Hospital systems are starting their own staffing agencies as a cheaper alternative to temp and traveling nurses

Scala was also given a welcome mix of responsibilities when she joined the Pittsburgh-based Allegheny Health Network. She signed with a newly created team working in shifts in different departments at the system’s 14 hospitals.

After working as a registered nurse at another facility, Scala, 31, now commutes from her home in Butler, Pennsylvania, to the western Pennsylvania system’s hospitals. “I get to meet new people, learn new procedures, how hospitals do different things,” Scala said.

A growing number of hospital systems like the Allegheny Health Network have created in-house staffing teams to deal with the nursing shortages caused by the pandemic – and are looking to beat private temp agencies at their own game. Depending on the system, nurses could do a week-long assignment or a multi-week assignment at one hospital and then complete a similar roster at another facility. Some even work self-scheduled shifts in different locations, unlike regular nurses who typically work in a single medical department within a hospital. These staff are distinct from “float” nurses, who move from department to department as needed within a single hospital.

The goal of the in-house teams is to provide enough pay and flexibility to attract nurses to the jobs — reducing the system’s heavy reliance on more expensive RNs from outside agencies.

Across the country, such contract labor costs are nearly 500% higher than before the pandemic, according to a consulting firm report commissioned by the American Hospital Association. That spending is pushing many hospitals into the red for 2022, the same firm, Kaufman Hall, recently estimated, although some systems have turned a profit during the pandemic.

The members of the new staffing units typically represent only a small fraction of a hospital system’s workforce. And such teams would probably not be feasible for many small or rural organizations. However, hospital officials said in-house staffing agencies will grow as nurses and other workers, such as respiratory therapists and surgical technicians, seek flexible working arrangements.

“There’s a big shift in how healthcare is evolving in creating more staff that can move,” said Daniel Hudson, vice president of care administration and operations at Philadelphia-based Jefferson Health, which recently created a staffing unit that now has 35 employees has created -temporary workers.

Although there have been nursing staff shortages for years, the staffing shortages worsened as the demands of COVID care left many hospital nurses exhausted. Some have quit, retired, or sought work at home care facilities, outpatient surgery centers, and doctors’ offices.

Many nurses left the workforce, including newly qualified ones, said Beth Ann Swan, associate dean of Emory University’s Nell Hodgson Woodruff School of Nursing in Atlanta.

Turnover for hospital staff increased to 27.1% last year, up from 18.7% in 2020, according to a NSI Nursing Solutions report.

So nurses from temp agencies filled more shifts. Their pay – and the resulting costs to hospitals – skyrocketed as COVID-19 surged. Travel nurses were making up to $10,000 a week at the end of 2020, although the average price has dropped to about $3,000 this year.

Before the pandemic, Atlanta-based Piedmont Healthcare was spending $20 million annually on nurses from such agencies. “In the past fiscal year, we spent $400 million,” said Kevin Brown, CEO of Piedmont. About a third of that sum went directly to the agencies, not the nurses, he added.

To cut out the middleman, Piedmont created a hospital human resources department to offer what officials described as the best of both worlds — the flexibility of a staffing agency and the stability and support of a local health care system.

Such job flexibility is a major draw for nurses, said Akin Demehin, senior director of quality and patient safety policy at the American Hospital Association. Relevant factors are the place of work and the frequency and structure of the shifts.

In-hospital staffing is not a new concept. Detroit-based five-hospital Henry Ford Health System launched its in-house human resources department in 2013. In addition to nurses, the pool includes medical assistants and surgical and emergency room technicians. Team members receive a higher hourly wage than regular employees and are free to choose their shifts.

The overall cost is significantly less than using the staff of an outside agency, said Kim Sauro, director of the BestChoice program, which calls Henry Ford’s system.

But for many nurses, in-hospital programs will not overcome the appeal of temp agencies and travel opportunities, at least at some stages of their lives.

Ryan Bannan and his wife Bharvi Desai Bannan, both nurses from Atlanta, were on the road for almost two years, working in Florida, Arizona and Utah, among other places. “The benefits were primarily compensation,” he said. Now that the couple is expecting a baby, they are back in Atlanta. Ryan works as an ICU nurse, while Bharvi is an “internal traveling nurse” with 13-week assignments for a second local hospital system.

Allegheny Health Network’s Scala said she too had considered becoming a travel nurse. “But I have a toddler,” she said.

The temporary medical staffing industry remains a profitable business, although revenue has fallen since the peak of the pandemic. The president of one such firm — Chris Eales of Premier Healthcare Professionals, based in Cumming, Georgia — said the new hospital staffing units pose no immediate threat to temp agencies. “Their success would depend very much on their ability to attract, recruit and retain nurses,” Eales said. “You have to build some credibility.”

His company, he said, still provides temporary workers to hospitals that have mobile staff units.

Indeed, Allegheny Health Network continues to enlist the help of a temp agency. But an exodus of nurses during the pandemic — many into higher-paying agency jobs — helped build the in-house human resources team, said Claire Zangerle, the system’s chief nurse executive.

The system increased pay and benefits for the remaining nurses. Meanwhile, the new mobile unit offered an even higher hourly wage than regular nurses to pull back agency nurses. These mobile workers move between hospitals but have access to all services and “can sleep in their own bed,” Zangerle said.

“I don’t think we’ll ever be out of work,” Zangerle said. But flexible work teams in hospitals, she added, “will transform the job market”.

KHN (Kaiser Health News) is a national newsroom producing in-depth journalism on health issues. Along with Policy Analysis and Polling, KHN is one of the three major operational programs at KFF (Kaiser Family Foundation). KFF is a donated non-profit organization that provides information on health issues to the nation.