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Cramer urges study of ‘unsustainable’ costs for temporary nurses to staff hospitals during pandemic

Hospitals in North Dakota paid up to $200 an hour for traveling nurses, and the state of Minnesota agreed to pay at least $275 an hour to an agency for nurses during the omicron surge.

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Linnea Testa, a traveling registered nurse from New Hampshire, works with COVID-19 patients at Sanford Broadway Medical Center in downtown Fargo.
Forum file photo
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FARGO — Temporary nurses provided a critical backstop for hospitals straining to staff beds during the waves of cases early in the coronavirus pandemic — but that lifeline came at a budget-busting cost.

Hospitals, desperate to maintain staffing levels , depended heavily on traveling nurses provided by agencies, a backup source of labor that rose exponentially in cost when demand spiked during the pandemic.

Sen. Kevin Cramer, R-N.D., has introduced legislation that calls for a General Accountability Office study to pry open the nursing agencies’ business model and to determine how much of the money goes to the nurses and how much is pocketed by the agencies.

The health care industry already was grappling with a shortage of nurses, a situation that became critical when COVID-19 struck in early 2020, Cramer said.

“Nurses, they’re the front line,” he said. “A lot of nurses and health care workers were getting burned out,” increasing the reliance on temporary nurses.

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Tim Blasl, president of the North Dakota Hospital Association, which along with the American Hospital Association supports Cramer’s bill, said at times some hospitals in the state paid as much as $200 an hour for contract nurses.

“We saw it inflated during the pandemic,” he said.”Have those prices come down? Maybe a little bit, but they’re still quite high.”

Supply and demand conditions understandably set market prices, Cramer said. But some prices charged by the nursing agencies were “egregious” and distorted the marketplace for nurses, some of whom left hospitals and clinics to earn higher pay working for the staffing agencies, creating vacancies.

“These workforce companies could kind of create their own scarcity,” Cramer said. Nurses should be paid, but it appears the staffing agencies saw their profits balloon during the pandemic, he said.

Studies cited by the American Hospital Association found temporary nursing agencies earned a profit of about 15% in 2019, before the pandemic, and profits soared to 62% in 2021.

Across its health system in North Dakota, Sanford Health saw its contract nursing costs more than triple during the pandemic, said Tiffany Lawrence, CEO and president of Sanford’s Fargo region.

“In 2021, the cost to Sanford locations in North Dakota for contract nursing rose to more than 300% of that for full-time hospital nurses,” she said. “For the shifts we filled with contract workers, our staffing costs would have been $30 million; the contract staffing costs totaled $96 million.”

Travel nurses enabled Sanford to fill gaps and provided “much-needed relief for our staff and continue to provide exceptional care for the patients,” Lawrence said. “But the incredibly high cost is not sustainable and has had an adverse effect on hospitals everywhere.”

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Mike Delfs, chief executive officer of Jamestown Regional Medical Center, said his hospital was fortunate in not having to rely heavily on temporary nurses during the pandemic, with no more than four contract nurses on hire at a time.

But the exorbitant costs have been difficult to bear for hospitals, which sometimes had to bid against one another to hire temporary nurses who were in high demand.

While temporary nurses, including the fees paid to the agency, could cost $200 an hour, pay for staff nurses ranges from $30 to $50 an hour, not including benefits.

“This was a cost that was not controllable,” Delfs said. “If hospitals were really short and had a need, they might increase that rate. It’s a very unenviable situation to be in. At times, it was a bidding war.”

Skyrocketing costs for temporary nurses not only drive up costs to health care providers, but also impose costs that were borne by taxpayers, who supported hospitals through federal COVID-19 relief programs, Cramer said.

“A lot of this was federally funded,” he said. “It’s really sort of fraud against the government and taxpayers.”

Cramer cited a report by Kaiser Health News and NBC that last year was “particularly profitable” for staffing agencies. “Cross Country Healthcare, one of the few publicly traded companies that staff travel nurses and other health care workers, posted a profit of $132 million in 2021, compared with a loss of $13 million the previous year and even bigger losses in 2019,” the report said.

Health care providers, consumers, nurses and other health care workers should know how much money the staffing agencies keep and the effect those charges have on health care costs, Cramer said.

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Delfs agrees with the need for greater transparency of the staffing agencies’ business practices and the split between what nurses earn and the profits made by the agencies.

“I think it’s a really good step,” he said of Cramer’s proposed GAO study. “Of course, the hope is it’s the start of a solution.”

Essentia Health has hired agency nurses on a short-term basis to “support patient volumes and orient new nurses” among steps taken to ensure “high-quality care for our patients,” spokeswoman Kelsey Mix said in a statement.

“We won’t discuss confidential contracts, including those with our traveling nurses, but Essentia is committed to providing affordable and equitable access to comprehensive health care in the communities we are privileged to serve.”

Minnesota provides a recent example of the high cost of hiring contract nurses.

In January, the state of Minnesota signed a contract with a staffing agency to pay at least $275 per hour for registered nurses to staff hospitals struggling to care for COVID-19 patients during the omicron surge, the St. Paul Pioneer Press reported.

Under the terms of the $40 million contract with Texas-based SLS Health Services, nurses who serve as supervisors or who work overtime or on holidays earn more. The contract, which doesn’t specify how much of the health care workers’ hourly wage goes to the staffing agency, also provides a daily payment of $345 per worker for food, lodging and other expenses, according to the Pioneer Press.

The lure of working for a staffing agency has compounded the nursing shortage that was difficult for hospitals even before the pandemic struck, he said.

“As bad as the shortage is in Fargo, it’s really bad at these rural hospitals. It’s even tougher on the rural landscape. Any margins they have is minimum at best.”

North Dakota has 36 rural hospitals. In the last financial survey of its members, taken before the pandemic, the North Dakota Hospital Association found that about half were losing money from operations, Blasl said.

A new financial survey will be taken later this year. “It will be interesting to see what this next cycle tells us,” he said. “It’s a struggle in rural North Dakota or rural America.”

Patrick Springer first joined The Forum in 1985. He covers a wide range of subjects including health care, energy and population trends. Email address: pspringer@forumcomm.com
Phone: 701-367-5294
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