As vaccine mandates threatened to make nursing home staffing woes even more unbearable, providers across the country began a concentrated effort this fall to bring attention to a major pain point: inflated costs for temporary staff that operators say are being elevated by unscrupulous agencies.
The nation’s two largest associations representing nursing homes have both sought federal government intervention that would force temporary staffing agencies to play by similar rules as nursing homes.
LeadingAge first asked the Federal Trade Commission to use its “resources and expertise” to address the “anticompetitive practices and pricing gouging of nurse-staffing agencies.” The American Health Care Association / National Center for Assisted Living followed suit, with President and CEO Mark Parkinson saying in November that his letter was “the beginning of our activity.”
“What some of the staffing agencies have done is just unconscionable,” Parkinson added at the National Investment Center for Seniors Housing & Care fall conference. “Unfortunately, there is no single, silver bullet solution.”
Anecdotally, tales of prices beyond what might be considered premium continued to mount as December approached.
In Iowa, providers reported base agency hourly rates had increased as much as 40% since 2020. In Pennsylvania, providers were reporting rates at two to four times the norm.
Lawmakers in the Keystone State were shopping legislation in late November that would regulate temporary staffing agencies and set maximum pay rates for agency healthcare personnel. Agencies would have to register with the Department of Human Services as a condition of operation, and the state would likely set their rates in a method similar to existing agency cap rules in Massachusetts and Minnesota.
The New York State Health Care Facilities Association also took the issue of inflated agency pricing to state lawmakers, but leaders there were still watching costs mount at press time.
“We’ve seen significant price-gouging for CNAs and LPNs,” President and CEO Stephen Hanse tells McKnight’s Long-Term Care News. “Whether or not the legislature will do something on that for providers remains to be seen.”
‘Vultures pecking’
Getting some kind of protection from highly inflated staffing rates remains essential as providers in many states are limiting admissions for want of workers. Others are blowing through their workforce budgets and operating in deficits.
Brendan Williams, president and CEO of the New Hampshire Health Care Association, tells McKnight’s providers in his state were offering $17 per hour, plus shift differentials, for licensed nursing assistants this fall. But staffing agencies were paying rates as high as $69 an hour, and charging agency fees on top of that.
“We’ve got to staff to be able to serve the needs of our residents,” says Williams, who likens the rates he’s seen to “vultures pecking” at operators. “You’ve got to pay whatever ransom the staffing agencies are demanding of you.”
The crisis is compounded by both a lack of workers and acts of worker “poaching” being reported across the country. In some anecdotes offered by providers and competing agencies, frontline staff resign and then return the next day as agency help — though now making substantially more than their former colleagues.
Other times, agency staffers don’t show up, despite agreed-upon rates, leaving operators and their staff struggling to fill rosters for a given shift.
And it’s not just a battle for CNAs.
“If you need an RN, you may as well turn over a blank check. The bidding is not unlike eBay, where desperate providers are actually bidding against one another and bidding up the price of that RN,” Williams says. “We really do feel like it’s predatory at this point.”
Hurting more than just providers
Companies that provide staffing services say the practices of a few bad actors are making their work more challenging, too.
Dan Silver launched his small agency in Chula Vista, CA, two and a half years ago. His company has increased the rate it charges to staff CNAs by about one-third since opening, he says, attributing part of the increase to pricing b market values in his early days. But even offering $22 below ourly for CNAs, Silver began to run into trouble recruiting, first among LVNs and RNs who could make much more working at COVID-19 testing sites and, later, at vaccine clinics.
“They found opportunities that paid so much more and were less stressful than a med pass position at a skilled nursing facility,” Silver says.
But the bigger challenge came around the same time, when two national agencies “flooded” the San Diego market — the only area Silver Medical Staffing serves. Those two firms, Silver says, pay employees as 1099 contractors, meaning they don’t have the overhead of collecting and paying taxes. Suddenly, CNA candidates were turning down job offers, saying they had other opportunities at $25 per hour.
“They moved the bar in terms of the expectation that CNAs had for hourly pay,” Silver says. “We really struggled to explain the difference between W2 and 1099 employment, especially to CNAs who were often early-career.”
Silver acknowledges other factors also are contributing to wage growth, including regulatory effects such as state minimum wage; market-based inflation where there is not enough labor supply; and the lingering influence of hazard pay.
Chris Sund is director of business development and sales for long-term care at Fusion Medical Staffing, a national contract nursing agency. He says he’s seen agencies — and some individual providers — ramp up pricing for specific jobs, which then results in a vicious bidding cycle. That can lead to a rush of applicants for a single position but create disillusionment with other jobs posted at more reasonable pay rates.
Facilities using his agency set their own price after consulting with a platform that allows them to see what other providers are offering in the same areas. Sund says, based on internal formulas, his agency clears a smaller margin when providers have to pay more for a contract.
Fusion saw its positions-to-fill more than double from a baseline of 3,000 to 4,000 weekly pre-COVID to a peak of 10,000 weekly as mandate debates raged in July and August. That level of need has held through the fall.
