Travel Nursing Pay: Why Don’t Agencies Divulge the Bill Rate?

Travel nurses negotiate new pay packages much more frequently than the average professional. This is because travel nursing jobs are short-term, each contract is different, and each agency has its own way of doing things. Therefore, it’s important for travel nurses to know that the the “bill rate” for a travel nursing job is perhaps the single most important variable in determining a pay package.

Find your next travel healthcare job on BluePipes!

The bill rate is the hourly rate that the agency is able to bill for the nurse’s time on the job. Many travel nurses understand the importance of the bill rate, leading some to question why agencies don’t divulge it upfront. In this blog post we’ll discuss the question from both angles so that nurses can understand the factors at play.

Why do travel nurses want to know the bill rate?

Having reviewed and partaken in many discussions on this topic both directly and through social media channels, I think it’s fair to say there are two main reasons that nurses would like to know the bill rates. First, they feel it will make their negotiations easier and save them time. A seasoned traveler might be able to cut out a lot of the negotiating back-and-forth if they knew the bill rate. Additionally, they could quickly decline an assignment if they knew the bill rate wasn’t enough to get them the pay rate they required for the assignment.

Second, many nurses do not trust agencies. These nurses feel that agencies are routinely gouging nurses and taking way too much for themselves. For example, one nurse recently wrote the following on a popular social media site:

I’ve seen my actual Bill Rate, roll “mistakenly” off the wrong fax machine. It’s was 3x what I was getting paid hourly. All that money being pocketed by my Company. That was in 2001. I’m betting it’s a lot more now!

This second issue is complex and we’ll touch on it to provide an explanation where appropriate throughout the rest of this blog post.

Why don’t travel nursing companies divulge the bill rate?

Travelers certainly have valid reasons for wanting to know the bill rates. What’s more, a good argument can be made that divulging bill rates would actually benefit the agency. First, the agency could also save time. After all, they’re part of the negotiations too. Second, it would certainly instill trust in their services. Imagine the positive PR that an agency might receive if they became the first to divulge bill rates on all jobs. But alas, agencies rarely divulge their bill rates to nurses, or anyone for that matter. So, why is that?

Agencies Believe Divulging Bill Rates will Lead to Misunderstanding

One reason agencies provide for not divulging their bill rates is a fear of further complicating the already complicated pay package. Travel nursing pay packages are very unique. Some variables are quoted by the hour, others are quoted by the week, others are quoted by the month, others are quoted for the entire contract.

Adding the bill rate to the equation requires a far greater number of variables to be presented and explained. It’s not that agencies think nurses won’t be able to understand the pay package. It’s that they believe providing the level of detail necessary to explain the pay package in lite of the bill rate is more confusing and much more difficult to sell.

The Conventional Approach to Travel Nursing Pay Quotes

It takes time for recruiters to explain all of the nuances of the pay package. Doing so typically generates a lot of questions. As a result, agencies offer what they believe to be the simplest possible explanation. For example:

This job pays $2000 a week gross and $1,800 net. Plus, we provide free health insurance, license and certification reimbursements, and medical exams. We also provide $700 for travel expenses. If you want to take company provided housing, then the pay package will be $1,500 per week gross and $1,200 net.

Free: Universal Job Application and Credential Management for travelers.

Quoting Pay with the Travel Nursing Bill Rate

Let’s compare this explanation to the one the agency would have to provide if they divulged the bill rate:

The bill rate for this job is $72 per hour. Our gross profit is 20% which is $14.40 per hour. That leaves $57.60 per hour. Our “standard burden” is 2.5% which is $1.80 per hour. That leaves $55.80 per hour. Liability insurance is .75% which is 54 cents per hour. That leaves 55.26 per hour. We allocate $300 per contact for compliance and credentialing. Given that this is a 36 hour contract for 13 weeks, that comes to 64 cents per hour. That leaves $54.62 per hour. Your taxable base rate will be $24 per hour. That leaves $30.62 per hour. The employer payroll burden for this state is 9% of the taxable hourly rate which comes to $2.16 per hour. That leaves $28.46 per hour. We provide medical insurance which costs $400 per month or $1200 for the entire contract which is $2.56 per hour. That leaves $25.90 per hour. We provide a weekly M&IE stipend of $350 which is $9.72 per hour. That leaves $16.18 per hour. We provide a travel reimbursement of $700 which is $1.50 per hour. That leaves $14.68 per hour which we’ll allocate to housing. That comes to $2,290 per month to cover the cost of housing.

There are 6 additional variables listed in the explanation above. We left out common variables like non-billable orientation hours, Vendor Management Fees, cost or capital fess and more.

Why So Much Detail?

Now, you might be wondering why the agency would have to go into such detail. The reason is that most people, nurses or otherwise, aren’t aware of all the variables at play on the back-end of a compensation package. Here’s a quote from a popular travel nursing group to illustrate:

I’ve seen my actual Bill Rate, roll “mistakenly” off the wrong fax machine. It’s was 3x what I was getting paid hourly. All that money being pocketed by my Company. That was in 2001. I’m betting it’s a lot more now!

Admittedly, I’m not fully aware of the circumstances in this particular case. However, taken word for word, a bill rate 3 times the hourly rate is fairly normal. In fact, the compensation package presented above illustrates exactly that.

Now, it’s fair to say that this confusion wouldn’t exist if agencies would just divulge all of the details. Unfortunately, that’s not problem agencies are trying to avoid. Instead, agencies are concerned that divulging all of the details raises questions and makes their compensation package much more difficult to sell.

