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May 11, 2022

Has the travel nursing 'bubble' burst?

Daily Briefing

    Throughout the pandemic, surges in Covid-19 hospitalizations combined with staffing shortages led many hospitals to turn to travel nurses—and as demand surged, so did the cost of travel nurse contracts. But now, as hospitalizations stabilize, many travel nurses are experiencing abrupt pay cuts or contract cancellations.

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    According to Parth Bhakta, CEO of Vivian Health, an online health care labor marketplace, the travel nursing industry has doubled in size over the last year. And in 2021, travel nursing revenue tripled to an estimated $11.8 billion, up from $3.9 billion in 2015, according to Staffing Industry Analysts. The average pay for travel nurses has also increased from $1,706 a week in December 2019 to $3,290 in December 2021.

    However, as Covid-19 hospitalizations stabilize and states run out of pandemic relief funds, many hospitals are now turning away from travel nurses and focusing on hiring full-time staff. According to data from Aya Healthcare, a staffing agency, demand for travel nurses nationwide has declined by about a third in the month leading up to April 10.

    John Hunter, CEO of OHSU Health, said a loss of state Covid-19 funding, lower coronavirus rates, and more full-time hires has led to "a bursting of the [travel nursing] bubble."

    In response to these changes, many hospitals are now negotiating lower contract rates with staffing agencies, sometimes reducing them by as much as 50%. In addition, some hospitals are even cancelling contracts for travel nurses, sometimes abruptly.

    For example, Tiffanie Jones, a travel nurse, said her contract for a hospital in Wyoming was cancelled while she was making the drive up from Florida, and another nurse "packed up her whole family and was canceled during orientation," Kaiser Health News reports.

    Who's to blame for abrupt pay reductions?

    According to Stephen Dwyer, SVP and chief legal and operating officer of the American Staffing Association, "as market conditions change, hospitals and other healthcare facilities may change the terms of travel nurse contracts." However, he noted that staffing agencies "often recommend advance notice" for any rate reductions or contract cancellations that occur during an assignment.

    When staffing agencies cancel the contracts themselves or give nurses a few days to consider lower rates, they're likely breaching a contract, according to Austin Moore, an attorney at Stueve Siegel Hanson. Generally, losses should be absorbed by the agency, not the nurses, when a hospital requests a lower rate, Moore added.

    Moore said abrupt pay reductions and cancellations have gotten so bad for some travel nurses that his law firm is considering taking legal action against more than 35 staffing agencies. Some agencies are "breaching their contracts" and sometimes "committing outright fraud" with their "bait-and-switch" tactics on travel nurse contracts, according to Moore.

    In March, the firm opened an investigation into staffing agencies and has since received comments from hundreds of nurses. "Our phones are ringing off the hook," Moore said. "Nobody has experienced it like this — historically, contracts have been honored."

    Now, some travel nurses are returning to full-time jobs, particularly as many offer new incentives and increased stability. However, other nurses are still taking travel positions, even at lower rates since they typically still pay more than staff jobs.

    "It's a tough profession," said Jones, who recently took a travel nurse contract in Kansas over a staff position in Montana. "We love doing it, but we have bills to pay, too." (Norman, NBC News, 5/8; Norman, Kaiser Health News, 5/10; Gamble, Becker's Hospital Review, 5/9)

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