As Pay for Staff Clinicians Rises, So Should Temporary Workers’ Pay

In the super-heated jobs environment for healthcare talent, a growing demand vortex is pushing up wages for core staff hires. However, pay rates for temporary clinicians have remained relatively flat. Given that demand for healthcare services and the talent who provide them will continue to rise, this pay inequity is creating greater challenges in healthcare organizations’ ability to secure the temporary talent they need.

Current trends in healthcare job openings, hires and quits are making it almost impossible for many healthcare organizations to ever catch up on hiring the core staff they need. According to the Bureau of Labor Statistics, there are about twice as many healthcare job openings compared to job hires on a monthly basis. This gap of unfilled jobs has been widening since 2014, when job openings were only slightly higher than job hires. Worsening the problem is that job hires are largely offset by quits and retirements, while openings continue to grow. And these hiring difficulties are cumulative: last month’s problem in hiring enough staff becomes next month’s even bigger problem.

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In this scenario, it’s not surprising that core staff wages are going up. What’s surprising is that bill rates for temporary healthcare talent have not kept pace, especially considering the growing reliance on a variety of temporary professionals throughout the healthcare industry.  The year-over-year percentage change in temporary registered nurses has grown much faster in 2017 and 2018 compared to permanent registered nurses at hospitals and ambulatory care. Additionally, the percentage of contingent nurses receiving more than one contingent job offer has risen by 500 bps in comparison to the same time period in 2014 when job orders were more normalized.

A growing body of research conclusively shows that temporary nurses are equivalent in quality and cost to staff nurses when full staff costs are measured, so it’s apparent that the increased utilization of temporary healthcare professionals has no negative impact to healthcare organizations.

With escalating difficulties in recruiting and hiring permanent staff, temporary clinicians are providing services that are comparable to staff clinicians in hospitals, ambulatory care centers and other post-acute facilities, helping them to maintain their care quality, public mission, and competitive edge.

The intense demand pressures that are boosting wages for staff nurses and other healthcare professionals have the same effect on temporary nurses and other clinicians as well. Standard cost of living adjustments of 3% annually may no longer keep pace with today’s more competitive environment, especially for hospitals who did not adjust rates over the last several years.

In fact, market conditions in mid-2019 closely resembled those of 2015 and 2016, when a sudden surge in demand for temporary nurses boosted bill rates. In those two years, average bill rates for temporary nurses rose 8% per year on average, and higher in some markets.

Hospitals that respond later in this demand cycle may need to offer a higher bill rate in order to competitively attract clinicians, compared to hospitals that respond sooner with a modest rate increase.

The long-term drivers of demand for healthcare professionals will continue to provide upward pressure on wages for the foreseeable future. More information is available in the Rising Compensation for Staff Clinicians Signals Need for Higher Pay Rates for Temporary Workers white paper. Since temporary staff are an integral part of patient-care excellence, pay increases need to be comparable between permanent and temporary staff to balance the supply and demand equation and meet the patient-care mission and organizational success needs for healthcare organizations.

Cole Edmonson

Cole Edmonson
Cole Edmonson, DNP, RN, NEA-BC, FACHE, FAAN, FAONL, is chief clinical officer at AMN Healthcare.

Cole Edmonson

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