The cost of hospital contract labor in 22 numbers

Many hospitals and health systems aim to recruit and retain permanent staff to replace contract labor positions, which have seen wages skyrocket because of staff shortages during the COVID-19 pandemic. 

Hospitals across the country have relied on contract labor and temporary staffing agencies to support their clinical teams when many burned-out providers are exiting healthcare. An October survey conducted by Bain & Company found that 25 percent of physicians, advanced practice providers and nurses are considering changing careers. Eight-nine percent of the providers thinking about leaving the profession cited burnout as the driving force. 

Staffing shortages are driving labor costs to an unsustainable level for hospitals operating on razor-thin margins and reducing temporary staffing costs is top of the agenda for many financial executives looking to reduce expenses in the coming quarters.

Here are 22 numbers that demonstrate the cost of contact labor for hospitals, according to reports from Kaufman Hall, Definitive Healthcare, Vaya Workforce and big hospital operators:

1. The demand for contract labor increased 500 percent in fall 2021 compared with 2019, according to healthcare staffing services company Vaya Workforce. While demand has since decreased, it is still nearly triple pre-pandemic levels and is projected to remain as high as 20 percent above the 2019 baseline.

2. In 2020, the average amount hospitals spent on contract labor was $4.6 million, more than double the average expense of $2.2 million in 2011, according to a report from Definitive Healthcare, a data and analytics company.

3. Rochester, Minn.-based Mayo Clinic Hospital, Saint Mary’s Campus spent $286.8 million on contract labor in 2020, the most of any hospital in the country that year, according to Definitive Healthcare’s analysis of about 3,100 U.S. hospitals

4. From 2019 to 2022, the hourly wage rate for contract nurses increased 106 percent, according to Kaufman Hall. Contract nurses are earning an average of $132 an hour in 2022 versus $64 an hour in 2019. At the height of the pandemic, some travel nurses earned up to $300 an hour, with rates as high as these placing immense pressure on hospital balance sheets.

5. The rise in contract labor from 2019 through March of 2022 led to a 37 percent increase in labor expenses per patient, equating to between $4,009 and $5,494 per adjusted discharge.

6. Hospitals with 25 beds or fewer spent about $460,000 on contract labor in 2020 compared to hospitals with more than 250 beds that spent almost $11 million on average, according to Definitive Healthcare.

7. Hospitals in the western U.S. have the highest contract labor expenses, with an average of $9.6 million reported in 2020. Large cities, high cost of living and high salary rates in the region contribute to this high average.

8. Labor costs were one of the core reasons Franklin, Tenn.-based Community Health Systems reported a net loss of $42 million in the third quarter, but CFO Kevin Hammons said he expects to see a 40 percent to 50 percent reduction in contract labor costs next year compared with 2022.

9. Nashville, Tenn.-based HCA Healthcare reported a 19 percent decrease in contract labor costs in the third quarter compared to the second quarter, allowing the system to absorb much of the market-based wage adjustment costs for its employee workforce, CFO Bill Rutherford said during an Oct. 21 earnings call.  

10. According to Kaufman Hall’s “2022 State of Healthcare Performance Improvement” report, published Oct. 18, 46 percent of hospital and health system leaders identify labor costs as the greatest opportunity for cost reductions. This was significantly up from the 17 percent of respondents who noted labor costs as their greatest opportunity to cut costs last year.

11. There are some hopeful signs that the use of contract labor has stabilized and is steadily falling, according to Kaufman Hall: 44 percent of hospitals in its survey reported that their utilization of contract labor is declining while 29 percent said that it is holding steady.

Massachusetts’ 19K vacant hospital jobs: ‘Our healthcare system has never been more fragile’

There are an estimated 19,000 full-time job vacancies across Massachusetts acute care hospitals, according to a survey published Oct. 31 by the Massachusetts Health & Hospital Association.

Hospitals are working to address backlogs and transfer patients to post-acute care settings while skyrocketing labor costs — including a projected $1 billion in travel labor costs this year — are compounding healthcare facilities’ financial woes, according to the report. These challenges are hampering hospital operations as well as leading to care delays and reduced access to care.

