Contract Nurse Agencies Are Making Big Money in the Age of COVID-19. Are They 'Exploiting' the Pandemic?

In the 40 years that Jennie Kahn has worked as a registered nurse, the last two have been by far the most grueling.

A lot of that is due to COVID-19, which transformed health care facilities, including Thomas Health’s hospital system in Charleston, West Virginia, where Kahn works, into triage centers and forced nurses to take on an extraordinary amount of personal risk and heartache. It’s no mystery why some 18% of health care workers quit their jobs between Feb 2020 and Sept 2021, according to a Morning Consult poll.

But another reason these past two years have been so punishing, Kahn says, is that hospital nursing staffs have been subject to extraordinary churn as thousands of nurses have quit their staff positions to become contract travel nurses, where the pay is often two to four times higher. This rapid turnover has triggered a costly feedback loop: hospital administrators, facing shortages in staff nurses, spend a mint hiring contract nurses, which makes them less able or willing to increase their staff nurses’ pay. So more staff nurses quit to become contract nurses, thus further lowering nurse supply and driving demand for contract nurses. “It is a vicious cycle,” says Kahn, the hospital system’s chief nursing officer.

Meanwhile, contract nursing agencies have increased their prices. The advertised pay rate for travel nurses has surged 67% from January 2020 to January 2022, according to Prolucent Health, a workforce management tool for healthcare companies, while some staffing agencies such as AMN Healthcare, told TIME that pay rates for travel nurses at facilities they work with rose by 164% from the fourth quarter of 2019 to the fourth quarter of 2021. Some of these agencies’ profit margins top 20%.

Some hospital administrators, many of which saw their facilities’ profits shrivel during COVID, say they’ve reached a crisis point and are calling on Congress and the Biden Administration to step in. They argue that contract nursing agencies are exploiting circumstances resulting from COVID-19 to pad their own pockets. The agencies say their prices are merely a reflection of growing demand. Nurses, meanwhile, argue that hospital administrators, who are somehow finding a way to pay premium rates for contract nurses, could have avoided the mass nurse exodus by paying their staff nurses better and improving working conditions from the start, and that a fragmented nursing force with quick turnover is bad for patients’ health.

The solution is not straight-forward. Health care facilities, desperate to keep nurses on staff, may have to improve salaries and working conditions, but at many facilities, that’s easier said than done. At long-term care centers, bottom lines are dictated by Medicare and Medicaid reimbursement, and at many small and medium-sized hospitals, the cost of personal protective equipment and patient loads have fluctuated dramatically since March 2020.

Continue reading at Time


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