Aging service organizations, their members and Congress have sounded the alarm on opportunistic staffing agencies during the pandemic, opening the way for possible regulation surrounding the bustling industry.
Other leaders in the space believe such legislation is an overreaction and unnecessary for one small segment of the health care staffing system.
Marquette University’s College of Nursing this month published a debate-style article about legislation to regulate nurse staffing agencies amid opportunistic companies charging – at times – triple what staff are paid.
Lisa Grabert, visiting professor of research at Marquette University College of Nursing, edited the article, while the authors remain anonymous.
The article references a letter signed by more than 200 bipartisan members of the U.S. House of Representatives to the Biden administration, citing “vastly inflating price(s) by three or more times pre-pandemic rates, and then taking 40% or more in profits.”
The American Health Care Association (AHCA) and American Hospital Association (AHA) claim agencies are exploiting the industry by price gouging, suggesting “widespread coordination and abuse of market position,” the Marquette authors said.
Naysayers believe staffing agencies should be able to operate in a “free, unregulated market,” urging Congress to instead invest in more nursing education to boost overall supply.
“Increased demand and prices for contract nursing, due to the pandemic, is a predictable, temporary market reaction to a lack of sufficient nursing supply,” the article’s authors reasoned.
The demand for travel nurses increased 284% one year after the start of the pandemic – basic economic principles hold that as demand increases, so does price, according to the article.
Seven states have introduced legislation to tamp down price gouging in health care settings – and it’s “only a matter of time” before state attorneys general and the Department of Justice (DOJ) take up the cause, the article said.
About 95% of health care facilities hired staff from contract labor firms during the Public Health Emergency (PHE), according to the article.
In 2020 alone, the federal government spent $20 billion in Covid relief on nursing homes, according to the article.
“Congress did not intend for these dollars to be transferred to opportunistic nursing staffing agencies who are taking advantage of the national [PHE],” the article stated.
Staffing agencies in the space are costing taxpayers; meanwhile, earnings reports from the top two staffing agencies found “extreme gains” during the third financial quarter of 2021.
One firm reported triple net income over its third quarter in 2020 at $74 million; another staffing firm reported a $23.4 million profit in 2021, up from a loss of $1.3 million from Q3 2020 to Q3 2021, according to the article.
Still, pro-agency individuals say agencies should have gotten Provider Relief Funds (PRF) from the federal government too.
“These funds were intended to help providers cover the additional and unforeseen costs that arose during the pandemic, including higher staffing costs,” the article authors noted.
The debate-style article also noted staffing agency impact on rural nursing homes – demand for travel nurses grew by 35% as agencies were “enticing” nurses to work in exotic locales for 10 times the amount a rural town could offer.
“In 2020 and 2021, average weekly pay for travel nurses doubled (above 2019), where travel nurses can earn between $5,000 and $10,000 per week, allowing large portions of the workforce to take weeks off between assignments and leave gaping staffing holes behind,” according to the Marquette article.
“Major gaps” in the nursing workforce, the article continued, are further widened by bonuses, free private housing and travel reimbursements. Spiking incentives create an “unfair playing field” in the nursing home workforce, authors said.
Pro-regulation leaders call agency recruiting tactics “rapacious,” with some travel nurses earning between $5,000 and $10,000 per week and in turn taking weeks off while facilities struggle to fill shifts.
The pro-agency argument contends its short-term help actually offers providers time to come up with a long-term solution to the staffing crisis.
About 500,000 nurses are expected to leave the workforce this year, according to data collected by the U.S. Bureau of Labor Statistics. That brings the overall shortage to 1.1 million nurses in 2022, the article said.
“This underscores the bigger problem – America has an insufficient supply of trained nurses,” Marquette authors noted. “Nurse staffing agencies provide short-term relief that enables our healthcare system the time necessary to develop a comprehensive long-term workforce solution.”
Regulating agencies with price caps will exacerbate the staffing crisis, the pro-agency argument notes, prompting more retirements and discouraging entry into the industry.
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