Nurses travel agencies cash in on Stanford strike and pandemic

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Job application from employment agency HSG strike was one of many who brought in thousands of replacement nurses to fill the vacancies left this week by the first nurse strike at Stanford Hospital in two decades. Crossing the picket line is promised up to $13,000 a week in wages plus free food, housing and transportation. And the recruitment agencies that hire them, increasingly owned by private equity firms, are reporting record profits.

The traveling nurse industry, fueled by labor unrest and the COVID-19 pandemic, has turned hospital staffing into a national bidding war, with medical establishments paying exorbitant rates to outside agencies for care.

Experts say the trend is creating a costly vicious cycle as nurses leave their long-standing full-time positions for temporary but more lucrative “traveling nurse” jobs, exacerbating labor shortages in hospitals, raising wages and creating rapid turnover that worsens morale of nurses.

The shortage means all hospitals are competing for the same nurses, says health economist Joan Speth, a professor at the UC San Francisco Institute for Health Policy Research.

“Stanford can’t say, ‘Well, I’ll just hire some nurses from, say, Valley Medical Center, because they probably have extra ones,'” she said.

Hospitals like Stanford have long relied on traveling nurses to fill staffing gaps. But the pandemic caused a 20 percent increase in patients seeking care, so more nurses were needed. Now, facing a strike this week, Stanford signed 2,700 temporary five-day contract replacements to fill 5,000 vacancies.

They must fund not only the much higher salaries offered to replacement nurses, but also the large commissions to the agencies that hire and house them.

On Tuesday, the striking nurses remained on the picket line as the leaders began the first day of talks early in the morning. Union leaders and hospital officials have remained silent on the closed-door talks, but nurses say they are prepared to strike indefinitely until a reasonable deal is reached.

Until then, Stanford will rely on nurses and leadership to fill the gap. Prior to the strike, agencies take shift nurses to their destination and take them to work every morning where they cross picket lines.

The estimated average hourly rate for strike nurses is $216.67, which is about 2.5 times the average hourly rate for comparable clinical nurses. They do not receive benefits such as health insurance. By comparison, the average hourly rate for a clinical nurse at Stanford ranges from $87 to $89.50. Road nurses also receive more than full-time nurses, although less than strike nurses.

PALO ALTO, CA – APRIL 25: Nurses and their supporters take part in a strike outside Stanford Hospital on Monday, April 25, 2022 in Palo Alto, California. About 93 percent of eligible nurses authorized the strike, which the Achievement Nursing Recognition Committee used to set up a picket line on Monday morning. (Arik Crabbe / Bay Area Newsgroup)

According to a report in the magazine, the demand for care services has skyrocketed during the pandemic. Health Issues George Washington University School of Nursing professors Tony Young and Diane Mason.

Between January 2020 and January 2022, the posted pay rate for traveling nurses jumped 67%, according to Prolucent Health, which provides software and services for healthcare professionals. Agencies say they have to pay these rates to attract talent, but hospitals like Stanford also have to pay huge fees to agencies.

Healthcare and elected officials say care agencies are using circumstances to line their own pockets. Last November, a group of Congress wrote a letter To the White House COVID-19 Response Team Coordinator, urging him to investigate whether nurse recruitment agencies are jacking up prices. The American Hospital Association claims that the agencies are “taking advantage of our organizations’ acute need for medical personnel.”

About 75% of the cost of hospitals is for a nurse; According to George Washington Young University health economist who studies the industry, companies keep 25% to make a profit.

One of the nation’s leading agencies, AMN Healthcare Services, reported a 109% increase in gross margin in the fourth quarter of 2021 compared to 2020, Yang said. Revenue from Cross Country Healthcare, another healthcare staffing agency, grew 93% between the third quarter of 2020 and 2021.

Meanwhile, private equity firms are cashing in on the nursing business. Since the beginning of 2021, at least eight private equity firms have bought at least seven recruitment agencies.

According to the Young and Mason report, state laws proved ineffective in combating the proliferation of contract nursing services. This may be because price gouging laws have historically been applied to product sales and retailers rather than temporary hires and staffing agencies, they say.

“Demand exceeds supply,” Yang said. “They can do it because they can get away with it.”

According to Stanford Nursing Chief Dale Beatty, Stanford’s shift nurses are expensive, but they are very experienced.

Agencies provide proof of license, experience, qualifications, drug testing and regulatory compliance, and COVID-19 vaccinations. According to him, Stanford is reviewing all these documents.

“We must continue to provide and support our patients with the same high quality care and keep them safe,” Beatty said.

“Of course, fees are a concern,” he said. “But our top priority should be quality and patient safety. When you are in a strike situation, we must have the resources to take care of our patients.”

On the Strike Nurse Facebook page, the new nurses praised Stanford. “Best place to work,” wrote one nurse. “Great resources and supplies. The staff is very welcoming to travelers.”

The nurses flew into San Francisco International Airport late last week. Beatty said they had to complete a 16-hour online Stanford-standards program and a 12-hour workout before starting work.

Upon arrival, each nurse was vetted one-on-one by Stanford staff to ensure they were fit for their position, he said.

“Sometimes we may have people who can provide emergency care, but they may not have specific skills for this population,” he said. “So we’re evaluating whether they can make that adjustment. … We can certainly redirect them elsewhere.”

Even if the strike at Stanford ends quickly and the striking nurses go home, they will already be paid.

“If you get on a plane,” one nurse wrote on the Facebook page, “you will get paid.”

Staff writer Aldo Toledo contributed to this report.