Rising staffing demand results in increased wages
News January 1, 2020

Rising Demand Impacts Wages for Both Core Staff and Temporary Clinicians

Rising demand for healthcare workers is pushing up wages for nurses and other clinical professionals. However, pay rates for temporary clinicians, who work side-by-side with staff counterparts in healthcare facilities throughout the nation, have remained relatively flat.

With demand for healthcare services — and the workers who provide them – continuing to grow for the foreseeable future, this pay inequity is harming healthcare organizations’ ability to secure the temporary talent that they need.

For more information on core and contingent staff pay, download the Rising Compensation for Staff Clinicians Signals Need for Higher Pay Rates for Temporary Workers white paper.

According to the Bureau of Labor Statistics, there are about twice as many healthcare job openings compared to job hires on a monthly basis. This gap of unfilled jobs has been widening since 2014, when job openings were only slightly higher than job hires. Worsening the problem is that job hires are offset by quits, which includes the tsunami of Baby Boomer retirements, while openings continue to grow. And these hiring difficulties are cumulative: last month’s problem in hiring enough staff become next month’s even bigger problem.

In such a high-demand scenario, it’s not surprising that core staff wages are going up. What’s surprising is that bill rates for temporary healthcare workers have not kept pace, especially considering the growing value of the variety of temporary professionals throughout the healthcare industry. The year-over-year percentage change in temporary registered nurses has grown much faster in 2017 and 2018 compared to permanent registered nurses at hospitals and ambulatory care. Additionally, the percentage of contingent nurses receiving more than one contingent job offer has risen significantly.

A growing body of research conclusively shows that temporary nurses are equivalent in quality and cost to staff nurses when full staff costs are measured, so it’s apparent that the increased utilization of temporary healthcare professionals has no negative impact to healthcare organizations.

With escalating difficulties in recruiting and hiring permanent staff, temporary clinicians are providing valuable services that would not be otherwise available to hospitals, ambulatory care centers and other post-acute facilities, helping them to maintain their care quality, public mission, and competitive edge.

Demand pressures that are boosting wages for staff nurses and other healthcare professionals have the same effect on temporary nurses and other clinicians as well. Standard cost of living adjustments of 3% annually may no longer keep pace with today’s more competitive environment, especially for hospitals who did not adjust rates over the last several years.

In fact, market conditions in mid-2019 closely resembled those of 2015 and 2016, when a sudden surge in demand for temporary nurses boosted bill rates. In those two years, average bill rates for temporary nurses rose 8% per year on average, and higher in some markets.

Hospitals, health systems, and other healthcare facilities are finding that when it comes to hiring, wage pressures for staff professionals are the same for temporary professionals. Facilities that respond later in this demand cycle may need to offer higher bill rates to competitively attract temporary clinicians, compared to hospitals that respond sooner with a modest rate increase.

The long-term drivers of demand for healthcare professionals will continue to generate upward pressure on wages for the foreseeable future. Since temporary staff are an integral part of patient-care excellence, pay increases need to be comparable between permanent and temporary staff to balance the supply and demand equation and meet the patient-care mission and organizational success needs for healthcare organizations.