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Many hospitals rely heavily on traveling nurse agencies to bolster their clinical teams during an outbreak. Now, a pair of bills currently before Congress would require a federal study of those agencies’ impact on health care.
The Travel Nursing Agency Transparency Study Act directs the U.S. Government Accountability Office (GAO) to examine the ways in which contract nursing companies have done business over the past two years, including allegations of price gouging.
Senator Kevin Cramer (RND) introduced the bill in the Senate (S.4352), while Representative Greg Murphy (RNC) sponsored the House version (HR 8576).
“Unfortunately, there have been reports of travel nursing agencies taking advantage of the pandemic to use questionable business practices that drive up costs and greatly harm our healthcare providers and patients,” Dr. Murphy said in a statement. “Our report examines the impact of these practices on the health care industry and ensures transparency moving forward.”
If approved, the GAO will investigate travel nursing agency costs and determine whether these companies are contributing to workforce shortages. The feds look closely at nurses’ earnings relative to the amount they pay. The GAO is a nonpartisan agency that conducts research and investigations on behalf of Congress.
Health care providers and industry groups have questioned the legitimacy of the declining costs, which some say are grossly inflated. The American Hospital Association has been vocal on the issue.
Hospice organizations, including the National Hospice and Palliative Care Organization (NHPCO) and the advocacy arm of the Hospice Action Network (HAN), have endorsed legislation to study travel nurse company practices.
“Hospices cannot compete with the high contracts required by travel nursing agencies. These agencies appear to be contributing to public health emergencies by overcharging,” NHPCO Interim President and CEO Ben Marcatonio said in a statement. We look forward to continuing to work to prioritize immediate workforce solutions to ensure access to end-of-life care.”
The cost of supplementing their workforce has been a pain point for hospitals and other healthcare providers over the past couple of years.
In general, travel nurses earn more than full-time workers at health care companies, and some have seen their wages double or triple as more providers seek their services. This has made recruitment and retention more complex for hospice operators competing with these firms.
In earnings conference calls last year, hospice and home health provider LHC Group (NASDAQ: LHCG ) reported that it would save $1.4 million per quarter for every 100 basis points it could reduce contract nurse use.
Home health and hospice giant Amedisys (NASDAQ: AMED ) reported a $2 million drop in its Q3 2021 hospice revenue, which the company attributed in part to higher use of regular contract nurses, the company said in an earnings call. Hospice segment revenue in Q3 totaled $198 million.
Those were last year’s numbers, and both companies (among others) reported a decline in travel nurse participation, largely due to a reduction in Omnicron’s raises and fewer workers entering retention.
Labor shortages predate the pandemic and will almost certainly outgrow it, leading some industry observers to conclude that utilization will continue to decline in the long term — but back to pre-Covid levels.
Currently, health care companies are seeing a demand for travel nurses to reduce utilization and the increasing and decreasing number of covid infections.
In recent months, staffing firms have seen demand swing between a 5.8% increase and a 3.3% decrease, accompanied by a slight increase in prices, according to research by Jefferies Financial Group equity analyst Brian Tanquelut.
While allegations of price gouging continue to fly, it has yet to be confirmed. Some stakeholders and analysts have pointed out that the price increase reflects changes in supply and demand rather than a fault.
Bruce Greenstein, LHC Group’s chief strategy and innovation officer, said: “I’d be careful to characterize our experience as ‘inflation’. “To some extent, it’s probably just an efficient market because we have a high demand for limited supply. It is not a regular commodity; It is labor. We as a market are very excited about that.
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