Beyond the Byline: Providers accuse staffing agencies of price gouging

Alex Katsik: Understaffed hospitals, nursing homes and other service providers across the country are turning to recruitment agencies to alleviate labor shortages. Meanwhile, wages for visiting nurses have skyrocketed as demand rises and supply of nurses shrinks. Should there be limits on what recruitment agencies can charge? Welcome to Modern Healthcare’s Beyond the Byline, where we offer a behind-the-scenes look at our reporting. I’m Alex Kachik, Senior Operations Reporter. Our political reporter Jesse Hellmann joins me today to talk about personnel, politics and regulation. Thanks for joining me, Jessie.

Jesse Hellmann: Thank you for inviting me.

Alex Katsik: Okay, Jesse. We have heard from providers that they are paying staffing agencies at rates that are two, three, four times what they were before the pandemic. You have reported this before. month that the nursing home industry is pushing to cap the rates that health staffing agencies can charge. What types of legislation are being introduced?

Jesse Hellmann: So legislators in states like Ohio and Pennsylvania have passed legislation that limits the rates these agencies can charge. They say these agencies are taking advantage of the pandemic to raise their stakes, and nursing homes are leading the way in this legislation. States such as Maryland and Indiana also have bills that take a different approach by including healthcare staffing agencies in existing anti-price gouging laws designed to protect consumers during emergencies. Thus, both types of bills are simply an attempt to rein in these state agencies.

Alex Katsik: And you seem to know that states are becoming more active when it comes to this kind of intervention. You know, I’ve been talking to some antitrust lawyers and some others. And, you know, on the regulatory front, states are increasingly introducing different types of bills and trying to get around some of these federal rules or fill in the gaps in these federal laws to suit their needs. condition. So it looks like it might be applicable in this case as well.

Jesse Hellmann: Yes, there is Congressional interest in this area, and as members of Congress, you have written to the FTC asking for an investigation. But there seems to be little that Congress, in his opinion, can do. That’s why you see trade associations talking to state legislatures instead. Thus, labor shortages were a problem long before the pandemic. Can you talk about how we got to this point?

Alex Katsik: Yes, which is why staff costs typically account for about half of hospital operating costs. And hospitals have tried for years to operate “more compactly,” in part by limiting the amount of inventory they can store. For example, for personal protective equipment such as masks and gloves, or to increase the workload of nurses and their productivity. As such, tensions mount between nurses and their managers as they advocate for lower nurse-to-patient ratios and better working conditions. And those frictions, combined with all the stresses of the pandemic, have caused many medical professionals to leave the industry. And also, you know, in the lead-up to the pandemic, many senior nurses with experience in, say, emergency medicine or respiratory care were approaching retirement age. So it made the whole system more vulnerable. And I was reading a recent issue of our Kara Hartnett cohort. history, and she pulled data from the Bureau of Labor Statistics showing that the number of registered nurses dropped by 2% between 2020 and 2021, and nurse assistants dropped by 9% over that period. But I’m curious why this attention is coming from, in particular, nursing homes that want to introduce some of these calf rate recruitment agencies?

More: Lack of staff, delay in treatment leads to change in care patterns

Jesse Hellmann: So groups like the American Health Association, which represents nursing homes, have really been at the forefront of state legislation, and the nursing home leaders I spoke to say it’s because they really have a different payer mix than hospitals. . . When staff prices go up, nursing homes can do little to offset these costs because they do rely heavily on Medicaid. I think that, on average, most of the patients served by nursing homes are Medicaid patients, and these rates tend to be lower than Medicare and commercial insurance. So they argue that these staff prices just hit them harder than they do in hospitals, where they usually have a more diversified payer mix. Can you talk about how the labor shortage has affected hospital finances?

Alex Katsik: Yes, sure. Providence, a system of 52 hospitals scattered across the West Coast, reported its 2021 earnings last week, which, as you know, mirrors many other larger healthcare systems. Their wages and benefit costs increased by almost 11% from 2020 to 2021. The national average was closer to 13%. According to Kaufman Hall, they had, they broke it down by full-time employees per bed adjusted. And it decreased by 4.5% year on year, while labor costs per adjusted emissions increased by 16.3%.