Fewer workers mean that fewer beds are available for patients, while the demand for care increases due to deferred care throughout the COVID-19 pandemic, the behavioral health crisis and reduced access to community-based services continue to challenge hospitals throughout the state. At any given time, more than 1,500 patients are in acute hospital beds awaiting placement to a specialized behavioral health bed or post-acute care, according to the MHA.

“Our healthcare system has never been more fragile, and its leaders have never been more concerned about what’s to come in months ahead,” Steve Walsh, president and CEO of the MHA, said in an Oct. 31 news release shared with Becker’s Hospital Review. “They are exhausting every option within their control to confront these challenges, but this is an unsustainable reality and providers are in dire need of support.”

In response to the survey, 37 hospitals — representing 70 percent of the state’s total hospital employment — reported 6,650 vacancies among 47 positions critical to hospital operations and clinical care. The positions range from direct care nurses to lab personnel and clinical support staff. Eighteen of the 47 positions have a vacancy rate greater than 20 percent

At a 56 percent vacancy rate, licensed practical nurses is the most in-demand position, while home health aides (34 percent), mental health workers (32 percent), infection control nurses (26 percent) and CRNAs (24 percent) are also highly sought after.

Survey respondents identified 6,650 vacancies. The 47 positions included in the survey, which was conducted this summer, account for less than half of all hospital roles. The MHA said it extrapolated that across all positions and hospitals to arrive at an estimated 19,000 vacancies across the state.

Staffing shortages are driving labor costs to an unsustainable level for many hospitals already grappling with margins close to zero or in the red. Hospitals have relied on high-cost temporary staffing to fill critical positions during the pandemic, resulting in average hourly wage rates for travel nurses increasing 90 percent since 2019, according to the report. Massachusetts hospitals reported spending $445 million on temporary registered nurse staffing halfway through the fiscal year, with temporary RN staffing costs increasing 234 percent from fiscal year 2019 to March 2022.

If urgent steps are not taken to address healthcare’s staffing shortage, hospitals will continue to face capacity challenges and overpay for labor, which will lead to fiscal instability, according to Mr. Walsh. 

The MHA urged providers, payers, public officials and government agencies to address the workforce crisis by investing in training and education, expanding the workforce pipeline, providing financial support to hospitals and advancing new models of care such as telehealth and at-home care. 

Inflation Is Squeezing Hospital Margins—What Happens Next?

https://www.healthaffairs.org/content/forefront/inflation-squeezing-hospital-margins-happens-next

Hospitals in the United States are on track for their worst financial year in decades. According to a recent report, median hospital operating margins were cumulatively negative through the first eight months of 2022. For context, in 2020, despite unprecedented losses during the initial months of COVID-19, hospitals still reported median eight-month operating margins of 2 percent—although these were in large part buoyed by federal aid from the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The recent, historically poor financial performance is the result of significant pressures on multiple fronts. Labor shortages and supply-chain disruptions have fueled a dramatic rise in expenses, which, due to the annually fixed nature of payment rates, hospitals have thus far been unable to pass through to payers. At the same time, diminished patient volumes—especially in more profitable service lines—have constrained revenues, and declining markets have generated substantial investment losses.

While it’s tempting to view these challenges as transient shocks, a rapid recovery seems unlikely for a number of reasons. Thus, hospitals will be forced to take aggressive cost-cutting measures to stabilize balance sheets. For some, this will include department or service line closures; for others, closing altogether. As these scenarios unfold, ultimately, the costs will be borne by patients, in one form or another.

Hospitals Face A Difficult Road To Financial Recovery

There are several factors that suggest hospital margins will face continued headwinds in the coming years. First, the primary driver of rising hospital expenses is a shortage of labor—in particular, nursing labor—which will likely worsen in the future. Since the start of the pandemic, hospitals have lost a total of 105,000 employees, and nursing vacancies have more than doubled. In response, hospitals have relied on expensive contract nurses and extended overtime hours, resulting in surging wage costs. While this issue was exacerbated by the pandemic, the national nursing shortage is a decades-old problem that—with a substantial portion of the labor force approaching retirement and an insufficient supply of new nurses to replace them—is projected to reach 450,000 by 2025.

Second, while payment rates will eventually adjust to rising costs, this is likely to occur slowly and unevenly. Medicare rates, which are adjusted annually based on an inflation projection, are already set to undershoot hospital costs. Given that Medicare doesn’t issue retrospective corrections, this underadjustment will become baked into Medicare prices for the foreseeable future, widening the gap between costs and payments.

