Hospitals & Facilities

Upstate New York hospitals bring traveler recruitment in-house

A new model looks to undercut traditional nurse staffing agencies.
article cover

Jose Luis Pelaez Inc/Getty Images

· 4 min read

As hospitals across the US struggle to fill open positions (despite spending millions on traditional travel staffing agencies), an Upstate New York hospital association decided to try a new (and increasingly popular) approach: bring the “travel staff” in-house.

In October 2022, the Iroquois Healthcare Association (IHA), which serves about 50 hospitals and health systems primarily in Central and Western New York, made its first hire through Upstate Works—a program that allows member facilities to hire travel staff without having to pay the hefty fees traditional agencies often require.

By Jan. 3, more than three dozen clinicians had been hired across five of the six participating IHA hospitals. This amounts to an estimated “total savings of over $351,000 (based on the average 13-week travel contract),” Lauren Ford, IHA’s senior director of data analytics and strategy, told Healthcare Brew. And those savings are only expected to grow into the millions as the program expands to a dozen other hospitals.

“This is the future of the staffing model,” Ford said.

The in-house model, which many health systems across the US have already embraced, threatens to upend traditional travel staffing agencies that commanded high fees amid increased demand for travel nurses and other health workers during the Covid-19 pandemic—two or three times more than pre-pandemic rates, according to groups like the American Hospital Association.

Developed with technology and management services provider Healthcare Workforce Logistics, IHA’s Upstate Works lets participating facilities source staff through websites like Wanderly, an online repository of healthcare staffing jobs. FlexUp, a third-party company, hires the contract workers and bills the hospital a flat administrative rate negotiated by IHA.

Ford did not share the precise fees IHA members pay per position (on top of the staff pay and benefits) through the new model, but said it’s about 10%–20% lower than facilities pay on average for travel nurses hired from traditional agencies.

“Upstate Works is not a revenue generator for IHA,” Ford added. “It is an innovative member benefit designed to [be] an effective and cost-saving alternative to the traditional staffing agency model.”

Hospitals and nursing homes participating in Upstate Works can still use the traditional staffing agencies they have contracted with for decades to recruit and hire nurses and other professionals on a short-term basis.

Navigate the healthcare industry

Stay up to date on the complex world of healthcare with the latest updates and insights in your inbox three times per week.

But member facilities that convert even just a quarter of their existing travel staff from traditional agencies to the Upstate Works program could save a combined $25 million, said Ford. (IHA member facilities spent a projected $1.2 billion on contingent labor in 2022, with several averaging around $8–$10 million a month on such expenses toward the end of the year.)

“That [money] can go back into their hospitals, back into their communities, back into recruitment/retention for permanent labor, and just patient care,” she said, noting that some members are using at least part of the savings to increase the hourly pay for travel nurses. “It’s really astounding the amount of money that has been spent on contingent labor in the past few years.”

Nearly all New York hospitals have nursing positions they cannot fill, and three-quarters have other key positions that remain open, according to a December 2022 survey conducted on behalf of IHA and four other hospital associations in the state. The survey also found that overall labor costs increased by 17% from 2019 to 2022, with contract nurses now making up 65% of total contract labor expenses at hospitals—compared to just 50% in 2019.

A May 2022 report from Kaufman Hall, a management consulting firm, found contract labor to be a “major factor in rising hospital expenses” nationwide.

Backers of the in-house model argue that it not only gives hospitals more control over how much they spend to recruit travel staff, but also gives travel workers—not recruiters—more power to compare pay packages and to decide where they want to work.

It also allows health systems to build their own brands while forcing traditional agencies to lower their margins and make other changes in order to compete, said Jeff Niles, EVP of sales and marketing at Healthcare Workforce Logistics.

“What we’re trying to do is to level off the markup really and say, ‘OK, the pay may go up because demand is up. But the profitability, or the gross profit margin, doesn’t need to go up.’ If anything, because of the volume, gross profits should go down,” he said.

Navigate the healthcare industry

Stay up to date on the complex world of healthcare with the latest updates and insights in your inbox three times per week.