A New York bill includes a cap on how much recruiting agencies can charge healthcare facilities. And a Texas measure would allow for civil penalties against such agencies.
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These proposed regulations — and others in at least 11 more states, according to the American Staffing Association’s industry trade group — come after demand for travel nurses, who work in temporary assignments across different facilities, rose to unprecedented levels. during the worst of covid-19. pandemic.
Hospitals have long used temporary workers, who are often hired by third-party agencies, to help fill their staffing needs. But as of December 2021, the average weekly salary for travel nurses in the country had risen to $3,782, up from $1,896 in January 2020, according to a Becker’s Hospital Review data analysis of hiring platform Vivian Health. That platform alone has listed over 645,000 active travel nurse jobs for the last three months of 2022.
Some traveling intensive care unit nurses earned $10,000 a week during the worst of the pandemic, prompting frazzled nurses across the country to leave their hospital jobs for more lucrative temporary assignments. Desperate hospitals that could afford it offered signing bonuses of up to $40,000 to nurses willing to make multi-year commitments to join their staff.
Rising costs prompted hospitals and their allies across the country to speak out against what they saw as price gouging by recruitment agencies. In February 2021, the American Hospital Association urged the Federal Trade Commission to investigate agencies’ “anti-competitive pricing,” and a year later, hundreds of lawmakers urged the White House to do the same.
No substantial federal action has taken place, so states are trying to take the next step. But the resulting regulatory patchwork could pose a different challenge for hospitals in states with rate caps or other restrictive measures, according to Hannah Neprash, a professor of health economics at the University of Minnesota. Those facilities may struggle to hire travel nurses or may face a lower quality hiring pool during a national crisis than those in neighboring states without these measures, she said.
For example, Massachusetts and Minnesota already had fee caps for temp nurses before the pandemic, but they raised and even waived their caps for some recruiting agencies during the crisis.
And any new restrictions could be met with stiff resistance, like Missouri’s proposed rate caps last year.
As the variant wave of the covid omicron began to subside, Missouri lawmakers considered a proposal that would set the maximum fee recruiting agencies could charge at 150% of the median salary for the previous three years, plus any necessary taxes.
The Missouri Hospital Association, a trade group representing 140 hospitals across the state, supported the bill as a crackdown on covert employee firms, not nurses who can demand higher wages, spokesman Dave Dillon said. .
“During the pandemic, there were recruiting companies that made a lot of promises and didn’t necessarily deliver,” Dillon said. “It created an opportunity for both speculation and bad actors to play in that space.”
The nurses, however, criticized what they called government overreach and argued that the bill could worsen the state’s existing nursing shortage.
Theresa Newbanks, a registered nurse, asked lawmakers to imagine the government trying to dictate how much a lawyer, electrician or plumber could earn in Missouri. “That would never be allowed,” she testified to the committee considering the bill. “Yet that is exactly what is happening now with nurses.”
Another of the nearly 30 people who testified against the bill was Michelle Hall, a longtime nurse and hospital nursing leader who opened her own recruiting agency in 2021, in part, she said, because she was tired of seeing her peers leave the industry for concerns about insecure staffing rates and low wages.
“I felt like I had to stand up for my nurses,” Hall later told KHN. Her nurses typically earn about 80% of what she charges, she said.
Typically, about 75% of the price charged by a recruiting agency for a healthcare facility goes towards costs such as salary, payroll taxes, workers compensation programs, unemployment insurance, recruiting, training, certification and credential verification. , said Toby Malara, vice president of the American Staffing Association trade group.
He said that hospital executives, “without understanding how a human resources company works”, wrongly assumed that price gouging was taking place. In fact, he said many of his trade group members had reported reduced profits during the pandemic because of the high pay nurses could earn.
While Missouri lawmakers did not pass the rate cap, they did make changes to regulations governing recruiting agencies, including requiring them to report the average fees charged per healthcare professional for each category of staff and the average amount paid to those workers. . These reports will not be public, although the state will use them to prepare its own aggregated reports that do not identify individual agencies. The public comment period on the proposed regulations was scheduled to begin on March 15.
Hall wasn’t concerned about the reporting requirements, but said another of the changes could see her close shop or move her business out of state: Agencies will be barred from receiving compensation when their employees are recruited to work at the facilities where work as part-timers.
“Never mind all the money I spent earlier to onboard and train this person,” Hall said.
Dillon called this claim “very rich”, noting that agencies routinely recruit hospital staff by offering higher salaries. “Considering the amount agencies charge for staff, I find it hard to believe that this risk is not built into their business model,” he said.
Of course, as the pandemic has subsided, the demand for travel nursing has declined. But pay still hasn’t dropped to pre-pandemic levels. The median weekly salary for travel nurses was $3,077 in January, down 20% year-over-year but still 62% higher in January 2020, according to Becker’s Vivian Health data.
With the acute challenges of the pandemic behind hospitals, Dillon said, health system leaders are eyeing proactive solutions to address ongoing workforce challenges, such as raising wages and investing in the nursing workforce.
A hospital in South Carolina, for example, is offering daycare for employees’ children to help retain them. California lawmakers are considering a minimum wage of $25 an hour for health care workers. And some hospitals have even created their own staffing agencies to reduce their reliance on third-party agencies.
But the impetus to directly address the high rates of traveling nurses has not disappeared, as evidenced by legislative pressure in Missouri this year.
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The latest proposal would apply to certain agencies if there is a “great disparity” between the prices they charge during an emergency and what they charged before it or what other agencies are currently charging for similar services and if their earnings are at least 15% higher. than before the emergency.
Malara said she doesn’t have many problems with this year’s bill because it gives agencies the ability to defend their practices and prices.
Last year, Kentucky enforced its existing price gouging rules for health personnel agencies. The rules, which set criteria for acceptable prices, allow for increases driven by higher labor costs. Malara said if the Missouri bill gains traction, he will point his sponsor to that language and ask her to clarify what constitutes a “gross disparity” in prices.
The bill’s backer, Missouri State Senator Karla Eslinger, a Republican, did not respond to requests for comment on the legislation.
Hall said he opposes any rate caps but is ambivalent about Missouri’s new proposal. She said she saw agencies raise their rates from $70 an hour to more than $300 while she was working as a hospital nurse lead at the height of the pandemic.
“All these agencies that manipulated prices,” Hall said, “all they did was put the money in their own pockets. They weren’t doing anything different or special for their nurses.”
Kaiser Health News is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation, which is not affiliated with Kaiser Permanente.