This leaves commercial payers to make up the difference. Commercial rates are typically negotiated in three- to five-year contract cycles, so hospitals on the early side of a new contract may be forced to wait until renegotiation for more substantial pricing adjustments. “Negotiation is also the operative term here, as payers are under no obligation to offset rising costs. Instead, it is likely that the speed and degree of price adjustments will be dictated by provider market share, leaving smaller hospitals at a further disadvantage. This trend was exemplified during the 2008 financial crisis, in which only the most prestigious hospitals were able to significantly adjust pricing in response to historic investment losses.

Finally, economic uncertainty and the threat of recession will create continued disruptions in patient volumes, particularly with elective procedures. Although health care has historically been referred to as “recession-proof,” the growing prevalence of high-deductible health plans (HDHPs) and more aggressive cost-sharing mechanisms have left patients more exposed to health care costs and more likely to weigh these costs against other household expenditures when budgets get tight. While this consumerist response is not new—research on previous recessions has identified direct correlations between economic strength and surgical volumes—the degree of cost exposure for patients is historically high. Since 2008, enrollment in HDHPs has increased nearly four-fold, now representing 28 percent of all employer-sponsored enrollments. There’s evidence that this exposure is already impacting patient decisions. Recently, one in five adults reported delaying or forgoing treatment in response to general inflation.

Taken together, these factors suggest that the current financial pressures are unlikely to resolve in the short term. As losses mount and cash reserves dwindle, hospitals will ultimately need to cut costs to stem the bleeding—which presents both challenges and opportunities.

Direct And Indirect Consequences For Cost, Quality, And Access To Care

Inevitably, as rising costs become baked into commercial pricing, patients will face dramatic premium hikes. As discussed above, this process is likely to occur slowly over the next few years. In the meantime, the current challenges and the manner in which hospitals respond will have lasting implications on quality and access to care, particularly among the most vulnerable populations.

Likely Effects On Patient Experience And Quality Of Care

Insufficient staffing has already created substantial bottlenecks in outpatient and acute-care facilities, resulting in increased wait times, delayed procedures, and, in extreme cases, hospitals diverting patients altogether. During the Omicron surge, 52 of 62 hospitals in Los Angeles, California, were reportedly diverting patients due to insufficient beds and staffing.

The challenges with nursing labor will have direct consequences for clinical quality. Persistent nursing shortages will force hospitals to increase patient loads and expand overtime hours, measures that have been repeatedly linked to longer hospital stays, more clinical errors, and worse patient outcomes. Additionally, the wave of experienced nurses exiting the workforce will accelerate an already growing divide between average nursing experience and the complexity of care they are asked to provide. This trend, referred to as the “Experience-Complexity Gap,” will only worsen in the coming years as a significant portion of the nursing workforce reaches retirement age. In addition to the clinical quality implications, the exodus of experienced nurses—many of whom serve in crucial nurse educator and mentorship roles—also has feedback effects on the training and supply of new nurses.

Staffing impacts on quality of care are not limited to clinical staff. During the initial months of the pandemic, hospitals laid off or furloughed hundreds of thousands of nonclinical staff, a common target for short-term payroll reductions. While these staff do not directly impact patient care (or billed charges), they can have a significant impact on patient experience and satisfaction. Additionally, downsizing support staff can negatively impact physician productivity and time spent with patients, which can have downstream effects on cost and quality of care.

Disproportionate Impacts On Underserved Communities

Reduced access to care will be felt most acutely in rural regions. recent report found that more than 30 percent of rural hospitals were at risk of closure within the next six years, placing the affected communities—statistically older, sicker, and poorer than average—at higher risk for adverse health outcomes. When rural hospitals close, local residents are forced to travel more than 20 miles further to access inpatient or emergency care. For patients with life-threatening conditions, this increased travel has been linked to a 5–10 percent increase in risk of mortality.

Rural closures also have downstream effects that further deteriorate patient use and access to care. Rural hospitals often employ the majority of local physicians, many of whom leave the community when these facilities close. Access to complex specialty care and diagnostic testing is also diminished, as many of these services are provided by vendors or provider groups within hospital facilities. Thus, when rural hospitals close, the surrounding communities lose access to the entire care continuum. As a result, individuals within these communities are more likely to forgo treatment, testing, or routine preventive services, further exacerbating existing health disparities.

