Contract Nurse Utilization Normalizing, But Hospice Staffing Situation Remains Dire

With hospice providers reporting fewer staff in quarantine, many hope to reduce their utilization of temp nursing services — as well as the higher labor costs that come with them.

But the reality won’t be that simple.

Indicators suggest that demand for temp nurses is dipping slightly, and rates may be starting to fall. However, providers shouldn’t necessarily expect a return to pre-2020 conditions.

The workforce shortage preceded the pandemic, and hospices and other health care employers will continue to need those contract nurses for the foreseeable future, according to Bobby Conlon, senior national staffing manager for Caring Brands International subsidiary Interim HealthCare.

“Although we expect the demand for nurses will experience some pull-back, it will remain elevated throughout the rest of 2022 compared to pre-COVID,” Conlon told Hospice News in an email. “High turnover rates due to retirement, burn-out and alternative employment choices among nurses are all contributing to this sustained demand.”

Hospice providers experienced some degree of relief as the Omicron variant surge began to subside earlier this year. The impact of the variant was massive.

Case in point: Aveanna Healthcare Holdings (NASDAQ: AVAH) in January and February had as many as 3,000 staff quarantined, up from a range of 200 to 300 in late December 2021, CEO Tony Strange said on a Q1 earnings call.

While quarantine numbers began to stabilize for many providers in early March, no one is out of the woods. Conditions in the health care space remain volatile due to the virus.

COVID-19 cases have risen 52% during the past 14 days, according to New York Times data. Hospitalizations are up 31%. But as sobering as these numbers appear, they do not tell the whole story.

With the availability of home testing kits — and partisan spats tying up federal COVID response funding — fewer cases are being reported. The true number of infections is undoubtedly much higher. Thus, the nation is still flying blind with no way to predict the pandemic’s course.

But even if the virus disappeared tomorrow, the labor pressure on hospices would still be with the industry. For one, the burnout that skyrocketed during the pandemic was widespread years earlier among hospice clinicians. 

“We had a nursing shortage well before the pandemic,” Encompass Health (NASDAQ: EHC) CEO and President Mark Tarr said recently at the Bank of America Securities 2022 Healthcare Conference. “And it was already a challenging environment. The pandemic just made it that much more difficult.”

A key factor is that hospice workers are aging along with the rest of the population, meaning they will be leaving the workforce in higher numbers.

The median age of nurses in the United States is 52 years old, according to the 2020 National Nursing Workforce Survey. More than one-fifth plan to retire within the next five years.

Similar trends will likely appear among the faculties of nursing colleges who would be training the next generation of clinicians, according to the survey.

This is a double whammy for hospices. Even now, medical, nursing and social work students receive very little exposure to hospice or palliative care during their training. A 2018 study concluded that most students in clinical disciplines do not feel prepared to provide family care at the end of life.

With these factors in mind, temp — or “travel” — nursing companies will likely feast in the near term while hospices continue to famine, even if staffing service rates gradually come down.

“We’ve seen an overall decline in contract (travel) nursing. This is mainly due to inflated contract bill rates that are not sustainable in the health care industry,” Conlon said. “This has actually benefited Interim HealthCare as we are able to provide these hospitals with local talent on per diem, block scheduling, or long-term 13-week contracts. Because our nurses are local, we can accept lower/normalized bill rates and our nurses do not have to worry about traveling or securing secondary housing.”

Investor interest also signals that nursing staffing services will continue to thrive.

For example, the tech-enabled nurse staffing firm IntelyCare in April secured $115 million in a Series C investment round, bringing the company’s total value to $1.1 billion.

In at least one instance, investors in staffing services are the providers those companies will ultimately serve. Amedisys (NASDAQ: AMED) early this year invested an undisclosed amount in a Series F round for the nurse staffing agency connectRN.

The “gig economy” nature of staffing company jobs has proven attractive to nurses as those positions tend to offer higher wages and more flexible scheduling than many full-time health care employers.

This flexibility and improved work/life balance are becoming more crucial to recruitment and retention throughout the health care sector, including the hospice industry.

Data from the health care staffing firm Aya Healthcare shows that demand for travel nurses remains 59.2% above pre-COVID levels, according to a research note by Brian Tanquilut, equity analyst for Jeffries Financial Group.

Generally speaking, nurse staffing companies case expect rate decreases to be modest and high volume to proceed apace. And hospices can expect to continue needed them.

“Incrementally — with the passing of another COVID wave — we believe the tail for elevated temp nursing demand has been pushed out further … .” the Jeffries note indicated. “Additionally, the fundamental demand drivers for nurses that existed even before COVID (i.e., nurse population demographics) have been boosted by the lingering effects of the pandemic on the profession and are likely to boost demand for temp staffing post-2022 and keep bill rates significantly elevated relative to pre-COVID going forward.”