Sund adds that some state officials were so concerned about possible additional needs around the federal Dec. 5 vaccine mandate deadline that they had begun trying to hire and place staff through their own health departments.
FTC to the rescue?
In LeadingAge’s Oct. 8 letter to FTC Chairwoman Lina M. Khan, President and CEO Katie Smith Sloan outlined “incredible hardships, including crippling workforce and staffing challenges,” that “have been exacerbated and exploited by the actions of nurse-staffing agencies.”
“Most long-term care is paid by taxpayers through the Medicare and Medicaid programs; neither program is structured to respond to excessive costs and so monies that should go to caring for residents are diverted to paying private agencies,” she pointed out. “We request the FTC use its authority to protect consumers and taxpayers from anticompetitive and unfair practices to investigate these activities and take appropriate action to protect long-term care providers and the seniors they serve.”
It’s not just small shops or mom-and-pops struggling with agency challenges. The real estate investment trust Welltower acknowledged in its third-quarter earnings call that the costs of agency staffing experienced by its operators had hit its bottom line, although the firm was seeing some stabilization.
New Hampshire’s Williams, an attorney, says there is a strong case to be made at the FTC.
“Under a Democratic administration, it might be an easier case to make, arguably, than it would have been under a Republican administration,” he says. “I think there’s a lot of antitrust issues that are worth exploring.”
Betsy Lordan, an FTC spokeswoman, confirmed to McKnight’s that the agency was in receipt of the letters from LeadingAge and AHCA. FTC investigations, however, are non-public so Lordan would not confirm the existence of an investigation.
“An investigation is made public when and if there is a complaint (by the agency),” Lordan said. A complaint can be accompanied by a proposed settlement, which would be negotiated beforehand with the parties, or it could be the first step in a legal process tried either by an Administrative Law Judge or in federal District Court. Either way, Lordan said, the process “takes time.”
Time is a resource providers argue they don’t have, with many operating in the red because of increased staffing and COVID-related costs and the door closing on what appears to be the final round of provider relief funding.
State solutions?
There is a dangerous game afoot, notes Pennsylvania Health Care Association President and CEO Zach Shamberg.
“There is a place in the long-term care continuum for direct care staffing agencies, but their service should not come at the expense of jeopardizing care for the residents they are hired to serve,” he says. “Price gouging is simply not sustainable for providers, especially those reliant on the state’s Medicaid reimbursement rate, which hasn’t kept pace with rising healthcare costs since 2014. As providers attempt to emerge from the COVID-19 pandemic and make resident-focused investments, these exorbitant costs are pushing nursing homes … to the brink of financial collapse.”
Shamberg is pushing hard for state intervention, saying providers there “can no longer wait for a federal solution or regulatory effort.” Others, though, have doubts a state-by-state approach will work, especially in areas where would-be workers or agencies could just opt to concentrate their efforts in border states without caps.
“Regulation might be able to fix it, but it’s going to have to be all 50 states together,” says Sund. “If one state does it, unfortunately, a lot of their staff is coming from outside of the state and they’re going to limit their pool to just what they already have. They’re not going to be able to pull the resources from other areas and they’re just going to hurt themselves.”
He says another solution would be for individual states to adjust their licensing standards. With a shrinking labor pool, temporary travel nurses can be more selective about where they want to go. But few will choose to go to, for example, New Hampshire, where it takes 120 days to be licensed. They’re more likely to pick a job in a state like South Carolina, with walk-in temporary licenses available, or Florida, which typically issues them in three to six days.
“The biggest thing anybody could do to drive down the cost is to make it easier to get staff,” he says. “Those states with really hard regulations to get people there or that are slower in their process, the price drives up because they have such a small pool. If you’re an easy-license state, those jobs get filled so fast and they don’t have to pay as much because they have the whole country to get people from.”
Silver says his agency could work with caps, given high averages in California.
“It would be helpful to know we are on equal footing with other agencies,” he says.
But Silver adds that operators can help themselves right now by adopting a few best practices, chief among them: finding an agency that works as a partner to communicate and help patch holes and adopting a longer-term scheduling strategy that anticipates ongoing shortages. Hiring an extra staff member for a month-plus — instead of just plugging daily holes — builds better relationships between internal staff and the temporary staffer.
It also could help providers compensate for time-consuming, constant training that comes with hiring only once an absence is noted or another employee quits.
“There are certainly agencies that are probably opportunistic in their pricing. They are unethical in their hiring practices. They don’t attempt to operate as true partners to their client buildings,” Silver says. But “I don’t think even a great agency is going to often be a truly beloved partner when they are coming into a chaotic, chronically understaffed kind of situation.”
Folding temporary staff into regular scheduling alongside permanent team members instead creates stability and entices workers to return without needing extra wage enticements, he says.
A semblance of stability is certainly a goal providers and ethical staffing agencies could come together on amid so much other uncertainty.
From the December 2021 Issue of McKnight's Long-Term Care News