In areas not affected by hospital closures, access will be more selectively impacted. After the 2008 financial crisis, the most common cost-shifting response from hospitals was to reduce unprofitable service offerings. Historically, these measures have disproportionately impacted minority and low-income patients, as they tend to include services with high Medicaid populations (for example, psychiatric and addiction care) and crucial services such as obstetrics and trauma care, which are already underprovided in these communities. Since 2020, dozens of hospitals, both urban and rural, have closed or suspended maternity care. Similar to closure of rural hospitals, these closures have downstream effects on local access to physicians or other health services.

Potential For Productive Cost Reduction And The Need For A Measured Policy Response

Despite the doom-and-gloom scenario presented above, the focus on hospital costs is not entirely negative. Cost-cutting measures will inevitably yield efficiencies in a notoriously inefficient industry. Additionally, not all facility closures negatively impact care. While rural facility closures can have dire consequences in health emergencies, studies have found that outcomes for non-urgent conditions remained similar or actually improved.

Historically, attempts to rein in health care spending have focused on the demand side (that is, use) or on negotiated prices. These measures ignore the impact of hospital costs, which have historically outpaced inflation and contributed directly to rising prices. Thus, the current situation presents a brief window of opportunity in which hospital incentives are aligned with the broader policy goals of lowering costs. Capitalizing on this opportunity will require a careful balancing act from policy makers.

In response to the current challenges, the American Hospital Association has already appealed to Congress to extend federal aid programs created in the CARES Act. While this would help to mitigate losses in the short term, it would also undermine any positive gains in cost efficiency. Instead of a broad-spectrum bailout, policy makers should consider a more targeted approach that supports crucial community and rural services without continuing to fund broader health system inefficiencies.

The establishment of Rural Emergency Hospitals beginning in 2023 represents one such approach to eliminating excess costs while preventing negative patient consequences. This rule provides financial incentives for struggling critical access and rural hospitals to convert to standalone emergency departments instead of outright closing. If effective, this policy would ensure that affected communities maintain crucial access to emergency care while reducing overall costs attributed to low-volume, financially unviable services.

Policies can also help promote efficiencies by improving coverage for digital and telehealth services—long touted as potential solutions to rural health care deserts—or easing regulations to encourage more effective use of mid-level providers.

Conclusion

The financial challenges facing hospitals are substantial and likely to persist in the coming years. As a result, health systems will be forced to take drastic measures to reduce costs and stabilize profit margins. The existing challenges and the manner in which hospitals respond will have long-term implications for cost, quality, and access to care, especially within historically underserved communities. As with any crisis, though, they also present an opportunity to address industrywide inefficiencies. By relying on targeted, evidence-based policies, policy makers can mitigate the negative consequences and allow for a more efficient and effective system to emerge.

Where do patients go when hospitals shut down capacity?

https://mailchi.mp/f1c5ab8c3811/the-weekly-gist-october-28-2022?e=d1e747d2d8

Last week we met the CEO of the flagship hospital of a large academic health system. Like nearly every hospital, they are challenged in finding the staff they need to keep the hospital running at full capacity. Keeping all the hospital’s units open has been critical: “Over the past three months, we have been busting at the seams…more patients, and they’re sicker. And we’re not even really into flu season yet.” We asked what had changed, given that summer usually is lighter than other seasons for hospital admissions. 

His diagnosis: local community hospitals, also strapped for staff, had begun to regularly shut down units to keep premium labor spend in check. “If they’re not running at full capacity, the patients still have to go somewhere. Given that we’re both the quaternary care provider and the community’s safety net, they’re coming downtown to us. We don’t have the luxury to shut down.” The system had to ramp up agency nursing to accommodate the demand, leading to a sharp rise in labor costs.

This CEO wasn’t backing away from the system’s mission, and vowed to expand capacity as much as they could, but felt that policymakers and payers needed to understand the dynamics in the market: “We’re getting criticized for not being able to control our costs, despite the fact that we’re absorbing what other hospitals can’t handle.” As we head into winter, flu will surely spike, and another COVID surge is possible—the hospitals at the top of the “care chain” will become even more strained in their mission to accommodate their communities’ needs. 