The Back-end Details Raise Questions

With the pay package above, it’s fair to expect someone to ask what a “standard burden” is. Just so you are aware, a “standard burden” is a generic cost basis that agencies use to cover things like contract cancellations, contact back-outs, traveler birthday gifts, welcome kits, and other random expenses. It’s fair to assume that a certain percentage of travelers would be appalled to learn that such things were factored into their pay packages.

Free eBook: How To Negotiate Travel Nursing Pay

It’s also fair to expect a travel nurse to question why they’re being charged for health insurance, medical screening, and license and certification reimbursement when all the other agencies offer it for free. The reality is that all agencies are factoring these expenses into their pay rates. Unfortunately, it’s really tough to sell that idea when the highest converting word in sales is involved….FREE.

The point here isn’t that travel nurses wouldn’t be able to understand the pay package. Instead, one way of explaining the pay package is easier than the other. Agencies believe that the conventional approach converts at a much higher rate.

Wage Recharacterization and Pay Breakdowns

On a side note, it’s important to point out that agencies aren’t supposed to be quoting stipends by the hour. Doing so can get them in trouble with the IRS for wage recharacterization. As we’ve seen, breaking things down to the hour would be required in order to provide a highly detailed explanation of the pay package that includes the bill rate. This is yet another reason agencies may shy away from this approach.

Agencies sometimes need to take higher margins on some contracts

Even if agencies were to be completely transparent and divulge the bill rate and all costs associated with a contract, they’d still be faced with the difficult task of explaining why they take more on some contracts than they do on others. They must operate this way in order to stay in business. The truth is that agency margins vary from contract to contract. There are many reasons for this, but it has a lot to do with the great disparity in bill rates.

Don’t ask me how it’s possible, but bill rates between hospitals, even hospitals in the same city, vary dramatically. So one hospital might have a bill rate of $60 per hour while a hospital across town has a bill rate of $72 per hour. The contract paying $60 per hour is going to be much tougher to fill because the pay is lower. Therefore, the agency might take a lower margin on the contract.

There are many other reasons that an agency might take lower margins on certain contracts. They may need to quickly back-fill a position because another candidate backed out at the last minute or was released with good cause. They may get stuck with higher than expected housing costs on a contract. They maybe desperate to get a nurse into a contract in order to establish good relations with the hospital in question. Unfortunately, the agency wouldn’t be able to stay in business if they took low margins on every contract so they try to make it up on contracts with higher bill rates.

Moreover, high bill rates are offered as an incentive for both agencies and nurses. When a hospital offers a crisis rate or a rate that’s higher than normal, agencies have a greater incentive to get the order filled because there is more revenue at stake. So agencies often focus their resources on contracts with higher bill rates. Recruiters are incentivized by the potential for higher commissions. And of course, travel nurses are incentivized by the higher pay package.

Tired of filling out skills checklists? They’re free on BluePipes.

Again, agencies could just explain these nuances to nurses. However, doing so would certainly add further confusion to the subject. Moreover, agencies that adopted this level of transparency would be at a disadvantage to those that didn’t adopt it. They’d be stuck explaining all of the extra details while their competitors offered a simpler message. The more complicated things get, the more difficult they are to sell.

Should travel nurses know the cost of the product?

Of course, at the most basic level, revealing the bill rate is a lot like revealing the cost of a product. Many recruiters and agencies make this assertion. For example, consider the quote below from a recruiter posting on a popular social media site for nurses:

Would you go to the grocery store and ask the butcher how much they paid for the tri tip you want to buy? Probably not.

This isn’t exactly the way I’d make the point, but this is certainly a valid angle. It’s very rare for consumers to know the cost of any product they purchase, even after they’ve purchased it. But a good argument can be made that we’re not talking about a product here; we’re talking about a compensation package. In which case, a more accurate analogy would be to compare travel nursing to permanent jobs.

Permanent employers certainly aren’t in the habit of laying out detailed compensation data for their prospective employees during compensation negotiations. Sure, they may have a standard pay-scale based on experience, but how does the prospective employee know that the pay-scale is justified? Perhaps nurses are getting gouged while the hospital and executive team soak up large sums of money.

The most powerful resume builder for travel healthcare professionals is free.

Despite this, it’s also fair to say that two wrongs don’t make a right. In other words, just because other industries and employers don’t reveal relevant data doesn’t mean that it’s okay. It doesn’t justify the policy.

Are agencies worried that travel nurses will cut out the middle man?

One thing is for certain. Agencies are not concerned that divulging bill rates will allow travelers to cut the agencies out of the equation and work directly with hospitals as this post on a popular social media site suggests:

Your companies don’t want you to solicit your own work. That’s my guess.

As we’ve discussed before, travel nurses do not qualify as 1099 contractors. Therefore, they wouldn’t be able to contract with hospitals under these auspices. However, there are some hospitals that work directly with nurses on a “seasonal” basis. The problem is that there are so few that a nurse would not be able to remain gainfully employed as a traveler. Very few hospitals have needs consistent enough to warrant this type of seasonal staffing.

In any case, it’s highly unlikely that agencies will ever adopt a transparent bill rate policy on a widespread basis. So the best advice is to find recruiters you can trust. Travel nurses should also work with as many recruiters and agencies as possible in order to keep them honest and competing for their services. You can use BluePipes to help you accomplish this. BluePipes reduces the initial paperwork burden so travel nurses can get submitted to open assignments quickly. It also provides networking and messaging features that will help travel nurses connect and communicate with more recruiters.

As always, please let us know your thoughts on this topic by posting in the comments section below!