With the Great Resignation and other economic and social uncertainties during the time of Covid, bill rates have been volatile for some contingent workers as wages have risen. And healthcare staffing buyers, in particular, have seen large crisis rates in some places.

The issue of crisis rates came up at SIA’s Healthcare Staffing Summit, held this month in Boston.

“The pandemic is supposed to cost hospitals something like $54 billion in losses,” most of which are from labor, said Bob Livonius, founder and managing director of Livonius Consulting. Livonius made the comment as a keynote speaker at the conference.

Rates are prompting some buyers to go back to thinking of healthcare staffing firms as more of a “necessary evil,” Livonius said. It’s a reputation that suppliers have tried to shed.

The tight labor market has also had an impact.

Welltower Inc., a real estate investment trust focused on senior housing and healthcare, reported in an earnings announcement on Nov. 4 that expenses were significantly higher than expected. The increase was “driven by higher seasonal utility costs and elevated labor expenses mainly resulting from an increased utilization of contract labor due to a rise in occupancy and a challenging labor market.”

The Toledo, Ohio-based company said contract labor totaled $19 million and had an unfavorable impact of $9 million on net income.

On the other hand, looking ahead, Welltower reported it is seeing signs of an improving labor market with more applications for open positions. And it’s anticipating a moderation in contract labor hiring ahead.

The unsettled environment isn’t just within the healthcare industry. Other are facing higher labor costs as well.

For example, Performance Food Group reported in the earnings release for its fiscal first quarter ended Oct. 2 that temporary labor costs shot up. Temporary contract labor costs rose by $52.3 million in the quarter, “including travel expenses associated with contract workers, compared to the prior-year period as a result of the current labor market’s impact on the company’s ability to hire and retain qualified labor,” according to the company’s Nov. 10 earnings release.

Richmond, Virginia-based Performance Food Group describes itself as one of the largest food and foodservice distribution companies in North America.

The company did say it expects contract labor costs to ease starting in its third quarter.

Supply and Demand

Across all jobs, there have been some reports of wage pressure. The most-recent Federal Reserve Beige Book noted demand for some workers was high and there was low supply in some areas.

Most Federal Reserve districts in the report cited robust wage growth.

“Wage pressures remained high for lower-wage jobs; one staffing firm wouldn’t accept new clients that offer below $15 an hour,” the Philadelphia Federal Reserve said in the report. “Wage pressures are rising for higher-wage positions as well. One firm is now offering up to $90,000 for a second-year CPA position that might have commanded $65,000 before the pandemic.”

The Atlanta Federal Reserve reported that wage pressures intensified with widespread effects. It cited strong demand for labor and a tight supply of workers.

“The most severe shortages were among hospital nurses who were noted as migrating to other practices where they can have a stable schedule, or to traveling positions where they can earn multiples of their prior hourly rate,” the Atlanta Federal Reserve reported.

Making Headlines

Rates for contingent nurses have also made the news as of late.

In September, the California Hospital Association called for that state’s attorney general to look into “skyrocketing prices” charged by healthcare staffing firms.

“Under normal circumstances, hospitals turn to staffing agencies to help fill temporary gaps,” the association said at the time. “But in recent weeks, it has become next to impossible for many California hospitals to obtain staff from contracted agencies due to increased nationwide demand. Desperate hospitals increasingly face unprecedented pricing due to the rates that some staffing agencies are charging.”

And those concerns were discussed at this month’s Healthcare Staffing Summit.

“It’s a supply and demand issue,” said Shane Jackson, president of healthcare staffing firm Jackson Healthcare and a panelist at the conference.

Crisis rates went to levels of up to $150 per hour in New York recently from $80 to $85 per hour in April 2020, Jackson said. What does this mean for the buyer of staffing services? Buyers need to understand that the staffing firms are not to blame. Instead, buyers need to work with their staffing providers to ensure that their talent needs are being met at a price point that both sides can work with in a continuously evolving landscape. Staffing firms need to guide their customers in this new terrain.

Look for part two of this article in the Dec. 1 issue of Contingent workforce Strategies 3.0. It will feature an interview with Brightfield and more.