Will agency labor needs become permanent? 

https://mailchi.mp/b1e0aa55afe5/the-weekly-gist-october-7-2022?e=d1e747d2d8

“A few months ago, I was confident we would be able to wean our system off travel nurses. But now I’m not so sure,” a chief nursing officer recently shared with us. Like most health systems, they had seen their use of agency nurses decline from peaks during the Delta and Omicron waves of the pandemic, and were encouraged by anecdotes of nurses returning to staff after stints as travelers. But today they remain “persistently stuck with a quarter of the agency nurses we needed at the peak”. 
 
Seeing nurses returning from travel roles makes sense. It’s naturally a time-limited job—eventually the desire to be home wins out over the earning potential on the road. But another nursing leader shared his fear that a stint as a traveler could become an expected part of the arc of a nurse’s career. And from a hospital operations perspective, agency nursing needs are no longer connected to COVID, but are instead driven by general capacity needs in a tight labor market, keeping the operating rooms, emergency department, and ICUs open.

Health systems and physician groups continue to face labor costs that are up to 40 percent higher than 2019. A permanent need for agency nurses will frustrate efforts to rein in labor costs, through both the dollars spent on premium labor, and the resulting need to boost staff nurse salaries when a portion of their colleagues’ pay is anchored at the “traveling rate”.

A rough year so far for health system finances

https://mailchi.mp/b1e0aa55afe5/the-weekly-gist-october-7-2022?e=d1e747d2d8

As everyone in our industry knows, sluggish volumes amid persistently rising costs, especially for labor, have sent health system margins into a downward spiral across 2022. Using the latest data from consultancy Kaufman Hall, the graphic above shows that by the end of this year, employed labor expenses will have increased more than all non-labor costs combined. 

While contract labor usage, namely travel nursing, is declining, the constant battle for nursing talent means travel nurses are still a significant expense at many hospitals. Through the first six months of this year, over half of hospitals reported a negative operating margin, and the median hospital operating margin has dropped over 100 percent from 2019. 

Larger health systems are not faring better: all five of the large, multi-regional, not-for-profit systems we’ve highlighted below saw their operating margins tumble this year, with drops ranging from three points (Kaiser Permanente) to nearly seven points (CommonSpirit Health and Providence). 

While these unfavorable cost trends have been building throughout COVID, health systems now have neither federal relief nor returns from a thriving stock market to help stabilize their deteriorating financial outlooks. 

Health system boards will tolerate negative margins in the short-term (especially given that many have months’ worth of days cash on hand), but if this situation persists into 2023, pressure for service cuts, layoffs, and restructuring will mount quickly. 

Largest private-sector nurses strike in U.S. history begins in Minnesota

https://www.washingtonpost.com/business/2022/09/12/minnesota-nurses-strike/

An ICU nurse helps to prepare medicine for a covid patient in St. Cloud, Minn. Nurses in the state are planning to go on a three-day strike starting Sept. 12. 

About 15,000 nurses in Minnesota walked off the job Monday to protest understaffing and overwork — marking the largest strike of private-sector nurses in U.S. history.

Slated to last three days, the strike spotlights nationwide nursing shortages exacerbated by the coronavirus pandemic that often result in patients not receiving adequate care. Tensions remain high between nurses and health-care administrators across the country, and there are signs that work stoppages could spread to other states.

Minnesota nurses charge that some units go without a lead nurse on duty and that nurses fresh out of school are delegated assignments typically held by more experienced nurses, across some 16 hospitals where strikes are expected.

The nurses are demanding a role in staffing plans, changes to shift scheduling practices and higher wages.

“I can’t give my patients the care they deserve,” said Chris Rubesch, the vice president of the Minnesota Nurses Association and a nurse at Essentia Health in Duluth. “Call lights go unanswered. Patients should only be waiting for a few seconds or minutes if they’ve soiled themselves or their oxygen came unplugged or they need to go to the bathroom, but that can take 10 minutes or more. Those are things that can’t wait.”

Paul Omodt, a spokesman for the Twin Cities Hospital Group, which represents four hospital systems where nurses are striking in the Minneapolis-St. Paul area, said that the nurses union did not do everything it could to avoid a strike.

