As nurses demand higher pay, nursing homes and staffing agencies clash on the price
Monica Cummings is a licensed practical nurse in Elkhart, Indiana. Long before COVID-19, nursing home work often involved back-to-back shifts doing hard work with low pay, she said. Nurses are simply fed up.
“We’re not going to work ourselves to death for peanuts anymore,” Cummings said. “There are a lot of nurses that have left and said, 'I don’t care how much it pays.' And that’s sad.”
Add COVID-19 challenges to that and it’s easy to see why workers are leaving nursing homes in droves. In Indiana, about 16 percent of nursing homes report nursing shortages. Across the Midwest, reported shortages range from 16 to 43 percent. Nationwide, it’s about 1 in 4.
But some nursing home workers are choosing to stay in the profession – and make more money in the process. They’re turning to staffing agencies, which offer flexible, short-term contracts – and lately pay a lot more.
Zina Lowery, another nurse in northern Indiana, said right now she can make roughly $20 an hour more than when she was a nursing home staff member.
“We're gaining that power back,” Lowery said. “We're understanding our worth and knowing our power and we're negotiating that.”
The rise of 'mom and pop' staffing agencies
Staffing agencies exist to help companies fill vacancies, and during the pandemic, Lowery noticed the higher prices staffing agencies could charge long-term care facilities for nurses on short-term contracts.
She filed for a business license in Indiana to start her own small agency and launched iCare Staffing Solutions in April 2020.
Lowery said it was initially a reaction to being forbidden to wear a face mask at work early on in the pandemic. She and a coworker were aghast and left the nursing home where they worked, she said, to launch the staffing agency.
“We know the world,” Lowery said. “We know how everything functions, what goes on, what's going to make staff happy: incentives, flexibility, all of that.”
Lowery and her colleague are hoping to grow iCare, but for now do most of their nursing work through larger, more established agencies.
Jason Meyer, president of Medical Staffing Consultants, said he gets calls from nurses every day looking for advice on starting their own agencies. He cautions it's not as simple as just filing a business license.
“I say, ‘Do you have malpractice insurance? Do you have general liability? Do you have worker’s comp? Are you licensed in certain states that need licensing?’” he said. “There’s so many moving parts.”
But he’s seen nursing homes work with smaller agencies that may not have all the proper paperwork, because they’re eager to fill positions and find lower prices. He worries it could set a dangerous precedent.
“Facilities in the pandemic [are] becoming really loosey goosey because of desperation … so they're not even asking for basic paperwork and [doing] due diligence,” Meyer said. “I've never seen that before.”
Nursing homes accuse staffing agencies of price gouging
Some nursing homes directors say the rising rates they’re having to pay staffing agencies amount to price gouging. Bernie McGuinness is the CEO of Majestic Care, a company with long-term care facilities across the Midwest.
“To be blunt, I feel taken advantage of,” he said. “Not even close to a fair market value am I being asked to pay. And that price just – it's unsustainable.”
He said he wants to pay his nurses better and compete with staffing agencies. Through the pandemic, he said all staff got a raise of about $5 an hour. They’ve gotten creative with incentives, giving out free cell phones and even working with rental companies to cut staff members’ housing costs.
McGuinness relies on reimbursements from Medicare and Medicaid to cover costs. So he feels he’s at a disadvantage.
“We've seen our costs go up, you know, 10 or 11 percent each year during this pandemic in the labor standpoint, in some markets even more,” he said. “Reimbursement does not go up 10 and 11 percent a year.”
So, McGuinness wants lawmakers to step in and do something to control the rising costs.
The American Health Care Association and the National Center for Assisted Living have sent multiple letters to federal lawmakers, accusing staffing agencies of “exploiting the severe shortage of health care personnel … by charging uniformly high prices.”
Staffing agencies: It's just supply and demand
Regulating staffing wages alone won’t fix the supply-and-demand issue that’s driving up prices, said Chris Madden, president of Networks Connect, a staffing agency based in Indianapolis.
“The villain is COVID,” Madden said. “It's just the silent villain that you can't talk to, you can't reason with and we're just all – nobody knows what to do.”
Madden said he’s not opposed to staffing wage regulations. But staffing agencies are in a tough spot because they have to compete against each other for fewer nurses demanding bigger paychecks.
“Can you blame them?” he said. “They're just saying, ‘If this is what the market’s paying, then I want to get paid that too.’ They're not [withholding] their care. They're just saying I want to be compensated for it.”
Jason Meyer, the staffing agency consultant, said he sympathizes with nursing homes, but thinks the anger nursing home directors feel is misplaced.
“It's understandable that they'll blame the agencies now because [nursing homes] always used … agencies supplementally,” Meyer said. “But they're using them more now. It's always been something that they consider a necessary evil, [but now] the hate is adversarial.”
The current trajectory is unsustainable
Federal CARES Act money going to nursing homes has helped some weather recent spikes in labor costs, said John Bowblis, an economics professor at Miami University in Ohio who studies geriatric care.
But relying on federal assistance is not sustainable.
“If this continues on this way, you will see a large number of nursing homes that might have to declare bankruptcy,” Bowblis said. “Or the other option is, politically, that you have to increase reimbursement, and a lot of states don't want to do that.”
Bowblis said it’s also really hard to prove if staffing agencies are price gouging. There’s no technical definition and laws preventing it vary state by state. It all comes down to the difference between what those companies charge and what agency workers make in wages – but those numbers generally aren’t public.
"If that historical difference is significantly out of line, you know, then that's a potential for price gouging," Bowblis said.
A handful of states – including Minnesota and Massachusetts – have passed laws putting wage caps on how much staffing agencies can pay nurses. But Indiana is halfway through the legislative session and lawmakers haven’t discussed any solutions.
One bill was proposed to cap staffing agency charges to three times a "fair market value," but it didn't manage to get a committee hearing.
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This story comes from a reporting collaboration that includes Indiana Public Broadcasting and Side Effects Public Media. Contact reporter Justin at email@example.com or follow him on Twitter at @Hicks_JustinM.