In addition, the agencies that provide those travel nurses can charge a substantial profit margin on top of the hourly rate, adding to hospitals’ expenses.
Hospitals have traditionally relied on their own nurse employees to tend to patients, calling up temp agency nurses, known in the industry as travel nurses, for extra help only in small numbers. But travel nurses now form a substantial part of many staffs.
Nurses, burned out from long hours and a never-ending pandemic, are leaving hospital staff positions to become travel nurses, giving them more control over their schedules and the setting. Hospital administrators complain that some temp agencies are taking advantage of the moment, setting prices that hospitals say they can’t afford.
The costs are enormous over time. That $222 per hour rate Grady paid for a neurological ICU nurse fell after the surge, but it has never fallen back to the price it was before the pandemic.
“Basically, there’s just a lot more a lot more dollars out there, chasing essentially the same supply of nurses,” said Chris Moseley, an executive with the health staffing portal and data firm Prolucent Health.
The increased reliance on travel nurses comes at a cost that’s not just financial. Patient safety is partly tied to consistent staffing by familiar employees.
“Well, I think in general, the good of the health system and patients relies on high quality care, and safe care, which in large part comes from, we believe, consistency in team and staffing,” said Katie Logan, chief consumer and strategic planning officer of Piedmont Healthcare. The use of agencies for staffing have helped drive her system’s labor costs for nursing up 75% during the pandemic.
“It’s not sustainable,” Logan said.
The rising price of a nurse
Nurses are the bedrock of any hospital staff, and there was already a shortage before the pandemic. During the worst of the pandemic, the draining work and deaths they saw chased some nurses out of the profession, or to jobs outside of the ICU or emergency room. As a result, patients across Georgia waited longer and got less care as hospital workers were overstretched. Health systems of all sizes shut down beds because of the lack of nurses.
Emily Stevens was an ER charge nurse at Northeast Georgia Health System’s big hospital in Gainesville. During the worst surges, she said, dozens of patients waited hours to even be seen by a doctor but couldn’t be moved in for treatment because there were not enough nurses.
“And then all of the doctors are yelling at me to find somewhere to put these people, ‘Bring them back, bring them back,’” Stevens recalled. “And then I’m like, ‘I don’t have any nurses to take care of these people. It doesn’t matter if you can see them; I have no nurses to do the things you need to be done.’”
When agencies came calling offering Stevens a significant raise to become a travel nurse, it took her a while to leave the ER she knew and loved. But last September, in the midst of the delta wave, she bit.
She got an assignment at Northside Hospital Duluth 35 miles away, a much smaller, less busy location that was still within commuting distance from home.
“I really like where I’m at,” she said. In addition to a massive increase in pay, she said, “I’m able to come to work and not completely be exhausted when I’m done.”
Stevens is not alone. For many, there is a sense that, for the first time, nurses have an opportunity to earn what they are worth.
The advertised pay rate for travel nurses jumped 67% from January 2020 to January 2022, according to Prolucent Health figures cited by the American Hospital Association. Agencies that dole out the travel nurses charge 28% to 32% margin for their work and other expenses, according to Prolucent.
Two large national firms that deal in travel nurses, AMN Healthcare and Cross Country Healthcare, saw their revenues more than double from the first quarter of 2020 to the first quarter of 2022, according to SEC filings compiled by the firm Macrotrends.
Nursing advocates argue that hospitals helped lay the groundwork for this moment. “Understaffing nursing has long been a problem, well before the pandemic,” said Matt Caseman, CEO of the Georgia Nurses Association.
Hospitals have argued that staffing agencies are capitalizing on the situation, piling on their own profit margin just because they can. In February, after the omicron wave peaked in early 2022, the American Hospital Association wrote to Congress asking for an investigation into “reports of anticompetitive behavior” that it said was making the shortages worse. It called agencies’ fees “exorbitant.”
Unlike some other industries, it’s common for health care staffing agencies supplying travel nurses to withhold from hospitals how much of the rate they charge goes to the worker and how much is kept by the agency.
John Haupert, CEO of Grady Health System, says Grady has asked its own travel nurses how much of the increased hourly rate is coming to them in higher wages. A typical agency markup might be about 30%, he said, but some agencies have more than doubled the price of a travel nurse, and then taken 50% of the fee.
Agencies say lower markups are more common and that part of the money goes to pay for benefits for nurses.
The cost of travel staff alone is putting Grady in the red this year, Haupert said, giving the health system a deficit of about $50 million before any cost-cutting measures are figured in. “Our budget issues are almost entirely related to labor cost,” he said.
