As healthcare continues to experience a labor shortage, wage inflation has become a significant issue. According to Premier Inc., the nurse base pay is up 9% since June 2021 and is likely to continue rising. Travel nursing agencies, which offer temporary nursing staff to fill in gaps in staffing, are expensive and exacerbate wage inflation. In fact, a recent 2022 report examined input from 272 hospitals in 32 states on registered nurse turnover, retention, vacancy rates, recruitment metrics and staffing strategies. The report revealed that for every 20 travel RNs eliminated, a hospital can save $4,203,000 on average. As a result, health systems and post-acute facilities are searching for alternative solutions.
Travel Agencies & Wage Inflation in Healthcare
The healthcare industry is facing a significant labor shortage, contributing to the projected increase in healthcare costs over the next five years.
According to a report by McKinsey & Company, by 2025, the United States could experience a shortage of 200,000 to 450,000 registered nurses and 50,000 to 80,000 doctors, representing 10 to 20 percent and 6 to 10 percent of the workforce, respectively. This shortage is expected to lead to clinical labor cost growth of 6 to 10 percent over the next two years.
In a recent Op Ed on Modern Health, ShiftMed’s VP of Growth, Aamer Mumtaz, highlighted the challenges of addressing wage inflation and the nursing shortage in the healthcare industry. Many health systems are grappling with the issue of filling temporary staffing gaps caused by factors such as sick leave, vacations, or staffing shortages.
Traditionally, these gaps have been filled by travel nurse agencies and Vendor Management Systems (VMS) or Managed Service Providers (MSP), but these solutions come with a high price tag and exacerbate wage inflation. Furthermore, they can be detrimental to a healthcare organization's long-term workforce strategy, as they do not consider the organization's budget, full-time employees, or distinct recruitment and retention needs.
Mumtaz proposes an alternative to the traditional staffing model: the W-2 workforce marketplace model. This model redefines staffing for healthcare systems, reduces costs, and helps recruit and retain talent. This approach involves partnering with a W-2 (not 1099) workforce marketplace technology provider that offers a pool of qualified W-2 employees who can be quickly and easily onboarded to fill staffing gaps without the need for expensive travel nurse agencies or VMS/MSPs.
The Solution: A Flexible W-2 Workforce
The healthcare industry needs a sustainable solution to the problem of staffing shortages, wage inflation, and the expensive fees charged by staffing agencies. A flexible W-2 workforce can provide an effective solution to these issues.
By tapping into a W-2 workforce marketplace like ShiftMed’s over 350,000 credentialed nurses, health systems and post-acute facilities can regain control over their staffing and wage costs, reducing their reliance on expensive staffing agencies and associated fees. The W-2 model can also provide cost savings and greater budget control, allowing organizations to invest in hiring, training, and retaining a skilled and dedicated workforce.
Organizations like ShiftMed offer flexibility of 1099 independent contractors with the stability of W-2 workers, thus allowing healthcare companies the opportunity to fulfill their shifting nursing needs without contributing to wage inflation.
A W-2 Workforce to Supplement Your Internal Staff
ShiftMed offers a reliable and cost-effective solution to the issue of wage inflation in healthcare. Our W-2 nurses are hired for the long term, and meaningful benefits are provided to keep them retained and engaged. By hiring nurses as W-2 employees, ShiftMed assumes all the risk and administrative burden that comes with workers' comp, overtime, and unemployment insurance.
Furthermore, facilities can leverage "Powered by ShiftMed" to run their own, private-label technology platform to seamlessly manage both internal and external resources. This internal resource manager allows facilities to seamlessly engage their full-time employees and float pools with innovative tools that help reduce reliance on external agencies and travel nurses, resulting in lower labor costs and increased retention rates.
With access to this innovative technology and access to ShiftMed’s W-2 workforce marketplace, hospitals, health systems, and skilled nursing facilities can rebalance their labor portfolio, reduce expenses, and stabilize their workforce.