“Nurses have steadfastly refused to go to mediation,” Omodt said. “Their choice is to strike. This strike is on the nurses.”

Conny Bergerson, a spokeswoman for Allina Health, another hospital system in the Twin Cities where nurses are on strike, said “rushing to a strike before exhausting all options such as engaging a neutral federal mediator does not benefit our employees, patients or the communities we serve.”

The Minnesota Nurses Association, the nurses union, said hospital administrators have continued to “refuse solutions” on understaffing and safety in contract negotiations. It said nurses have increasingly been asked to take on more patients for bedside care to make up for labor shortages, exacerbating burnout and high turnover.

Some hospitals have offered increased safety protocols for reporting security incidents in negotiations, but have not budged on other safety- and staffing-related demands.

The union has proposed new mechanisms for nurses to have a stronger say in how wards are staffed, including a committee made up of nurses and management at each hospital that would determine appropriate staffing levels. It has also proposed protections against retaliation for nurses who report understaffing. Striking nurses at some hospitals said their shifts are often short five to 10 nurses, forcing nurses to take on more patients than they can handle.

Omodt said that while there was a rise in understaffing reports during the height of covid, conditions have improved, and nurses have made contradictory claims when it comes to staffing at their hospitals since then.

In the lead-up to the strike, Minnesota hospital groups filed unfair labor practices charges against the union for refusing to go to mediation, and asked the National Labor Relations Board to block the strike for a failure to provide enough notice. The NLRB has thrown out at least some of those charges.

Hospitals facing strikes have been recruiting traveling nurses from across the region and plan to maintain staffing levels during the strike, though they are preparing for reduced operations, according to some of the hospital groups facing strike activity.

For years, hospitals in the United States have faced understaffing problems. A surge in demand and increased safety risks for nurses during the pandemic accelerated those trends. The number of health-care workers in the United States has still not recovered to its pre-pandemic levels, down 37,000 workers compared with February 2020.

At the same time, demand for health-care services has steadily increased during the pandemic, with a backlog of people who delayed care now seeking medical attention. During the covid wave that swept across the United States this summer, states such as New York and Florida reported the worst nursing shortages in decades. Research shows that patients are more likely to die because of preventable reasons when health-care providers are overworked.

Nurses, who risked their lives during the pandemic, are quitting and retiring early in droves, because of increased workloads caused by short staffing and demanding schedules that make finding child care and having a life outside of work exceedingly difficult. The understaffing crisis is pronounced in Minnesota in part because of its aging population and its record low unemployment rate.

There are some signs that nurse- and other health-care-worker strikes could spill over to other states in the coming weeks. Four thousand nurses with the Michigan Nurses Association voted earlier this month to authorize a strike related to understaffing concerns, and 7,000 health-care workers in Oregon have also authorized a work stoppage. University of Wisconsin nurses narrowly averted a strike this week. Therapists and clinicians in Hawaii and California are currently in the fourth week of what has become the longest-running mental health care strike, over inadequate staffing levels.

In Minnesota, the Minnesota Nurses Association recorded a 300 percent increase in nurses’ reports of unsafe staffing levels on their shifts since 2014, up to 7,857 reports in 2021.

Kelley Anaas, 37, a nurse who works in the ICU at Abbott Northwestern in Minneapolis said nurses in her unit have been forced to double up on patient assignments and work with lead nurses who have less than a year of experience.

It eats away at you. If that was my family member in that bed, I wouldn’t want to leave their side,” said Anaas, adding that her workload has increased steadily over her 14 years at Abbott Northwestern.

While the nurses say their main impetus for striking is staffing levels and not pay, they are also at odds with hospitals over wages. The Minnesota Nurses Association has proposed a 30 percent pay increase over the next three years, noting inflation is at a 40-year high, while health-care groups have proposed a pay increase of 10 to 12 percent.

“The union’s wage demands remain at 29 and 30 percent increases over three years, which we’ve told them is unrealistic and unaffordable,” Omodt said, noting that the average Minnesota nurse makes $80,960 a year.

Contracts expired in May and June, and the union has been in negotiations since March.

Nurses said they are frustrated the strike is happening, but the stakes are high for them and their patients.