To balance the books, Grady is implementing some cost cuts that are not directly related to patient care, Haupert said. Unlike other hospitals, Fulton and DeKalb counties jointly own Grady Health System, which has its main hospital in downtown Atlanta and network of clinics that serve medically needy and indigent residents. Grady is in the process of renegotiating how much local funding it gets from each county — amounts hospital executives have told county officials will need to increase because of the rise in nursing costs.
“How sustainable is an institution like Grady — which barely ever generates a margin to begin with — how sustainable is it, if labor rates outstrip our ability to produce some level of margin in order to maintain the facilities and buy the equipment?” Haupert said. “That’s worrisome.”
A no-bid contract for staffing
It’s not hospitals alone that have taken on the additional costs of keeping an adequate number of nurses in hospitals. In April 2020, at the start of the pandemic, Georgia contracted with Alpharetta-based Jackson Healthcare to help overwhelmed hospitals get the nurses they needed. Jackson agreed to provide extra hospital staff that the state would pay for. Because of the public health state of emergency, state officials signed the contract without taking bids from other staffing agencies.
The state has now paid more than $694 million to Jackson. The state doesn’t know and Jackson won’t say how much of that money was paid to nurses and how much kept by the agency.
Hospitals said the state-paid nurses helped fill the gaps but didn’t cover all their needs. So, in addition, hospitals footed the bill for more travel nurses. Most hospitals have returned to finding and paying for the cost of travel nurses, even though the contract between the state and Jackson was renewed in case of necessity this spring.
Jackson Healthcare would not answer The Atlanta Journal-Constitution’s questions about its profit margin on the state-paid nurses, though it said the percent of the fee it has kept has decreased over time.
Jackson also said its rates were lower than those charges in other states, but didn’t say how they compared to similar staffing agencies in Georgia.
As the contract with Georgia was amended and renewed, the top rate Jackson charged for nurses went from $165 per hour to $200 per hour.
Jackson says it worked out well for the state. “Through the duration of Jackson Healthcare’s partnership with the State of Georgia, we remained focused on doing everything possible to provide the best care at the lowest cost, including charging the state below market rates,” Shane Jackson, president of Jackson Healthcare, said in a statement. “I am proud of the work we’ve done through this contract.”
Jackson officials said one of the ways they worked to hold down costs for the state was through a computer bidding system that allowed hospitals to connect with travel nurses who work with any staffing agency, not just Jackson. But that system, which selects the agency with the best bid, raises questions because it’s owned by Jackson Healthcare.
Jackson Healthcare’s top executives donate to political leaders, mostly Republicans. Founder Richard Jackson donated $6,600 to Kemp’s first gubernatorial campaign. A spokeswoman for Kemp, Katie Byrd, deferred to DCH, and said Kemp’s office was not directly involved in executing and carrying out Jackson’s no-bid contract.
A spokeswoman for the Department of Community Health, Fiona Roberts, said in a statement that “Given the urgent nature of the pandemic, limitations on accessing available healthcare workforce, and the extraordinary demand for healthcare services, we were fortunate to contract with a local company that could quickly assist with helping hospitals and nursing homes remain open and operational.” DCH declined to provide an interview.
Moseley, of Dallas-based Prolucent Health, said while he’s unfamiliar with Georgia’s Jackson Healthcare deal, he believes it’s important for a hospital to actively manage its contracts with staffing agencies to keep down costs.
“I feel like it used to be a much more rational market, pre pandemic.... It’s almost like a run on the bank where it went beyond just the actual demand,” he said.
“Because it’s such a panic, because the market is so dynamic and changing constantly, being informed and strategic about how you manage your contract labor is incredibly important,” Moseley said. “Being smart about paying as much as you have to to get the staff you need, without overpaying for it.”
Fixing the nurse shortage
Work is underway to alleviate the need for such heavy reliance on travel nurses.
Hospital officials say they are pushing the state to invest more in nursing schools and other education to increase the number of qualified health workers by training more. Many hospital systems also are doing what they can to lock up the limited supply of nurses, by partnering with local nursing schools to help train them.
Some hospital systems are creating their own internal “travel agencies.” Piedmont has several hospitals across the state, and it is offering its nurses the opportunity to sign temporary contracts and move between hospitals like they would as a traveler, as long as they stay within the Piedmont system.
Merry Fort, who is based in Macon and has been a manager in the travel nurse industry, predicts that things will eventually get back to normal. “We were never intended to be permanent staff,” she said.
But the shortage must be dealt with, she said.
Fort has given presentations, years ago, pointing out that, without intervention, “we would be 40,000 nurses short by 2030,” she said. “That was prior to the pandemic.”
“What do you think it’s going to be like now?”