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September 27, 2022

Pay for travel nurses is down—and some are suing

Daily Briefing

    As demand for travel nursing wanes, many nurses are reporting abrupt pay reductions—ranging from 25% to 75%—from staffing agencies. In response, many of these nurses are now suing staffing agencies for allegedly engaging in "bait-and-switch" practices when it comes to their pay, Valerie Bauman writes for Newsweek.

    Travel nurses sue staffing companies for abrupt pay cuts

    During the pandemic, the travel nursing industry saw significant growth as many hospitals and health systems struggled with staffing shortages amid Covid-19 surges. According to Staffing Industry Analysts, traveling nursing revenue tripled from $3.9 billion in 2015 to roughly $11.8 billion in 2021. And at the height of travel nursing demand, some nurses saw pay as high as $125 an hour.

    However, as Covid-19 hospitalizations declined and many states ran out of pandemic relief funds, the demand for travel nurses dropped, leading to significant—and sometimes abrupt—pay reductions.

    Hannah Bailey, a 49-year-old nurse who had contracted with Aya Healthcare, initially agreed to a contract with an $85.86 per hour rate with a weekly $1,000 stipend, from late March to late June. Then, five weeks later, her rate was suddenly reduced to $50.85 per hour. Weeks later, her rate was further reduced to $34.25 per hour, lower than what she was being paid at her old, non-travel job.

    "I'm just breaking even, barely," Bailey said. "Sometimes I'm in the negative—like this week ... I wouldn't have taken the job at this pay rate."

    According to Bauman, hundreds of travel nurses have reported similar instances of seeing their pay rates significantly cut after being initially offered a much higher rate. Currently, several staffing companies are facing lawsuits that allege they engaged in fraudulent "bait-and-switch" practices of hiring a nurse at one rate while planning to reduce it after they relocate.

    Austin Moore, an attorney at Stueve Siegel Hanson, said he has filed lawsuits against four staffing companies so far, including Aya Healthcare, Maxim Healthcare, NuWest Group, and Cross Country Healthcare.

    "We're hearing from nurses all over the country who just felt absolutely taken advantage of, and who felt like the rug had been pulled out from under them," Moore said. "It's fraud because they're knowingly participating in a bait-and-switch."

    While Aya and other providers said they wouldn't comment on specific litigation, an Aya spokesperson denied overall wrongdoing, saying the allegations were "demonstrably false" and that the complaints failed to note "the reality that nurses received mid-assignment pay increases at various times during the pandemic."

    In addition, Cross Country CEO John Martins said, "Our clients have faced unprecedented cost pressures, and although historically rare, if changes are necessary to a contract, our goal has always been to protect and insulate our clinicians from rapid swings in compensation or the sudden loss of a temporary assignment to the greatest extent possible."

    Why the abrupt pay cuts?

    According to the American Staffing Association (ASA), a trade group that represents travel nursing and other staffing companies, hospitals were the ones to demand staffing companies lower their rates for travel nurses as Covid-19 rates declined and many of them ran out of federal pandemic funds.

    "When bill rates decline, staffing agency revenues decline and the agency must make proportionate reductions in its costs, including labor (the largest share of costs) to maintain profitability," said Toby Malara, VP of government relations at ASA.

    However, Mindy Hatton, general counsel for the American Hospital Association (AHA), said that rates for travel nurses are set by the staffing companies, not hospitals.

    "Travel nurse staffing agencies have taken advantage of hospitals and health systems during the pandemic by inflating prices to unsustainable levels, a significant proportion of which is not passed on to the nursing and other staff," Hatton said.

    To address the high costs of travel nurses, AHA, the American Health Care Association, and the National Center for Assisted Living earlier this year asked the White House to investigate staffing agencies. According to the organizations, staffing agency prices are not directly correlated with the income individual travel nurses earn.

    How these pay cuts could further exacerbate the nurse shortage

    According to Maggie Ortiz, a nurse advocate, the practice of abruptly reducing pay could potentially exacerbate the current nurse shortage.

    Based on data from McKinsey & Company, the United States is projected to have a shortfall of between 200,000 and 450,000 RNs by 2025. Although some nurses may be leaving the profession due to retirement, a significant portion may be leaving due to a sharp decline in job satisfaction and an increase in other stressors.

    For example, a recent survey from the American Association of Critical Care-Nurses found that only 40% of RNs said they were "very satisfied" with their job, down from 62% who said the same in 2018. Overall, 67% of RNs said they planned to leave their current position within the next three years. Of this group, 36% said they planned to leave within the next year, with 20% planning to leave within the next six months.

    If travel nurses continue to face sudden pay reductions, many will be less likely to engage in travel work and assist with shortages, and more will likely leave the profession all together after the trauma of the Covid-19 pandemic, Ortiz said.

    "Patients need to understand that there's going to be organizations probably that close... we're seeing that there are going to be floors that are closed. They are going to be units that are closed," Ortiz said. "Every nursing issue is a patient issue." (Bauman, Newsweek, 9/25)

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