Providence operating losses double in 2021

That means, you know, there aren’t necessarily more nurses at the bedside. But these fewer nurses are demanding higher pay. And, you know, the people I’ve talked to expect some of these pay and benefit increases to be permanent, not just a short-term spike. So you know that in addition to raising salaries and signing bonuses or partnering with nursing schools or hiring medical professionals from abroad, they are trying to use telemedicine where they can and expanding the roles of workers in the team-based care model and their limitations. certain types of personnel. Thus, in the near future, some hospitals, especially rural ones, had to suspend their services, which could lead to poor results for years to come. But, you know, in this conversation about changing policy and some of the proposed bills, how do you see this dynamic between hospitals and other types of providers trying to stay viable with the appropriate arguments that nurses should be paid adequately, and you know what, you you know, working conditions have to change to keep them safe and earn them a job?

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Jesse HellmannA: So it’s really interesting. It seems that the position of hospitals when it comes to these rate cap bills is not as unified as it is when it comes to nursing homes. I have seen some hospital associations say they support the rate capping law. I have also seen some people say they don’t. For example, Oregon has a rate capping bill that was opposed by the state hospital association because they feared it would actually dissuade staffing agencies from coming to their state. And they say we rely on these traveling nurses all the time, not just during the pandemic, and we can’t risk the situation when we need them. And they won’t come here because it’s rate caps.

Alex Katsik: Yes, and Oregon too. I mean, they are just starting this cost growth benchmark, just like other states like Massachusetts. So it’s interesting to watch these competing games play out where, as you know, they’re very focused on healthcare spending. And, you know, these recruiting agencies are a big contributor to that, but at the same time, you know, they’re worried about being able to hire enough people to support, you know, their level of care. So, yes, I’m glad you pointed Oregon. And when you talked to other lawyers and legal experts about these bills, do you know what they thought about, you know, that they got legislators’ approval, and what are the chances of them going forward?

Jesse Hellmann: So even the people and nursing home associations that are pushing these bills have recognized that this is an uphill battle. They hear concerns from Republican lawmakers and Democrats that this is some form of rate setting. And that’s kind of a swear word in health care. Thus, they face opposition on this front. As I said, they also face opposition from hospitals. Nurses are definitely facing opposition that the traveling nurse gives them more control over their schedule, more opportunities to make more money. So it’s definitely an uphill battle. We’ve already seen the bill die in Kansas, which means it won’t be considered this year. In states like Missouri and Oregon, there are other bills that have been relaxed and now only require recruitment agencies to register in the state and don’t address the issue of rate setting at all. So I think this is definitely something that will not be decided this year in the state legislatures. And we will probably see this problem come back again in the future.

Alex Katsik: It makes me also think about these broader price transparency efforts where, you know, these hospitals had to disclose, you know, their payers negotiated the rates. I guess part of it, in theory, changed the cost. So if there are more of them, they incur higher labor costs, you know, which can translate into higher prices. So maybe part of that backlash is, you know, with these mandates and they have to be more open and reveal their prices, and then, you know, right there, I think they kind of justify some of those higher prices through some of these increases in staff costs if they were to experience. But do you see any corollary between some of these demands for price transparency and these allegations of price gouging by these recruiting agencies?

Jesse Hellmann: Certainly, I think that state and federal legislators are more interested in wanting to know why certain medical services or procedures cost as much as they cost. So I think this is another example of that. An interesting difference. However, I would like to point out, and something I’ve heard from people who don’t support rate caps, is that hospitals in general were really against the price transparency measures that were put in place by the previous administration and are ongoing. under the Biden administration. But some of these hospitals have been the first to call for more transparency about what these recruiting agencies charge. So it’s kind of an interesting dynamic.

Alex Katsik: Well, we’ll be watching these bills get through the state legislatures and see what happens. But anyway, I think some of them are more focused on pricing and some of you are also aware of those costs. So I think this will be a theme in the future.

In the meantime, Jesse, thank you very much for your report and for your time. Appreciate your understanding.

Jesse Hellmann: Thanks.

Alex Katsik: Thank you all for your attention. If you’d like to subscribe and support our work, there’s a link in the show liner notes. You can subscribe to Beyond the Byline on Spotify, Apple Podcasts, or wherever you listen to your modules. You can stay connected to our work by following Jessie and me on Modern Healthcare, Twitter, and LinkedIn. We appreciate your support

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