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White House Urged to Investigate Pandemic Price Gouging by Nurse Staffing Agencies

Analysis  |  By Carol Davis  
   November 18, 2021

Wages paid to traveling nurses during the pandemic have been 'vastly' inflated, lawmakers say.

U.S. lawmakers are urging the White House to enlist federal agencies to investigate price gouging by nurse staffing agencies.

"We have received anecdotal reports that the nurse staffing agencies are vastly inflating price, by two, three, or more times pre-pandemic rates, and then taking 40% or more of the amount being charged to the hospitals for themselves in profits," said the letter to Jeffrey Zients, White House COVID-19 Response Team coordinator, signed by Sens. Mark Kelly, D-Ariz., and Bill Cassidy, R-La., and Reps. Doris Matsui, D-Calif., and David McKinley, R- W.Va.

"We have heard the amounts charged to hospitals rose precipitously when the most recent wave of the COVID-19 crisis swept the nation and the agencies seemingly seized the opportunity to increase their bottom line. But this is not the first time the agencies have engaged in this sort of conduct," the letter reads. "As the first wave of COVID-19 swept the nation in 2020, they similarly inflated their prices to hospitals. Hospitals have no choice but to pay these exorbitant rates because of the dire workforce needs facing hospitals around the country."

These high rates will place additional strain on not-for-profit hospitals' profitability in the long run, says a recent report released by Moody's Investors Service.

After a short reprieve, expensive contract labor for nursing has increased as COVID-19 cases have risen with the Delta variant, and in some cases, to a higher level than during the surge seen in mid-2020, some hospitals report. The use of traveling nurses has further driven up the demand and cost of contract labor.

"This model is unsustainable for many health systems," the letter says.

The lawmakers asked Zients to enlist one or more of the federal agencies with competition and consumer protection authority to investigate this conduct to determine:

  • Is this activity the product of anticompetitive activity?
  • What is the ownership structure of these staffing agencies and is there evidence of price collusion or other anti-competitive pricing patterns?
  • Does this activity violate consumer protection laws?
  • Are these increased rates translating to higher pay for contract nurses?
  • What impact have these price increases had on rural and underserved areas?
  • Have nurse staffing agencies increased their own percentage of profit during the COVID-19 pandemic? If so, by how much?
  • How much of the COVID-19 relief funds are directly or indirectly going to pay these contracts?
  • How may the 100% cost share for FEMA reimbursement be contributing to the ability of the staffing agencies to extract higher payment?

"We urge you to ensure that this matter gets the attention from the federal government it merits," the letter concludes, "to protect patients in dire need of life-saving healthcare treatment and prevent conduct that is exacerbating the shortage of nurses and continuing to strain our health care system."

“Hospitals have no choice but to pay these exorbitant rates because of the dire workforce needs facing hospitals around the country.”

Carol Davis is the Nursing Editor at HealthLeaders, an HCPro brand.

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