Reps. Peter Welch (D-Vt.) and Morgan Griffith (R-Va.) this week led a bipartisan coalition of more than 200 members of Congress urging the Biden administration to investigate alleged price gouging by nurse staffing agencies. Demand for contract nurses has risen sharply during the past two years due to the pandemic.
The legislators penned a letter to Jeffrey Zients, COVID-19 Response Team coordinator at the White House. Though the letter focused primarily on the needs of hospitals, health care providers of all stripes have suffered from labor pressures and rising costs, including hospice and palliative care providers.
“We are writing because of our concerns that certain nurse-staffing agencies are taking advantage of these difficult circumstances to increase their profits at the expense of patients and the hospitals that treat them,” the signatories wrote. “We urge you to enlist one or more of the federal agencies with competition and consumer protection authority to investigate this conduct to determine if it is the product of anticompetitive activity and/or violates consumer protection laws.”
The signatories maintain that contract nursing costs have “vastly inflated price(s)” by two to three times pre-pandemic rates, generating profits as high as 40% for some firms. The rates increased further during the Delta and Omicron variant surges that began last fall, according to the letter.
While, to date, hospice providers have not publicly accused staffing services of price gouging, many have acknowledged the impact of the rising costs.
Amedisys (NASDAQ: AMED) reported a $2 million drop in hospice segment revenues during Q3 2021 due to a $7.14 increase in cost per visit, partially attributed to higher utilization of contractors. Other factors included planned wage increases, rising health insurance costs, hiring and retention bonuses and raises, and higher business performed by hourly employees, the company indicated in an earnings call. Hospice segment revenue in Q3 totaled $198 million.
Amedisys is not alone.
LHC Group (NASDAQ: LHCG) President Joshua Proffitt said that the company would save $1.4 million per quarter for every 100 basis points it can reduce its dependence on nursing contract labor. Proffitt made the remarks at the Bank of America Securities Virtual Home Care Conference.
“When you’ve got upwards of 3% or 4% of your entire front-line workforce on quarantine, you’re now having to supplement that with contract labor and with much higher cost labor sources,” Proffitt said.
Amid the calls for federal action by providers, industry groups and now members of Congress, some state governments are beginning to examine the contract nursing issue, Hospice News sister site Skilled Nursing News reported. These include Minnesota, Massachusetts, Illinois, Missouri and Pennsylvania.
The reality of the rising costs of these services is undeniable. However, some in the hospice space question the supposition that the increases represent price gouging.
“To some extent, maybe it’s just a market working efficiently in that we have massive excess demand for a limited supply,” LHC Group Chief Strategy and Innovations Officer Bruce Greenstein told Hospice News in December. “It’s not a regular commodity; it’s a piece of labor. We as a market are so desperate for that. Those that hold that high-demand asset, which are the nurses themselves, they get to really set their price.”
