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In a pandemic, is it price gouging to charge a premium for crisis nurses?

MIAMI, FL - MARCH 10: A Now Hiring sign is seen as the Bureau of Labor Statistics reports that nonfarm payrolls increased by 235,000 in February and the unemployment rate was 4.7 percent in the first full month of President Donald Trump's term on March 10, 2017 in Miami, Florida. (Photo by Joe Raedle/Getty Images)
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Travel nurses are in high demand in places like Idaho, where the pandemic’s effects have destabilized the nursing workforce. Travel nursing agencies now offer wages in excess of $3,000 a week. With the cost of housing skyrocketing, Idaho is seeing what happens when a housing crisis and a health care crisis collide. (Joe Raedle/Getty Images)

A bill introduced in the Idaho Legislature would make that designation possible

As the delta variant crashed down on Idaho last fall, a hospital staffing shortage turned into a staffing crisis — and gave way to an expensive swap.

Hospitals would lose nurses to lucrative, short-term gigs with staffing agencies that offered upwards of $4,600 to $8,000 per week, sometimes with housing allowance on top of the wages. And every time a nurse left, their job had to be filled. So, hospitals turned to those same staffing agencies to fill job openings, and the agencies charged the hospitals a premium on top of the worker’s own wages and benefits.

The same thing has happened in all health care facilities, according to the representative of an industry group that wants to set some boundaries on what staffing agencies can charge.

A bill introducedon Feb. 11 and referred to the Senate Commerce and Human Resources Committee would add temporary health care staffing as a category under Idaho’s consumer protection law that forbids price gouging — charging “an exorbitant or excessive increased price” during an emergency.

Other states, industry groups and members of Congress have mulled similar bills and sought inquiries into the high rates charged by health care staffing agencies during the pandemic.

Robert Vande Merwe, executive director of the Idaho Health Care Association, said he’s not optimistic that Idaho’s bill will pass this session. A hearing to discuss the bill before the committee has not yet been scheduled.

“Most legislators are leery about any kind of legislation that doesn’t appear to be free market,” he said in an interview with the Idaho Capital Sun. Vande Merwe’s group represents long-term care facilities in Idaho.

But, Vande Merwe said, health care is not always a free market.

For long-term care facilities, those that accept patients with Medicaid health insurance cannot afford to pay higher wages, he said.

Bill would not cap pay for nurses, would ban predatory pricing

Just as in hospitals, jobs in nursing homes, assisted living or group homes can be physically and emotionally taxing. Health care staff have spoken of feeling underappreciated and overworked during the pandemic, often because the staffing shortages have forced them to take on more work.

When offered a higher wage by a staffing agency, some of them jump at the opportunity to at least make more money — or, in free-market terms, getting paid what they are worth — and their departure worsens the staffing shortages.

“It’s a downward spiral,” said Vande Merwe, describing the phenomenon that has become well-known in the pandemic. “You kind of have to use agency (staff) because there’s no other choice. … One hospital told me the nurse is being paid $75 an hour, but the rate (charged) to the hospital is $250 an hour.”

He said that businesses are “grateful for agency staff when it’s available,” but that nurses and aides who come in on temporary assignments don’t know the patients, the cadence of the shifts, or the facility’s processes.

The phenomenon came up in the Senate Health and Welfare Committee on Tuesday, too, when Sen. Michelle Stennett, D-Ketchum, asked a leader in the nursing industry about Idaho’s rural nurses quitting their jobs for more lucrative, flexible travel nursing contracts.

“I was a director at Saint Al’s for a long time, and one of my good friends who was an ER nurse there just told me he quit because he took a travel agency job for $7,300 a week at St. Peter’s in Olympia, Washington,” said Randall Hudspeth, executive director for the Idaho Center for Nursing, told that committee.

Vande Merwe told the Sun that many of the temporary health care staff who work through agency contracts aren’t crisis travelers coming from other states to help — but are actually Idahoans who quit their jobs and got hired by an agency to continue working here.

Vande Merwe acknowledges that, if Idaho were to regulate health care staffing costs, the Gem State could lose out to other states where agencies are allowed to charge whatever they please.

“We just want a check and a balance of what is abusive practices and what is reasonable,” he said. “But it has to be abusive” for the law to be broken. (If an agency is forced to charge higher rates because workers demand higher wages, that wouldn’t be considered price gouging.)

“We can send a letter that says, you know, this seems outrageous; we have this law here, and we want to use you, but …” Vande Merwe said.

For their part, the staffing agencies say they aren’t making a fortune on the pandemic. They had a 2020 profit margin of 12.4%, according to a paper last month by the American Staffing Association. The paper does not list a profit margin for 2021, when the health care staffing crisis was at its worst in Idaho and most other states.

“The cost of nurse staffing services has risen not only because of the unprecedented demand but because the supply of nurses has suffered due to the unusually harsh working conditions caused by Covid,” the paper said.

“Stress and overwork, stark physical danger and, in the case of travel nurses, extended periods away from home, all have led to burnout, long leaves of absence, and retirements which have significantly reduced the number of nurses available to work,” the paper said. “This supply-demand imbalance required nurse staffing agencies to offer significantly higher wages to attract and retain nurses — which necessarily drove up the cost of the agencies’ services.”

‘It has real impacts on everyone else’

The staffing situation in Idaho’s care facilities is not good, according to Vande Merwe and others. And it has a ripple effect on the rest of the health care infrastructure, on patients and their families, on the economy.

One-third of Idaho’s group homes and one-fourth of Idaho’s residential assisted living facilities that took Medicaid have closed in the past year, according to Vande Merwe.

Without enough room in understaffed care facilities, hospitals can’t discharge patients who need around-the-clock care for a disability or a condition like dementia. Without a place to send the patients, hospitals take care of them for weeks or months.

One hospital told Vande Merwe they’ve been trying to send a patient to a care facility “for a year,” he said. “How many COVID patients can you care for in a year?”

Nursing homes and long term care facilities have been understaffed since the start of the pandemic, and it has only worsened in recent months — contributing to the hospital crisis that sent Idaho into crisis standards of care again in January.

“There are still some facilities that are trying to pay $10-12 an hour” because they rely on Medicaid payments, Vande Merwe said. Those wages won’t fly in the current labor market, so “many” facilities are taking out loans to meet every payroll, he said.

When they can no longer afford to pay staff, and can’t afford the rates commanded by staffing agencies, the facilities sometimes have to close. Some of them are residential, and they realize they can either continue to operate at a loss or sell their eight-bedroom house for $1 million in Idaoh’s current real estate market.

“There’s been families that are in real pinches,” he said. “‘OK, we’ll try to care for Mom, who’s violent — and it’s not her fault, it’s the stroke or she has Alzheimer’s’” is not an ideal situation, he said. It’s also impossible for most people who work full-time to manage care for a vulnerable adult.

“We need a safe place for these seniors to go, and these people with disabilities,” he said.

The Idaho Capital Sun is a nonprofit news organization delivering accountability reporting on state government, politics and policy in the Gem state. As longtime Idahoans ourselves, we understand the challenges and opportunities facing Idaho. We provide in-depth reporting on legislative and state policy, health care, tax policy, the environment, Idaho’s explosive population growth and more. Our mission is relentless investigative journalism that sheds light on how decisions in Boise and beyond are made and how they affect everyday Idahoans. We aim to tell untold stories and provide data, context and analysis on the issues that matter most throughout the state. The Capital Sun is part of States Newsroom, a national 501(c)(3) nonprofit supported by grants and a coalition of donors and readers. We retain full editorial independence.