During Covid outbreaks nurses willing to relocate for temporary assignments could command a huge premium over their regular wages. Hospitals overwhelmed with patients had little choice but to pay whatever it took to recruit scarce nurses. As I’ve said in the past, hospitals are loath to raise nurses’ pay. They often hire temporary nursing staffing at much higher rates than raise the standard pay to recruit staff nurses. During Covid outbreaks hospitals’ unwillingness to compensate nurses for the heightened risk and heavier workloads caused many to jump ship and join traveling nurse agencies.
At the height of Peak Covid some staff nurses willing to travel were able to earn up to $8,000 a week. Some intensive care unit nurses commanded $10,000 a week during the worst of the pandemic. Hospitals that lost staff to travel nurse agencies were aghast at losing nurses they needed (but weren’t willing to compete for). By December 2021, the average weekly travel nurse pay in the country had nearly doubled from two years earlier. At one point in 2022 Vivian Health had listings for over 645,000 travel nurse jobs.
Now that Covid is receding state legislatures are looking for ways to prevent nurses from making big bucks off hospitals in the future.
Now more than a dozen states have passed or are debating legislation that would penalize price gouging or limit what nursing staffing agencies could charge during an emergency.
The escalating costs led hospitals and their allies around the country to rally against what they saw as price gouging by staffing agencies. In February 2021, the American Hospital Association urged the Federal Trade Commission to investigate “anticompetitive pricing” by agencies, and, a year later, hundreds of lawmakers urged the White House to do the same.
Massachusetts and Minnesota already had price controls prior to Covid but wisely waived them when hospitals within their states needed nurses. Missouri considered legislating price controls last year but was met with stiff resistance.
As the covid omicron variant wave began to subside, Missouri legislators considered a proposal that would have set the maximum rate staffing agencies could charge at 150% of the average wage rate of the prior three years plus necessary taxes.
The Missouri Hospital Association, a trade group that represents 140 hospitals across the state, supported the bill as a crackdown on underhanded staffing firms, not on nurses being able to command higher wages, spokesperson Dave Dillon said.
Yeah right! Missouri was cracking down on staffing firms, not the nurses who rely on them for better pay when the market warrants it. Nurses who work for staffing agencies typically make 75% to 80% of the hourly rate staffing agencies charge.
The Missouri legislature ultimately did not cap the pay of nurses working for temporary agencies, but it does prohibit staffing agencies from earning commissions when agency nurses agree to become employees of a client hospital. That doesn’t make sense considering every temporary staffing agency I’ve heard of charges stiff fees if a client hires away a temporary worker. According to Kaiser Health News, the desire to limit the high cost of nurses willing to travel during emergencies has not gone away.
The latest proposal would apply to certain agencies if a “gross disparity” exists between the prices they charge during an emergency and what they charged prior to it or what other agencies are currently charging for similar services and if their earnings are at least 15% higher than before the emergency.
Kentucky last year applied its existing price gouging rules to health care staffing agencies. The rules, which set criteria for acceptable prices, allow increases driven by higher labor costs. Malara said if the Missouri bill gains momentum he will point its sponsor to that language and ask her to clarify what constitutes a “gross disparity” in prices.
Hospitals and their lobbyists argue that staffing agencies were “price gouging” during Covid outbreaks. Yet, nurses who felt overworked and undervalued left staff positions to take travel assignments that paid far, far better. Even temporary nurses unwilling to travel outside their home city make more by taking assignments at different hospitals locally depending on which hospitals need them the most. A nurse testifying in Missouri explained the legislation better than I can:
Theresa Newbanks, a nurse practitioner, asked legislators to imagine the government attempting to dictate how much a lawyer, electrician, or plumber could make in Missouri. “This would never be allowed,” she testified to the committee considering the bill. “Yet, this is exactly what is happening, right now, to nurses.”
2 thoughts on “States Try to Cap Travel Nurse Wages that Skyrocketed During Covid”
There seems to be ambiguity between what constitutes price gouging as opposed to demand-based pricing. I would expect a rational definition to be based on things like information asymmetry or likelihood of manipulation, rather than an arbitrary price level.
Yes, I don’t know what their endgame is. It’s probably a case where legislators just “know it’s wrong” but haven’t thought through what it takes to get a married nurse with a husband and two kids to pick-up and relocate 1,000 miles away for a pandemic. They assume it’s those evil staffing firms who are price gouging and want to assure us that it’s in no way meant to effect nurses pay.