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Minnesota and Massachusetts are the only two states with a law capping travel nurse agency rates.
The Minnesota law, passed in 2001, bars an agency from charging more than 150 percent of the average hourly wage of an employee in that role. During the pandemic, the state did allow agencies to apply for wage cap waivers. Massachusetts has an overarching anti-price gouging law that applies to services like nurse agencies, but in May 2020 raised the cap agencies could charge by 35 percent.
Several other states, including Pennsylvania, Illinois and Connecticut, are considering similar legislation. And hospital and nursing home associations are putting pressure on lawmakers to act.
In February, the AHA and 200 others urged the U.S. Congress to use its federal powers to investigate travel nurse agencies for “price gouging” and other anti-competitive practices.
“The conduct of some of these staffing agencies bears all the hallmarks of widespread collusion and perhaps other abuses,” their letter read. “Preventing staffing agencies from exploiting hospital and health systems’ need for providers would help mitigate some of the financial and operational pressures currently facing hospitals and allow them to continue focusing on critical care for patients.”
The Michigan Health and Hospital Association supports the proposed Michigan legislation.
“The MHA supports HB 6364 because it would help to address exorbitant contract labor expenses that threaten the financial sustainability of hospitals,” it said in a statement on its website.
Health systems believe the financial viability of their entire industry is at stake given a projected shortage of 450,000 registered nurses alone in the next three years, according to a recent report from McKinsey & Co. And with more nurses reaching retirement age, the facilities don’t want to compete, or aren’t able to, with travel nurse agencies. The fear is too many patients, too few nurses and, ultimately, a reduction in quality of care.
“We’re seeing double-digit increases in costs at long-term care facilities and wages are the No. 1 driver of that,” Samuel said. “Staffing agencies are just a part of that picture but it’s just not sustainable. We need to do everything we can to attract workers back to the sector, and we can’t do that under these costs.”
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