How Per Diem Nursing Cost-Effectively Fills Hospital Staffing Gaps
Hospitals struggling with margins and contract labor costs may find a turning point ahead. Fitch Ratings reports that providers reducing contract labor and boosting productivity saw margins begin to rebound in late 2023—a trend continuing into 2024. With labor and inflation pressures easing and volumes growing, margins are expected to improve into 2025.
If your hospital relies heavily on contract labor, you’re not alone. Hospitals nationwide spent an estimated $51.1 billion on contracted staff in 2023, according to the 2024 AHA Costs of Caring Report. The good news? There’s a more sustainable path forward. By shifting to per diem nursing for scheduling gaps, your hospital can reduce labor costs, improve staffing flexibility, and set the stage for stronger margins.
What Is Per Diem Nursing?
Per diem nursing is a flexible staffing model that allows nurses to fill scheduling gaps as needed. Whether covering for staff absences, planned vacations, or surges in patient volume, per diem nurses enable hospitals to maintain high standards of care without the overhead associated with full-time or travel labor. Unlike travel nurses, per diem nurses typically work within their local communities and don’t require long-term contracts, making them a cost-effective solution for addressing fluctuating demands.
Per Diem Nursing vs. PRN Nursing
Per diem and PRN nursing opportunities bring job flexibility to nurses seeking non-traditional schedules and better work-life balance. While both roles involve working as needed, they differ regarding employment structure, scheduling flexibility, and workplace expectations.
Per Diem Nurses
Per diem nurses are typically free to pick up shifts across multiple facilities. This staffing model offers maximum flexibility, allowing nurses to choose when and where they work. It’s ideal for those who prioritize work-life balance or want to supplement their income. However, per diem nurses typically aren’t guaranteed a set number of hours or offered benefits.
PRN Nurses
PRN nurses usually work at a single facility and typically have more predictable schedules, so they have less flexibility in choosing when they work. When on-call, they must remain at home or within a designated distance from the hospital, ready to report if needed to cover a shift due to an emergency or an unexpected spike in patient volume. PRN nurses are typically guaranteed a specific number of shifts and offered benefits.
3 Ways Hospitals Benefit from Per Diem Nurses
Per diem nursing has become a strategic workforce strategy for hospitals, offering unique advantages that go beyond the limits of traditional staffing models. Here are three key benefits of integrating per diem nurses into your workforce:
1. Staffing Flexibility
Per diem nursing provides unparalleled flexible healthcare staffing options, enabling hospitals to adjust staffing levels in response to fluctuating patient volumes. This model helps you quickly address staffing gaps caused by unexpected absences, seasonal fluctuations, or sudden admission surges.
2. Labor Savings
Tapping into local per diem nurses can be a cost-effective alternative to maintaining a full-time workforce or relying on travel nurses. This approach helps your hospital reduce expenses related to benefits, overtime, and long-term contracts. By paying only for the hours worked, you can manage your budgets more efficiently while maintaining the flexibility to adjust staffing levels based on patient demand.
3. Operational Efficiency
Your hospital can enhance operational efficiency by leveraging per diem nurses ready to fill staffing gaps and keep patient care running smoothly. Their ability to step in on short notice is key to maintaining high-quality care and seamless operations—especially during peak demand.
3 Hospital Staffing Challenges of Per Diem Nursing
Although per diem nursing brings many benefits, it also comes with distinct challenges that hospitals must proactively manage to maintain quality care and operational efficiency. Here are three key staffing challenges associated with per diem nurses and ways to overcome them:
1. Lack of Protocol Awareness
Maintaining high care standards and operational efficiency with a variable workforce can be difficult. Per diem nurses typically are less familiar with specific facility protocols, policies, and workflows than permanent staff. However, with the right workforce partner, you can tap into a pool of local, credentialed per diem nurses who seamlessly integrate with your float pool—ready to step in and fill scheduling gaps whenever needed.
SSM Health, for example, uses ShiftMed on-demand nurses to extend their regional float pools. These fully vetted per diem nurses undergo the same onboarding, LMS training, and orientations as full-time SSM Health nurses.
“SSM Health has seen great quality outcomes after bringing on-demand staff,” said Jennifer Garnica, vice president of care service and chief nursing officer at SSM Health—Saint Mary’s Hospital. “Onboarding is one key to success. You need to onboard people correctly and ensure they understand practice standards.”
2. Reduced Accountability
Maintaining accountability, consistency, and engagement with per diem nurses can be challenging because they often lack the long-term institutional ties of full-time staff. However, you can address these issues effectively with the right workforce partner. It's equally essential for your organization to invest in building relationships with per diem nurses.
At SSM Health, Garnica emphasizes integrating ShiftMed nurses into the team culture. “Most of our core ShiftMed nurses pick up four shifts a week in the same units and return to the same hospital,” she explains. “We reward and recognize them like our own staff.”
