Staffing

Nursing used to be a stable job. The gig economy has changed that

Travel nurses can cost hospitals two to three times more than a nurse in a permanent position.
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Jelena Stanojkovic/Getty Images

· 4 min read

Gig work has become a major disruptor for one of the most stable healthcare gigs: nursing.

During the height of the pandemic, hospitals used what Deirdre Baggot, a former nurse who now works as a healthcare consultant at the firm Oliver Wyman, called a “shotgun approach” with hiring gig workers. Baggot explained that essentially, hospitals were hiring huge numbers of on-demand workers, sometimes more than necessary, because of the sudden massive spike in demand and inability to predict when surges would take place.

“You couldn’t really anticipate demand, so you placed a big order for gig workers, maybe more than you needed, because you were worried about…having a shortfall. And we didn’t have the level of precision that we needed,” Baggot said.

Hospitals are spending more on nursing labor

Hospitals relied on gig nursing way more post-pandemic—travel nurses worked less than 4% of all hospital nursing hours in January 2019, but more than 23% by January 2022, according to data from analytics firm Syntellis Performance Solutions cited by the trade group American Hospital Association (AHA).

Because travel nurses tend to cost hospitals two to three times more than a nurse in a permanent position, said Pam Damsky, director at healthcare consulting firm the Chartis Group, hospital labor costs have shot up as well. Hospitals spent less than 5% of their total nurse labor expenses on travel nurses in January 2019, but a median of nearly 40% by January 2022, according to the AHA.

The increase in labor costs has led to a median operating margin about 10% lower than pre-pandemic levels, and more than one-third of hospitals were operating in the red by late 2021, according to the AHA.

The nurse gig-working model can also pose a lot of thorny legal challenges for hospitals, according to Bloomberg. Since every state has different laws around pay and how many hours nurses can work, it can be hard to make sure hospitals are following all the rules for gig workers. It can also be unclear whether the hospital would be liable if a travel nurse decides to sue the facility, or if that would fall to a staffing agency, Bloomberg reported.

With all that considered, is nursing gig work in healthcare sustainable?

Experts say yes, but significant changes need to take place in how hospitals utilize travel nurses.

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“A lot of hospitals that are struggling now [are] not because we have travel nurses, it’s the amount of travelers that they have,” said Katie Boston-Leary, director of nursing programs for the American Nurses Association.

To get to a place where hospitals aren’t seeing their margins shrunken by gig work, they need to use travel nurses more strategically, Baggot said. They also need to improve retention so they don’t lose too much of their workforce. Baggot said she wouldn’t be surprised if the percentage of gig workers jumps from 20% to closer to 30% in certain hard to fill job categories within nursing by the end of the year.

Hospitals can improve retention by fostering a supportive atmosphere for workers, according to Baggot.

“Overwhelmingly, what we heard in our research is that gig workers feel as though their new boss has their back. And that’s what they’re looking for,” Baggot said.

Creating staffing models that support the volume of work a hospital has is key to creating a stable environment that nurses want to stay in, said Damsky.

“Long term, we have to find ways to navigate this, and to manage it and to improve retention and restructure the work so that we are creating an environment where nurses can thrive and where they want to work,” Damsky said.

Gig nursing seems here to stay, and it’s going to be up to hospitals to use gig workers strategically.

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