Although the cost of travel nurses has since dropped from its pandemic high, the pay gap between travel nurses and staff RNs remains high, with travel nurses earning roughly twice as much as RNs per week. To combat these high contract labor expenses, some hospitals are creating their own internal staffing agencies to offer nurses higher pay and flexibility while controlling costs.

The pay gap between travel nurses and RNs

Throughout the pandemic, many hospitals have had to turn to travel nurses as they struggled with both Covid-19 surges and widespread staff shortages. Compared to pre-pandemic levels, contract labor expenses are now almost 500% higher, according to a Kaufman Hall report commissioned by the American Hospital Association (AHA)—and these costs have pushed many hospitals into negative margins in 2022.

Although travel nurse pay is now much lower than its peak in late 2020, the average cost of a travel nurse is still roughly double that of a staff RN.

According to the U.S. Bureau of Labor Statistics, the average hourly pay for an RN is $39.78, or $1,591 a week. In comparison, data from Vivian Health, a national health care hiring marketplace, shows that the weekly pay for travel nurses in November was $3,204.

Across all 50 states, the pay gap between travel nurses and RNs ranged from 151% (Hawaii) to 287% (South Dakota), according to data organized by Becker's Hospital Review.

Hospitals create their own internal staffing agencies to curtail labor expenses

As hospitals continue to struggle with high labor expenses from travel nurses, some have decided to create their own internal staffing agencies to offer nurses more flexibility and higher pay while still curtailing expenses from outside agencies.

For example, Allegheny Health Network created its own in-house staffing team that works in various units within its 14 hospitals. The nurses who work for this unit have higher hourly pay than regular staff RNs and have access to full benefits. Although they move among different hospitals, they can also "sleep in their own bed," said Claire Zangerle, Allegheny's chief nurse executive.

Similarly, Jefferson Health also recently created its own internal staffing unit, which currently has 35 full-time workers. "There's a huge shift in the evolution of health care in creating more staff who can move around," said Daniel Hudson, Jefferson's VP of nursing administration and operations.

According to Kaiser Health News, hospital officials at Piedmont Healthcare, which recently formed its own hospital staffing unit, believe the unit provides the "best of both worlds—the flexibility of a staffing agency and the stability and support of a local health system."

Akin Demehin, AHA's senior director of quality and patient safety policy, said that work flexibility, including location and the frequency and structure of shifts, is likely to be a key draw for nurses going forward.

In addition, Kim Sauro, director of Henry Ford Health System's internal staffing unit that began in 2013, said the cost of in-house staffing teams is much less than the cost of travel nurses from outside agencies.

So far, many internal staffing units remain relatively small, and they are not likely to significantly impact the travel nursing industry just yet. "Their success would very much depend on their ability to attract, recruit, and retain nurses," said Chris Eales, from Premier Healthcare Professionals. "They have to build up some credibility."

Currently, many hospitals are still hiring travel nurses, even as they fill out their internal staffing units. However, hospital officials are hopeful that internal staffing agencies will continue to grow as nurses and other workers, such as surgical techs and respiratory therapists, look for more flexible working conditions.

"I don't think we'll ever be temp agency-free," Zangerle said. But flexible internal hospital teams "are going to change the labor market." (Robertson, Becker's Hospital Review, 12/15; Miller, Kaiser Health News, 12/15)