I have seen another staffing firm bill a hospital $160 an hour for an Epic consultant who was being paid $85. The firm kept $75 of every hour. The hospital never knew.
Those are not FIT Healthcare's numbers. They are an example of what happens across this industry.
Nothing about that was illegal. It is how much of Epic staffing works. But it changes who shows up at your door, and most buyers never see it.
How a rate is built
Every hourly rate you are quoted has two parts.
- The pay rate is what the consultant earns.
- The spread is what the firm keeps. It covers recruiting, payroll taxes, benefits, insurance, account management and profit.
A spread is fair. Firms do real work to find, vet and support good people. The question is how big it is and what you get for it.
Why the spread matters to you
Senior Epic consultants know what they are worth. When a firm holds your bill rate steady and widens its spread, the pay rate drops. The most experienced people pass on the role, and you get whoever will take the lower number.
You pay a senior price and get a mid-level consultant. The difference went to the firm.
It also affects retention. A consultant who finds out about a wide spread starts taking calls from other recruiters. You lose them in month four, in the middle of your build.
The gross-margin comp plan
Here is why it keeps happening. At a traditional staffing company, recruiters and sales executives are paid on gross margin. They earn more when the spread is wider.
So they are incentivized to charge you more and pay consultants less. Given the choice between an elite, high-caliber consultant and a two-year analyst who costs $30 less an hour, which one do you think you are going to get?
The firm is out of alignment with you from the very start.
Five questions to ask any firm
Add one more to the list below: is anyone on your team paid on gross margin?
- What is this consultant being paid? A firm that is proud of its model will tell you.
- Who interviewed them, and have they done this job? A recruiter matching keywords can't tell a strong Willow analyst from a weak one.
- Who owns your firm? Investor-owned firms have margin targets. That pressure lands on your rate or on the consultant's pay.
- What happens if it isn't working in two weeks? You want a clear answer and a fast replacement.
- Will the person I meet be the person who does the work? Get the name in writing.
How we handle it
At FIT Healthcare we place senior people only, and we explain the rate on the first call. If you ask what the consultant is paid, we tell you. No one at FIT is paid on gross margin, and we are privately held, so nobody gains from a wider spread. Our interests are aligned with yours and with our consultants. We all win together.
You may still choose another firm. Ask them the five questions first.
Be Great, Al Fisher