When a Travel Nursing Contract Gets Cancelled Before Start

Unfortunately, travel nursing contracts can and do get cancelled. While cancellations don’t happen too often, they can be demoralizing when they do. Cancellations happen for any number of reasons and at any period of the process. In this blog post, we’ll discuss some of the circumstances surrounding one specific cancellation scenario; when a travel nursing contract is cancelled just before it starts.

To start, it’s important to define what constitutes a cancellation prior to a contract starting. For our purposes, we’ll consider a contract as “cancelled before start” if the hospital made an official offer and the offer was accepted by the traveler.

It’s fair to say that in the vast majority of cases, if not every case, contracts are cancelled by either the hospital or the traveler. This is just as true for contracts that are cancelled before they start as it is for any other type of cancellation. However, all three parties, the hospital, agency and traveler can face consequences when contracts are cancelled. In any case, the ramifications of cancellations will hit certain parties harder than others depending on who is doing the cancelling.

When the travel nurse cancels a contract before it starts

When, Why, and How Often?

According to an article in Healthcare Traveler, agencies surveyed reported cancellation rates of as low as 5% to as high as %20 depending on the agency. The article also asserts that cancellations by the traveler are most likely to occur before the assignment starts but after the contract has been accepted. The article goes on to claim that, “More often than not, reasons for cancellations involve lack of planning, foresight or commitment.”

Now, if you’re a travel nurse reading this, then you’re probably thinking, “Hey, wait a minute! There are plenty of legitimate reasons for a traveler to cancel a contract before it starts!”  And of course, this is true. Agencies acknowledge that situations such as injury, illness, family emergencies and military duty, among other circumstances, are valid reasons to back out of a contract.

But trust plays a big role in determining perception when a traveler cancels a contract before it starts. In a recent discussion on this topic in a popular social media group devoted to travel nursing, one recruiter commented’ “A true emergency should be recognized by the hospital and no penalties should be assessed but how do they tell the difference?” Another went on to say, “You wont believe how many nurses have at least 7 moms and 4 dads that die during their assignment.”

Any traveler who has backed out of a contract for legitimate reasons will understandably take offense to such statements. However, this really is a case of a few bad apples ruining the bunch. My experience validates the assertion that the majority of back-outs do not occur for legitimate reasons. So travel nurses should understand that this perception is natural. However, this isn’t an excuse for recruiters or agencies to blindly assume the worst. So, maintaining “Zero-Tolerance” policies or rushing to negative judgment are unwarranted reactions.

Finally, there is another reason that back-outs happen which rarely gets mentioned. We call this a “hidden issue.” In other words, the traveler may learn something about the contract that they previously did not know, which may lead them to back out. For example, the contract may have been touted as having guaranteed hours. But, when the contract arrives, there’s a clause allowing the hospital to cancel up to 6 shifts during the contract. In other cases the agency may have a very difficult time finding housing that meets the traveler’s needs.

Of course, agencies will be quick to argue that ANY such issue can be resolved. However, the question is whether or not the issue can be resolved to the traveler’s liking. If not, the traveler may back out.

Consequences and solutions when a traveler backs out before start

In any case, the consequences of a traveler backing out of a contract before it starts depend in large part on the amount of time that has transpired between the contract being accepted and the cancellation notification. Let’s take a look at some specific examples to illustrate.

Consequences generally fall into three categories. First, the cancellation could negatively affect staffing levels at the hospital and ultimately impact patient care. The shorter the notice of cancellation, the more difficult a time the hospital will have finding staff to fill in.

The best solution in this case is for the hospital to find a “back-fill”; another traveler to take the assignment. Agencies and recruiters routinely express how difficult this is. And they’re right to a certain degree. It will be difficult for THEM to find a back-fill, but it may not be as difficult for the hospital to find a back-fill. That’s because hospitals typically work with high number of agencies to get their positions filled. That said, there are plenty of instances where the hospital is unable to find a replacement in time.

Second, the agency may have spent money on onboarding, housing or other items. Housing typically represents the biggest financial consequence. The agency may be out the deposit, first month’s rent, or maybe even the cost of the entire lease. That said, it’s fairly rare for agencies to shell out cash for housing well in advance of the contract’s start date. On the flip side, agencies typically begin the onboarding process immediately. Of course, a traveler should know if the agency has incurred any onboarding expenses as they’d be the ones completing the process.

Unfortunately, the money spent on onboarding is typically lost. However, the agency does have options if they have secured housing. First, if the agency is able to find a back-fill, then they’ll put the new traveler in the housing. If they’re not able to fill the order, then they could work with the agency that does fill the order to take over the lease. They may also work something out with the landlord that gets them out of the lease altogether. Or, they may be able to sublet the property.

Third, the agency’s relationship with the hospital may be negatively impacted. Hospitals never like cancellations, but last minute cancellations are greatly frowned upon. Moreover, the agency may be subject to a financial penalty for cancelling the contract. These penalties typically go into effect 7 to 10 days before the start date. And the hospital may or may not enforce the penalty depending on the circumstances.