“We’re really sad and disappointed that it has come to a strike,” said Brianna Hnath, a nurse at North Memorial in Robbinsdale. “But we feel like this is the only thing we can do to show administration how incredibly important a strong nursing core is to a hospital. Hospitals tell us it’s our fault, but we’ve been actively involved and getting nowhere.”

Travel nurses’ gold rush is over. Now, some are joining other nurses in leaving the profession altogether.


Working as a travel nurse in the early days of the Covid pandemic was emotionally exhausting for Reese Brown — she was forced to leave her young daughter with her family as she moved from one gig to the next, and she watched too many of her intensive care patients die.

“It was a lot of loneliness,” Brown, 30, said. “I’m a single mom, I just wanted to have my daughter, her hugs, and see her face and not just through FaceTime.”

But the money was too good to say no. In July 2020, she had started earning $5,000 or more a week, almost triple her pre-pandemic pay. That was the year the money was so enticing that thousands of hospital staffers quit their jobs and hit the road as travel nurses as the pandemic raged. 

Two years later, the gold rush is over. Brown is home in Louisiana with her daughter and turning down work. The highest paid travel gigs she’s offered are $2,200 weekly, a rate that would have thrilled her pre-pandemic. But after two “traumatic” years of tending to Covid patients, she said, it doesn’t feel worth it.

“I think it’s disgusting because we went from being praised to literally, two years later, our rates dropped,” she said. “People are still sick, and people are still dying.”

The drop in pay doesn’t mean, however, that travel nurses are going to head back to staff jobs. The short-lived travel nurse boom was a temporary fix for a long-term decline in the profession that predates the pandemic. According to a report from McKinsey & Co., the United States may see a shortage of up to 450,000 registered nurses within three years barring aggressive action by health care providers and the government to recruit new people. Nurses are quitting, and hospitals are struggling to field enough staff to cover shifts. 

Nine nurses around the country, including Brown, told NBC News they are considering alternate career paths, studying for advanced degrees or exiting the profession altogether. 

“We’re burned out, tired nurses working for $2,200 a week,” Brown said. People are leaving the field, she said, “because there’s no point in staying in nursing if we’re expendable.”

$124.96 an hour

Travel nursing seems to have started as a profession, industry experts say, in the late 1970s in New Orleans, where hospitals needed to add temporary staff to care for sick tourists during Mardi Gras. In the 1980s and the 1990s, travel nurses were often covering for staff nurses who were on maternity leave, meaning that 13-week contracts become common. 

By 2000, over a hundred agencies provided travel contracts, a number that quadrupled by the end of the decade. It had become a lucrative business for the agencies, given the generous commissions that hospitals pay them. A fee of 40 percent on top of the nurse’s contracted salary is not unheard of, according to a spokesperson for the American Health Care Association, which represents long-term care providers. 

Just before the pandemic, in January 2020, there were about 50,000 travel nurses in the U.S., or about 1.5 percent of the nation’s registered nurses, according to Timothy Landhuis, vice president of research at Staffing Industry Analysts, an industry research firm. That pool doubled in size to at least 100,000 as Covid spread, and he says the actual number at the peak of the pandemic may have far exceeded that estimate.

By 2021, travel nurses were earning an average of $124.96 an hour, according to the research firm — three times the hourly rate of staff nurses, according to federal statistics. 

That year, according to the 2022 National Health Care Retention & RN Staffing Report from Nursing Solutions Inc., a nurse recruiting firm, the travel pay available to registered nurses contributed to 2.47% of them leaving hospital staff jobs.

But then, as the rate of deaths and hospitalizations from Covid waned, the demand for travel nurses fell hard, according to industry statistics, as did the pay.

Demand dropped 42 percent from January to July this year, according to Aya Healthcare, one of the largest staffing firms in the country. 

That doesn’t mean the travel nurses are going back to staff jobs.

Brown said she’s now thinking about leaving the nursing field altogether and has started her own business. Natalie Smith of Michigan, who became a travel nurse during the pandemic, says she intends to pursue an advanced degree in nursing but possibly outside of bedside nursing.

Pamela Esmond of northern Illinois, who also became a travel nurse during the pandemic, said she’ll keep working as a travel nurse, but only because she needs the money to retire by 65. She’s now 59. 

“The reality is they don’t pay staff nurses enough, and if they would pay staff nurses enough, we wouldn’t have this problem,” she said. “I would love to go back to staff nursing, but on my staff job, I would never be able to retire.” 

