With the current pandemic causing healthcare labor shortages that are compounded by a general nursing shortage, hospice agencies in every corner of the nation have increasingly relied on nurse staffing agencies. This increase in demand has been accompanied by a dramatic increase in price. Now, 196 members of Congress are calling for a federal investigation of America’s nurse staffing industry.

Staffing Challenges in Hospice

Hospice agencies have faced a number of staffing challenges in recent years. In February 2021, Hospice News reported the results of their survey including 161 hospice agencies nationwide. More than a third listed staffing challenges among their top concerns for the year – second only to concerns about access to hospitals during the pandemic.

Nursing Shortage Strains Hospice Staffing

Even without the pandemic, expert analysis suggests we would have been in a nursing shortage at this time. With nursing employment opportunities growing at a faster rate than all other occupations, the US Bureau of Labor Statistics projects that 11 million additional nurses are needed to fill the gap.

Employee Turnover Challenges Hospice Staffing

In an industry with traditionally high nurse satisfaction, turnover has been on the rise. In the past two years, more than six out of ten hospice nurses have changed jobs. At present, a little more than one in four hospice nurses stay on the same job five years or longer. Meanwhile, 60% of hospice nurses stay on the same job two years or less. Turnover in other hospice positions is also on the rise. This represents a huge challenge to hospice agencies.

Vaccine Mandate Threatens Hospice Staffing

On November 4, 2021, the Centers for Medicare and Medicaid (CMS) published an emergency regulation requiring COVID-19 vaccination for a long list of healthcare providers. The list includes hospice. This mandate does not limit itself to hospice nurses. Everyone who works for hospice must meet the requirement. This includes hospice volunteers, office staff, and subcontractors who deliver care and are paid by the hospice. While the White House refutes reports that COVID-19 vaccine mandates cause staff turnover in healthcare, other accounts attribute vaccine mandates to staff losses topping 30%.

Congress Calls for White House to Order Investigation of Nurse Staffing Industry

Hospice is not alone in staffing challenges. Amid this turmoil, in January, 194 members of Congress joined a letter from Peter Welch and H. Morgan Griffith. Welch and Griffith addressed Jeffrey Zients, Team Coordinator of the White House’s COVID-19 Response Team. They report that nurse staffing agencies have vastly inflated their prices by two or even three times the pre-pandemic rates. The congress people allege that nurse staffing agencies are gouging healthcare providers with gross profit margins of 40%. The letter urges Zients to assign a federal agency to investigate anticompetitive activity and potential infractions of consumer protection laws.

The Nurse Staffing Industry is Not Price Gouging

Curiously, these 196 members of Congress, in their own letter, show that the nurse staffing industry is not taking advantage of circumstances as alleged. They state that nurse staffing agencies are collecting a 40% gross profit. That’s a normal, pre-pandemic gross profit for staffing agencies. In 2019, Lone Oak Payroll reported a industry-typical markup ranging from 45% to 75%, and suggested a median of 60%. This insight is echoed by Headcount Management’s February 2021 article estimating that staffing agencies (in and out of healthcare) charge a normal 20% to 75% markup.

Gross Versus Net Profit for Healthcare Staffing Agencies?

Of course, from that gross profit, staffing agencies must pay payroll taxes, unemployment insurance, workers’ compensation insurance, health insurance, their own agents, rent, advertising, standard office expenses, etc. CSIMarket reports an industry standard, pre-tax net margin of less than 12%. Interestingly, their report shows a steady net margin from 2020 through 2021.

Conclusion

Higher nurse wages and higher costs for temporary nurse staffing seem to be more a product of supply and demand. If these nearly 200 members of Congress want to help healthcare with the staffing shortage, it may be productive to focus on increasing the supply of nursing graduates with public relations, discounted student loan incentives, scholarships, and support for those colleges growing their nursing programs.