Even as COVID-19 cases fell this year, demand and rates for traveling nurse staff have remained high, according to data from nursing staffing companies.
That’s strapping hospitals and health systems that expected to be using less temporary labor by now, and comes as systems boost permanent staff wages to quell ongoing shortages and heightened turnover driven by burnout.
In October the national average weekly rate for travel nurses was $3,080 — about $700 less than it was a year ago, according to data from nurse staffing platform Vivian Health.
In January 2020, just before the pandemic began in the U.S., average weekly travel nurse pay was $1,894, according to Vivian.
Wages for traveling nurses experienced three significant spikes during the pandemic: first when the virus initially hit, then during the delta and omicron wave.
Travel nurse pay throughout the COVID-19 pandemic
When rates peaked during the omicron wave, legislators in some states looked to cap temporary hospital nurse staffing rates. Staffing firms pushed back, though, defending the rates as reasonable due to the intensity of the assignments.
So far this year demand has stayed fairly consistent since around April, Tim Needham, senior vice president of revenue at Vivian Health, said.
“We don't have a reason to believe that it's going to go back at all to pre-pandemic levels,” Needham said, noting the flu season and potential additional waves of COVID-19 variants could again boost hospital volumes.
Health systems expected contract labor costs to wind back down when cases of the omicron variant eased at the beginning of this year, but that didn’t happen.
Instead, HCA and Community Health Systems cut their full-year guidance due to heightened labor spending in the first quarter. Universal Health Services also spent more year over year on salaries, wages and benefits. Only Tenet labor costs fell 1% year over year.
By Q3, HCA was the only major for-profit hospital to document a decline in labor spending.
Ongoing demand for contract labor today is driven in large part by core staff vacancies, said Melanie Bell, senior vice president for fulfillment and strategy at Vaya, a subsidiary of Aya Healthcare.
Since 2019, turnover among permanent nursing staff more than doubled, according to a report from Vaya and another staffing company, Vizient.
Systems facing shortages typically use more overtime, spurring more burnout, more turnover and an ongoing need for temporary staff — thus causing a vicious cycle, she said.
Contract labor rates are expected to stabilize at 15% over pre-pandemic levels in 2023, according to Vaya and Vizient.
A number of factors can make assignments command higher rates, like whether a hospital is dealing with a natural disaster or strike, and what market demand looks like in that region.
For instance, rates fell 36% in Idaho this year compared to 2021, while rates fell 7% in Connecticut, according to data from Vivian.
Jefferies analysts wrote in a note that while hospital operators have worked to reduce their use of temporary staff, “we believe it’s harder to predict where temp labor utilization and spend will baseline entering 2023.”
Hospitals such as CHS, HCA and Tenet “must prioritize ramping up permanent hiring and reducing their use of contract labor as we head into 2023 to drive EBITDA growth,” they wrote.
Health systems across the country have doubled-down on both their hiring and retention efforts over the past year in a bid to quell shortages, with many first looking at compensation. Most of the systems Vivian works with have raised permanent staff wages this year, Needham said.
Pay concerns have been widely raised by labor unions representing nurses in negotiations for new contracts as well, with workers lamenting raises are needed to reduce heightened turnover and attract needed staff.
“The only way to get out of this vicious cycle is for us to get more nurses into the talent pipeline and retain the ones we have,” Bell said.
“It's not a great outlook, and hospitals have to find long term strategies,” she said.