Unlocking Workforce Agility: The Strategic Value of Contingent Labor
Insights on KPMG’s recent independent study, commissioned by NATHO
“We’re going to get rid of all our contractors.” Does this sound familiar to your organization? In an organization's efforts to reduce costs, this is often the thinking. However, recent data shows a far more proactive and sustainable path. As we strive for excellence in care while managing tight budgets, new evidence gives us the chance to break away from old paradigms and take greater control of workforce strategy.
A pivotal independent study by KPMG, commissioned by NATHO, shatters long-held assumptions about labor costs in healthcare. For months, we’ve seen the narrowing gap between hospital RN core wages and travel nurse bill rates. Now, the data confirms what forward-thinking leaders have sensed: the “fully loaded” cost of permanent staff often exceeds that of contingent labor.
Challenging the Cost Myth—and the Overtime Trap
To drive real change, we must look beyond base wages to understand the true investment behind every staff member. The KPMG study claims the all-in hourly cost for travel nurses averages $89, compared to $94 for permanent nurses when all costs—training, benefits, recruitment, non-productive time—are considered. The same applies for allied health and therapy roles, where contingent staff are consistently less expensive than their permanent counterparts.
But the conversation cannot end there. The findings align with insights in “The Real Cost of Overtime,” a recently published case study by AMN Healthcare, which details how one major health system reduced its staggering overtime spend, improved financial outcomes, and boosted staff morale by adopting a blended staffing model. This approach—using a strategic mix of permanent and contingent labor—delivered $6 million in savings and protected their core staff from burnout. The lesson is clear: over-reliance on overtime is not only costly, but also unsustainable. By thoughtfully integrating contingent talent, organizations achieve true agility, stabilize their workforce, and safeguard quality of care.
Contingent Labor: A Lever for Sustainable Success
Now is the time to shift our mindset. Rather than solely seeing contingent labor as a costly temporary solution, we can recognize it as a sustainable and powerful lever as part of a comprehensive strategy that combines core and contingent resources to achieve a more flexible workforce. These solutions offer the ability to rapidly scale to meet patient demand, support operational resilience, and control costs without compromising care quality.
When you combine the KPMG data with real-world success stories like the one featured in “The Real Cost of Overtime,” the evidence is irrefutable: strategic use of contingent labor not only closes financial gaps but also nurtures a more stable and engaged workforce.
Empowering Our Future
Ultimately, leading with this new perspective positions us to thrive in an evolving healthcare environment. We have the tools and data to create a workforce mix that is robust, financially sound, and ready to overcome any challenge. Let's use these data-driven insights to educate stakeholders, break through misconceptions, and design staffing strategies focused on well-being, sustainability, and exceptional patient care.
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