Travel nurse agencies cash in on Stanford strike and pandemic

“Turn Your Nursing Passion into Profit. Contact Us Today!”

The recruitment plea from an employment agency called HSG Strike Staffing was one of many that attracted thousands of replacement nurses to fill positions left empty this week by the first nursing strike at Stanford Hospital in two decades. Crossing the picket lines comes with the promise of up to $13,000 a week in salary plus free food, housing and transportation. And the staffing agencies that hire them, increasingly owned by private equity firms, are reporting record profits.

The traveling nurses industry, fueled by labor unrest and the COVID-19 pandemic, has turned hospital staffing into a national bidding war, with health care facilities paying outside agencies exorbitant rates to secure help.

This trend is creating a costly vicious cycle, say experts, as nurses leave their longtime staff jobs for the temporary but more lucrative “travel nurse” positions — worsening hospitals’ labor shortage, escalating wages and creating rapid turnover, which worsens nursing morale.

The shortage means that all hospitals are competing for the same nurses, said health economist Joanne Spetz, professor at UC San Francisco’s Institute for Health Policy Studies.

“Stanford can’t say, ‘Oh, well, I’m just going to borrow some nurses from, say, Valley Medical Center, because they probably have extra,’ ” she said.

Hospitals such as Stanford have long relied on traveling nurses to fill gaps in staffing. But the pandemic triggered a 20% increase in the volume of patients coming for care, so more nurses were needed. Now, confronted by this week’s strike, Stanford signed 2,700 temporary replacements for five-day contracts to help fill 5,000 empty positions.

They must bankroll not only the much higher salaries offered to the replacement nurses — but also a steep commission to the agencies that hire and house them.

On Tuesday, the striking nurses remained on the picket line as leaders began the first day of negotiations in the early morning. Union leaders and hospital officials were tight-lipped about the closed-door bargaining, but nurses say they are prepared to strike indefinitely until a reasonable contract is agreed upon.

Until then, Stanford will rely on replacement nurses and management to fill the gap. Before a strike, agencies fly replacement nurses to their destination and shuttle them to work each morning, where they cross picket lines.

The estimated average hourly rate for strike nurses can reach $216.67, about 2.5 times the average hourly rate of comparable clinical nurses. They do not receive benefits, such as health insurance. By comparison, the average hourly rate of a clinical nurse at Stanford ranges from $87 to 89.50.  Travel nurses are also paid more than staff nurses, although less than strike nurses.

The demand for travel nursing has exploded during the pandemic, according to a report in the journal Health Affairs by George Washington University School of Nursing professors Tony Yang and Diana Mason.

Between January 2020 and January 2022, the advertised pay rate for travel nurses jumped 67%,  reported Prolucent Health, which provides healthcare workforce software and services. The agencies say they must pay these rates to attract talent, but hospitals such as Stanford also must pay hefty fees to the agencies as well.

Health care and elected officials argue that the nursing agencies are exploiting circumstances to pad their own pockets. Last November, a group from Congress wrote a letter to the White House COVID-19 Response Team Coordinator, urging him to investigate whether nurse staffing agencies were price gouging. The American Hospital Association asserts that the agencies are “exploiting our organizations’ desperate need for health care personnel.”

About 75% of hospitals’ cost is for the nurse; the companies keep 25% for profit, according to George Washington University health economist Yang, who studies the industry.

One of the nation’s top agencies, AMN Healthcare Services, reported a 109% increase in gross profits in the fourth quarter of 2021, compared to 2020, Yang said. Cross Country Healthcare, another health care staffing agency, saw its revenue jump 93% between the third quarters of 2020 and 2021.

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

State laws have been ineffective in combatting the rise of travel-contract nursing, according to the report by Yang and Mason. Perhaps this is because price gouging laws have historically applied to product sales and retailers, not the hiring of temporary employees and staffing agencies, they said.

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

While expensive, Stanford’s replacement nurses are very experienced, said Stanford chief nursing office Dale Beatty.

The agencies provide proof of licensure, experience, qualifications, drug testing and regulatory requirements, as well as COVID-19 vaccination. Stanford reviews all of these documents, he said.

“We have to continue to provide and support our patients with the same high quality care and assure that they’re safe,” Beatty said.

“Certainly, the fees do worry us,” he said. “But our top priority has to be quality and patient safety. When you’re in a strike situation, we have to have the resources to care for our patients.”

On the Strike Nurse Facebook page, replacement nurses praised Stanford. “Best place to work,” wrote one nurse. “Great resources and supplies. Staff very welcoming to travelers there.”

The nurses flew into San Francisco International Airport late last week.  Before starting, they were required to complete a 16-hour online curriculum of Stanford’s standards and a 12-hour training session, Beatty said.

Upon arrival, each nurse was reviewed one-on-one by Stanford staff to make sure they were a good match for their position, he said.

“Sometimes we can have individuals that can come in to provide critical care, but they may not have a specific skill for within that population,” he said. “So we assess to see if they can make that adjustment. … We can certainly reassign them to another location.”

Even if the Stanford strike ends quickly and the strike nurses go home, they’re already paid.

“If you get on the plane,” one nurse wrote on the Facebook page, “they gonna pay you.”

Staff Writer Aldo Toledo contributed to this report.