Travel Nursing Pay – Dispelling the Myths
The multitude of variables involved with a travel nursing pay package make it pretty complicated and difficult to understand. In addition, there are several myths about pay packages that serve to further obfuscate the matter. In this blog post, we’ll look to clarify some of the confusion that these myths leave in their wake.
Nothing is free when it comes to travel nursing pay
The most prominent myth I’ve encountered is the “Free Myth.” Remember, the only source of revenue for a company is the bill rate. And because the bill rate is the rate upon which every compensation package is based, every single attributable cost is taken from it. There is no free housing. There are no free medical benefits. There are no free rental cars.
Pitching these items as “free” is a sales gimmick designed to lure you in. When a company says “free”, you should interpret that to mean “company provided.” There is an important distinction between “free” and “company provided.” “Free” implies that there is no cost to you. However, every travel nursing company that provides “free” housing will offer to pay you a “lodging stipend” if you choose not to take their “free” housing. How is that free? The simple answer is it isn’t. If we resolve to accept these items for what they are, company provided, then their true nature becomes apparent. These are nothing more than services that an agency offers for a price.
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Some agencies offer every service you can imagine. You can have anything you want for a price. Meanwhile, other travel nursing companies don’t offer much of anything and I’m often asked why that is. Why would a company not offer housing, or travel expenses? The answer is risk. If a company signs a 3 month lease on a nice apartment and the candidate backs out, or gets released, the company is still responsible for the cost of the apartment. Remember, the only source of revenue is the bill rate, and if the hours aren’t worked, then there’s no money to pay for anything.
These losses can be massive and despite what some may think about the contract’s ability to shift liability to the travel nurse, the simple fact of the matter is that in the vast majority of cases there is nothing at all the company can do to recoup these costs. The important thing to know is that if a company does not offer something, then it’s almost certain that they’ll pay more than the company that does. This is why you must understand how to compare travel nursing pay packages to ensure that you’re getting the most out of every deal.
Bill rates are standardized, not negotiated
The second myth is the “Bill Rate Negotiation Myth.” I was often asked by candidates if I could negotiate a higher bill rate with the hospital. These candidates had no doubt been given the impression by some recruiter, either directly or indirectly, that negotiating bill rates with hospitals on a contract by contract basis is a common practice. This is a sales gimmick. It’s like a used car salesman telling you he’s going to discuss lowering the price of the car you’re buying with his manager and then going back to the break room, munching on some popcorn, exchanging a few jokes with co-workers, and coming back to tell you, “Let me tell you what I’m gonna do.”
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The fact of the matter is that the vast majority of bill rates are etched in stone. The contract between the hospital and the agency determines the bill rate, and these rates are most often negotiated, or at least require the approval of, someone quite high up in a hospital’s administration. In the vast majority of cases, it’s going to be much easier and more realistic for the hospital to move forward with another candidate than it would be to negotiate a separate rate for this particular job.
I’m not saying that negotiating a higher bill rate with the hospital is impossible, it’s just extremely rare, and definitely not the norm. However, there are some Vendor Management Systems that offer bidding systems for bill rates. But, these systems typically have a bid ceiling and are designed to bid bill rates down, not up. Additionally, contracts between hospitals and travel nursin companies often times include a standard rate and a higher rate known as a “crisis rate.” It is possible that a hospital may extend the crisis rate for what was originally advertised as a standard rate assignment. But again, this is highly unlikely. Finally, we’ll sometimes see bill rates get increased by $2-$5 per hour if a hospital has been unable to fill a job and they become desperate. Such circumstances are typically only encountered during a very tight labor market.
Do travel nurses really make a lot of money?
The third myth involves pay rates. There seems to be a commonly held misconception that travelers are making tons of money relative to their permanent peers. Unfortunately, this isn’t entirely true. When you compare the entire compensation package you receive with a permanent job against the entire pay package you receive on the standard assignment, it’s going to be about even, give or take a few percentage points in either direction. When making this comparison, it’s necessary to account for the benefits packages, the paid time off, the sick leave, and all of the other variables involved. Also, the fact that agencies advertise to hospitals that using travelers will save the hospitals up to 10% on their labor costs should be evidence enough that travelers aren’t making tons more money than their permanent counterparts.
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However, there are certainly situations in which travelers can make very good money. First, when a hospital’s permanent workers go on strike the rates for replacement workers tend to be very high. Of course, strikes are typically very short term and certainly can’t be relied on for ongoing employment. Second, hospitals sometimes determine that they have an urgent need that necessitates them to institute a “crisis rate” or increase their standard agency bill rate in order to promptly meet their needs. Crisis rates can be $10 to $20 higher per hour than the standard rates.
Third, hospitals in certain locations have high bill rates due to the difficulties they experience in attracting qualified candidates. Bakersfield, California is one example. The pay rates in Bakersfield are generally much higher than the rates in Los Angeles despite the fact that the cost of living Los Angeles is much higher than Bakersfield. Fourth, contracts that guarantee 48 hours per week can be quite lucrative. Not only are travel nurses working more hours, but the agency’s fixed costs are reduced because they are spread out over more billable hours. This allows the agency to pay more money than they would on a standard 36 hour contract.
Fifth, travelers tend to have higher net pay than their permanent counterparts. This is due to the tax free stipends that travel nurses are paid. Sixth, travel nurses do indeed make more than their permanent counterparts in certain states. However, this situation never existed in certain states and has begun to level out across the country. For example, permanent nurses in California tend to earn much more than travel nurses. Meanwhile, pay in places like Texas, where travel nurses used to significantly out-earn their permanent counterparts, have leveled off due largely to increased compensation for permanent employees.
Why has travel nursing pay declined?
Now, there was a time when it may have been true that travel nurses significantly out-earned their permanent counterparts. However, bill rates for assignments have remained flat despite increased inflation and have significantly decreased in many cases. For example, when American Mobile won the contract with Kaiser California in 2010 the bill rates for Registered Nurses decreased between $6 and $12 per hour depending on the specialty. I speculate that there are a couple of reasons for this.
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First, the high unemployment rate the country has experienced since the Financial Crisis in 2008 has resulted in downward pressure on the industry. Healthcare workers who may have otherwise retired or worked fewer hours remained in the workforce to help pick up the slack for losses they or their families may have incurred. Meanwhile, people in America utilized healthcare less because they had lost their healthcare insurance or needed to save money. All of this resulted in a decrease in the total number of jobs and an increase in the number of potential candidates.
Second, the proliferation of the Vendor Management Service has resulted in increased competition and downward pressure on bill rates. Cost savings are one of the major selling points that Vendor Management Services offer. In addition, increased competition among the largest companies in the market has resulted in bidding wars that drive bill rates lower.