There is another potential consequence that we’ve seen referenced by recruiters. These recruiters claim that their agencies penalize them for the costs involved if a traveler they’re working with backs-out of a contract. In fact, we came across one case where a recruiter claimed that they were penalized $9,000 for a back-out.

The insinuation here is that the agency will withhold $9,000 in pay from the recruiter. I have to be honest, I find this very difficult to believe. I could understand if the agency reduced the recruiter’s gross profit by this amount. In which case, the recruiter’s commission check would take a slight hit, but not a $9,000 hit. In any case, if this is true, then these recruiters should take the advice that is so often doled out to travelers and find a better agency to work with.

When the hospital cancels a travel nursing contact before start

When, Why and How Often?

As any experienced traveler will tell you, contract cancellations are a two way street. Hospitals can and do cancel contracts before they start. Take this quote from a social media group devoted to travel nursing:

Just finished uploading the trailer to go to Oregon for my next assignment only to answer the phone and the contract has been cancelled need a job ASAP in Oregon or California ready to start August 18th

Given the August 8th posting date of this comment, this assignment appears to have been cancelled just ten days before the scheduled start. It’s difficult to tell how often hospitals cancel contracts before they start. However, our experience indicates that it happens more often than agencies and hospitals would care to admit.

Hospitals cancel contracts prior to start for any number of reasons. For example, they may have experienced a sudden drop in census. Or, an employee that was planning to leave suddenly changes their mind and decides to stay. And it’s quite common for hospitals to cancel contracts when EMR conversions are involved. The conversions are regularly pushed back for months or are just postponed altogether. When this happens, a large number of contracts are cancelled because the facility is typically bringing on many travelers for the project.

Consequences and solutions when a hospital cancels before start

Some recruiters shrug off the consequences faced by travelers when hospitals cancel contracts by claiming that the agency can always find them another contract. Take this comment for example:

…when a hospital cancels a traveler ( it does happen but not alot) the company can help find another assignment or get severance( depends on factors here and why did they cancel you and when).

While it’s true that an agency may be able to find another assignment for a traveler, this argument grossly oversimplifies the circumstances. Our experience indicates that it’s common for hospitals to cancel contracts within 10 days of the start date. It’s very difficult to find a contract, submit for it, interview for it, get the offer, complete the credential process, and be there in time to start within a 10 day window.

Moreover, the traveler may have had a very good reason for accepting a contract in the specific location in question. This would narrow their search making it even more difficult. In other words, it’s very likely that the traveler will not find an ideal assignment and instead have to settle on something less desirable.

Perhaps more importantly, if the traveler is not able to start a new assignment with the same start date, then they will undoubtedly be missing out on at least a week’s worth of income. This is crucial for travelers who typically go 1 to 2 weeks without work between assignments. As a result, they may already be missing 4 to 6 weeks of work throughout the year just by the nature of their business. So missing additional weeks can have a major impact on their bottom line.

And as for getting “severance” when a hospital cancels before start…this is extremely rare. So rare, that it shouldn’t even be mentioned. That said, the contract between the hospital and agency typically does include a penalty fee to be paid to the agency when the hospital cancels a contract. The clause typically includes provisions outlining the circumstances under which the penalty goes into effect. And just like with the agency penalty, the cancellation must be within a certain time-frame before the start date.

It’s pretty common for the penalty to kick in anytime within 7 days of the start date. That’s probably why in the example above, the traveler was cancelled on a Friday, 10 days before start. Hospitals know full well when they can and cannot cancel, so they rarely run afoul of this rule.

Even if they do, the agency must bill them for it and offer it to the traveler in order for the traveler to ever see it. It’s tough for agencies to penalize hospitals. They’re essentially penalizing a client. Moreover, there is nothing in the contract between the traveler and agency that requires the agency to pay severance to the traveler. So if they do penalize their client, then they’re much more likely to use the money to cover their own costs.

Finally, it’s just as likely for travelers to have incurred expenses going into an assignment as it is for agencies. We’ve seen contracts cancelled after the traveler made their way across country on their own dime. And it’s certainly possible for travelers to have secured their own housing prior to starting the contract.

Now, it wouldn’t be fair not to mention that agencies incur costs when hospitals cancel contracts as well. Essentially, the agency could find themselves in the same financial boat as they do when the traveler cancels a contract, minus the penalty fee charged by the hospital.

Cancellations are bad for everyone

The bottom line is that it’s bad for everyone when contracts are cancelled before they start. Chris Ahl, the Director of Operations at Medical Solutions, indicated to Healthcare Traveler Magazine that they have made a dramatic improvement by instituting policies intended to weed out bad actors on both sides of the equation. Essentially, agencies must do a meticulous job vetting both candidates and clients in order to ensure that bad actors are less of a burden on the system.