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The Money Pit: Third Party Nursing Agencies

We all know that nursing staff is valuable and necessary, but the expenses associated with hiring travel staff can create a downward financial spiral. 

Travel nurses can be a lifeline for hospitals during times of large patient volumes  – say during a pandemic. The problem is  – those solutions were never intended to be permanent. Some hospitals are now in the position of using travel nurses to staff complete departments or risk shutting those services down. 

Travel Staffing Costs Crippling U.S. Hospitals

The American Hospital Association policy briefing stated that the cost of travel nurses is “crippling” US hospitals – to the tune of an 84% increase since 2019. 

In a 2022 article on the topic, Piedmont Healthcare talked about how the current staffing model is unsustainable:

“We are currently paying rates to contract agencies that represent an increase of more than 200% over what we were paying agencies prior to the pandemic. Much of this increase is not going into the pockets of front-line nurses, without whom we would not have been able to weather this crisis.”

The nursing shortage has been exacerbated by the pandemic, as many burned-out nurses left the profession. Others left to – you guessed it – travel for higher pay and more opportunities. From 2019 to 2022, staff nurse salaries rose from an average of $35/hr. to $39/hr. while travel nurse wages topped out at about $154 per hour. It is no wonder that hospitals are ramping up recruitment efforts and looking for ways to retain permanent staff while they work through shortages. 

The 2022 NSI National Health Care Retention and RN Staffing Report stated that hospitals are prioritizing decreasing their dependency on supplemental staffing in 2023. 

The NSI report reads:

“For every 20 travel RNs eliminated, a hospital can save, on average, $4,203,000.”

The Hidden Costs

Travel nurses typically work 13-week contracts in one location. The inclusion of travel nurses into the staffing mix has noticeably affected the full-time staff in many situations. 

Many different issues tend to arise:

  • Pay discrepancies and resentment
  • Travel nurses can negotiate certain schedules that full-time staff may not be able to get.
  • Travel nurse contracts may not demand them to “float” where needed in the hospital – leaving staff nurses to float to other areas. 
  • If patient census drops, travel nurses are “guaranteed” their hours, while other staff will be sent home on call or floated. 
  • Staff nurses worry about the quality of care being given by temporary staff that doesn’t have as much commitment to the organization. 

Organizations that want to nurture their own staff relationships and foster a positive culture see the benefits of reducing dependency on travel staff. The problem is – how do they climb out of the “money pit” and build a sustainable self-staffing model?

The answer is usually multi-faceted and can vary by organization depending on unique challenges in their local area. 

Approaches to Self-Sufficient Staffing

It is unlikely that most organizations that rely heavily on temporary nurse staffing can simply cut it off, a phased approach over time can be accomplished. 

Foster educational relationships

By partnering with local high schools, colleges, and technical schools, hospitals can build their reputation and expose more students to nursing and other healthcare careers. Many hospitals offer to shadow programs for high school students, scholarships, and internships that seek to move good students into permanent jobs after graduation. By utilizing this “homegrown” recruitment strategy, a continuous pipeline of staff can be established. 

Support new graduates

Statistics from McKinsey show that 33% of new nurses leave the workforce within the first two years. New graduate nurses that begin working on understaffed nursing units are often not afforded the quality orientation and mentorship they need to be successful in their new roles. Many organizations have implemented nurse residency programs (NRPs) that extend new graduate learning opportunities over the first year of employment. These programs are typically very structured and help students gain the clinical and management skills needed for stressful roles in the field. Studies have shown that these programs can increase new graduate retention rates – from an average of 74% to 100% in some cases. 

Use Analytics and Technology

Some staffing problems in hospitals are a problem of matching capacity with volume. Patient volumes are unpredictable and ever-changing. Length of stay for patients has gotten much shorter than in years past, with patients moving from admission to discharge even faster – creating more fluctuation. A unit may start off a shift with 6 nurses, but after discharging several patients only needs 4. Another department may have an influx from the emergency department, or patients waiting to transfer out of the ICU. 

The functions of bed management and staffing management are time-consuming, rapidly changing, and impossible to predict from day to day. Charge nurses, managers, and staffing coordinators can spend hours trying to fill last-minute staffing needs by calling and texting other departments, nurses that are off work, and PRN staff. 

With smart software solutions like Demand Workforce, automatic alerts can be sent to nurses who are available and eligible to fill shifts or even half-shifts. They can then respond immediately, saving time for scheduling staff and reducing frustration for nurses on their day off. Organizations that were able to fill only 10% of their last-minute shift openings have seen results like 78% filled after implementing the software. 

With strong planning and a multi-pronged strategic approach to reducing travel nurse expenditures, hospitals can stop the financial bleeding and strengthen their operations. To learn more about Demand Workforce and the results you can see at your own facility, contact us to schedule a demo.