3. Scheduling Complexity
Coordinating a float pool comprising internal staff and external per diem nurses—each with their own availability and shift preferences—can make scheduling more complex and increase the likelihood of last-minute gaps. However, this process becomes far more streamlined and efficient with the right workforce management technology.
ShiftMed simplifies and streamlines float pool coordination through its integrated workforce management platform, which allows your hospital to manage both in one centralized system efficiently.
For example, the ShiftMed platform enables real-time shift posting and fulfillment. It automatically matches available, credentialed nurses based on shift needs, location, and qualifications—minimizing manual coordination and last-minute scrambling.
ShiftMed oversees credential verification and compliance management for its nursing network, ensuring that every nurse who works a shift at your facility is fully qualified and current with your specific requirements. This not only reduces administrative workload but also minimizes compliance-related risks.
Successfully addressing these hurdles requires thoughtful planning and strong support systems to ensure per diem nurses integrate smoothly into your care team.
Cost Analysis of Per Diem Nursing
As hospitals look for cost-effective ways to maintain safe staffing levels, per diem nursing has emerged as a strategic solution. Understanding the financial impact of this staffing model requires a clear breakdown of direct and indirect costs and the overall return on investment. Below, we examine key cost considerations associated with per diem nursing.
Direct Costs
The direct costs of per diem nurses include hourly wages and administrative expenses. Although these nurses often earn higher hourly rates than full-time staff, the absence of your hospital having to pay benefit costs, paid time off, and overtime can make this option more affordable overall. By using per diem nurses to fill short-term staffing gaps, hospitals can reduce long-term financial commitments and achieve meaningful cost savings.
ShiftMed nurses are available on demand, with no fixed commitment, giving you the flexibility to scale staffing as needed. The platform also features built-in controls and intelligent shift distribution, promoting fairness across your workforce and helping to prevent burnout or frustration caused by inconsistent incentive pay.
Indirect Costs
Training and turnover costs are essential when evaluating per diem staffing. Onboarding new per diem nurses can require additional training resources. However, with ShiftMed, nurses complete the same training and orientation as internal staff, ensuring consistency in care and faster integration into teams. This approach reduces onboarding inefficiencies and supports stronger team cohesion and lower turnover rates.
Return on Investment (ROI)
Evaluating the return on investment (ROI) for per diem nursing means weighing the savings from reduced benefits, overtime, and long-term commitments against the higher hourly wages and training costs. Many hospitals find that the flexibility, speed, and efficiency of per diem staffing deliver strong financial returns—especially when paired with a strategic partner like ShiftMed.
ShiftMed enhances ROI by:
Optimizing labor resources to minimize nursing overtime and staffing imbalances.
Prioritizing internal staff while seamlessly filling gaps with cost-effective per diem support.
Offering an on-demand workforce that averages $10 less per hour than traditional travel labor.
Streamlining recruitment and providing hospitals with credentialed nurses without buyout fees.
Automating tasks that reduce manual errors, lower reporting costs, and improve audit readiness.
Making Per Diem Nurses Part of Your Workforce
Integrating per diem nursing into your healthcare workforce strategy requires thoughtful planning. Your hospital must evaluate staffing needs, identify peak demand periods, and build a reliable and skilled per diem nurse float pool. A clear strategy with defined goals, processes, and resources is key to successful implementation.
Workforce platforms like ShiftMed play a vital role by streamlining recruitment, scheduling, and management. With advanced tools, ShiftMed simplifies the staffing process—helping hospitals quickly and efficiently fill gaps while boosting operational efficiency.
Best Practices:
Establish a strategic plan that outlines goals, processes, and resources for effective per diem nursing.
Streamline scheduling and shift management with a scalable workforce management platform.
Maintain a qualified per diem nurse database to ensure quick access to skilled staff when needed.
Use predictive analytics to anticipate staffing needs and proactively schedule per diem nurses.
Ensure proper onboarding and training for per diem nurses to maintain high care standards.
Create a supportive and inclusive work environment to engage and encourage per diem nurses.
Find a workforce partner with per diem nurses who meet all licensing and regulatory requirements.
Foster open communication between per diem nurses and permanent staff to promote teamwork.
Establish contingency plans for staffing emergencies to ensure uninterrupted patient care.
Per Diem Nursing Conclusion
As hospitals navigate financial pressures, staffing shortages, and fluctuating patient volumes, per diem nursing stands out as a flexible, cost-effective solution. By strategically incorporating per diem nurses into your workforce, your hospital can reduce reliance on costly contract labor, improve operational efficiency, and maintain high standards of patient care.
With the right planning, onboarding processes, and workforce partner, per diem nurses can become a trusted and seamless extension of your internal team. Embrace the agility of per diem nursing and position your hospital for greater resilience, better patient outcomes, and stronger financial performance. Schedule a free workforce consultation with ShiftMed today!