The coronavirus exacerbated issues that were already driving health care workers out of their professions, Landhuis said. “A nursing shortage was on the horizon before the pandemic,” he said.

According to this year’s Nursing Solutions staffing report, nurses are exiting the bedside at “an alarming rate” because of rising patient ratios, and their own fatigue and burnout. The average hospital has turned over 100.5% of its workforce in the past five years, according to the report, and the annual turnover rate has now hit 25.9%, exceeding every previous survey. 

There are now more than 203,000 open registered nurse positions nationwide, more than twice the number just before the pandemic in January 2020, according to Aya Healthcare.

An obvious short-term solution would be to keep using travel nurses. Even with salaries falling, however, the cost of hiring them is punishing.

LaNelle Weems, executive director of Mississippi Hospital Association’s Center for Quality and Workforce, said hospitals can’t keep spending like they did during the peak of the pandemic.

“Hospitals cannot sustain paying these exorbitant labor costs,” Weems said. “One nuance that I want to make sure you understand is that what a travel agency charges the hospitals is not what is paid to the nurse.”

Ultimately, it’s the patients who will suffer from the shortage of nurses, whether they are staff or gig workers. 

“Each patient added to a hospital nurse’s workload is associated with a 7%-12% increase in hospital mortality,” said Linda Aiken, founding director of the University of Pennsylvania’s Center for Health Outcomes and Policy Research.

Nurses across the country told NBC News that they chose the profession because they cared about patient safety and wanted to be at the bedside in the first line of care. 

“People say it’s burnout but it’s not,” Esmond said about why nurses are quitting. “It’s the moral injury of watching patients not being taken care of on a day-to-day basis. You just can’t take it anymore.”

7 travel nurse pay trends for healthcare leaders to know

The COVID-19 pandemic intensified hospitals’ reliance on travel nurses to address staffing shortages and highlighted the gap between full-time workers’ pay and lucrative temporary contracts. In the third year of the pandemic, hospitals continue to rely on travel nurses and grapple with workforce shortages for a variety of reasons. However, some organizations have reduced their reliance on travel nurses, and pay overall is lower compared to certain points of the pandemic, experts told Becker’s

Here are seven travel nurse pay trends for healthcare leaders to know, per Vivian Health, a national healthcare hiring marketplace used by about 800,000 clinicians, and AMN Healthcare, a medical staffing firm based in Coppell, Texas:

1. The average weekly travel nurse pay in July in the U.S. was $2,997, up 12 percent from $2,681 during the same time in 2021, according to a report from Vivian Health. The report, which was shared with Becker’s, is based on proprietary data of job postings on Vivian Health in July.

2. Among states, Alaska saw the largest average increase to travel nurse pay in July compared to the same time in 2021, according to the Vivian Health report. Florida saw the largest average decrease.  

3. When taking a month-over-month view of 2022, average travel nurse pay is declining and coming back to last year’s levels, according to Vivian Health. The company cited several factors for this trend, such as a shift away from travel roles and toward permanent nursing roles as well as less federal money being shifted toward hospitals for large travel contracts.

4. Rishabh Parmar, head of strategy and operations at Vivian Health, told Becker’s: “Compared with July 2021, we still see that travel rates are higher [year over year] — close to around 12 percent to 15 percent — but it seems to be stabilized. Now, in terms of the demand, there’s still a lot of demand out there.”

5. Mr. Parmar estimated that available travel nurse jobs on Vivian Health’s platform doubled in July 2021 compared to pre-pandemic numbers in March 2020. As of July 2022, they were at 2.7 times the rate of March 2020 job numbers.

6. AMN Healthcare also reported lower rates. “According to a recent earnings call, AMN Healthcare expects the company will exit 2022 with travel nurse and allied healthcare professional bill rates at approximately 30 percent lower than first-quarter levels,” the company told Becker’s. “Though demand for travel nurses and allied professionals has declined from an all-time high in Q1, the company expects persistent vacancies and labor shortages to continue.”

7. Some hospitals “are saying, ‘We need to use travel nurses, we just have to use [travel contracts] at lower rates,'” Mr. Parmar said. Some organizations are also offering internal travel programs amid an opportunity to attract workers while decreasing contract labor expenses.