provide value on either sides of the healthcare recruitment equation.

While agencies are perhaps good at covering short notice gaps, there is certainly room for improvement in their offering.

The time to onboard a doctor or nurses takes just as long as it does with a hospital HR department. And while the agency can then place these clinicians in multiple locations, and thereby gain some economies of scale from the process, they are still limited by the contractual arrangements in place with various hospitals.

Each agency has its own negotiating team crafting deals with individual hospitals, with some agencies specialising in last-minute placements for premium prices.

Doctors and nurses employed by these agencies may get better rates than in their own hospitals, and possibly higher rates than for shifts that are booked long in advance. There is, however, almost no transparency in the process, with the ultimate cost landing at the feet of cash-strapped hospitals and ultimately the taxpayer (or insurance-premium paying patient).

As healthcare costs spiral out of control, we need a system that remunerates fairly but doesn't break the bank.

For those that are familiar with doing locum shifts in their own hospital, it will come as no surprise that payments can take several months to appear in a pay-check. And while agencies may be better at paying more promptly, they too rely on hospitals paying them in good time - a process which relies in part on a series of document reconciliations and coordination with lethargic payroll systems. In my own experience, deciphering which additional shifts correspond with which payment (with taxes and pension contributions accounted for) can be almost impossible. The lack of clarity can be incredibly frustrating.

The process involves a linear progression of managerial sign-offs, often on paper, and it is not unknown for claim submissions to need repeating. There is certainly no real-time visibility of this document chain, nor any true auditability of the activity.

I have previously written about the use of blockchain in supply chains which demonstrated significant impact in document flow traceability and reconciliation, as well as contract clarity. Needless to say, I believe blockchains have a significant role to play in this use case too.

The title of this article mentions DAOs, so perhaps this is the perfect place to introduce a perhaps utopian and futuristic vision. For those unfamiliar, Decentralised Autonomous Organisations (DAOS) are internet-based communities that coordinate their activities on blockchain. Members of the DAO (token-holders) own 'shares' in the DAO, and contribute expertise and governance votes to ensure the organisation succeeds. A comprehensive course on DAOs is available at catena.mba for those wanting to delve deeper.

A Recruitment DAO might look something like this:

• Doctors and Nurses buy into the DAO (share capital if you like) to gain ownership and voting rights.

• The DAO (via its delegates) negotiates with hospitals directly for contracts, agrees rates of pay, suitable to the voting majority of token-holders, and hires compliance experts to ensure pre-employment checks are to national standards.

• Contracts with a company like Truu enables members (who will also be the working clinicians) to move freely between partnering hospitals using digital passports.

• The DAO deploys a blockchain based document flow-management system which provides visibility to all parties that: the correct doctor has done the shift, (already pre-authorised for payment into a hospital-owned digital wallet) and measures the hours in the hospital (by geolocation time-stamping). Using smart contracts, the doctor (or nurse) then exits the building with an automated digital currency payment into their wallet, which they can exchange/withdraw into their bank account.

• Managers and ward staff can provide real-time feedback to the DAO on the doctor's acumen and behaviour, which will provide a reputation score that influences the pay rates for subsequent shifts.

• The DAO agency is able to offer transparent rates based on urgency of placement, geography and other variables, and because much of the DAO activity is automated, can potentially offer better rates to both the hospital and working clinician, while still making a reasonable profit for providing the service.

• Since DAO members are working doctors and nurses, but also shareholders, any DAO profits can be paid as dividends or, if voted for, be used to expand the DAOs activities or perhaps pay for training.

Whilst I appreciate this vision is perhaps a little before its time, it is possible with the technologies of today. I believe it offers an opportunity for a startup to disrupt the 998 currently existing agencies in the UK and the many more globally, and a mechanism that brings value to paying hospitals and working doctors alike. Healthcare has not changed for a very long time, and we all recognise that this is long overdue.

Catena MBA is a strategy consultancy based in the Cayman Islands focusing on Healthcare and the Circular Economy. We help executives implement Blue Ocean Strategies through the use of emerging technologies to gain competitive advantage.

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