1 (888) 402-3465

Our Take: Staffing agencies accused of exploiting nursing staff shortages, federal investigation requested

Jan 31, 2022

Advocacy groups for the country’s hospitals and long-term care facilities, as well as nearly 200 members of the House of Representatives, have asked the White House to investigate whether staffing agencies are taking advantage of nursing staff shortages to increase their profits at the expense of patients.

The American Hospital Association (AHA) and the American Health Care Association/National Center for Assisted Living expressed their concerns in a letter sent Thursday to Jeffrey Zients, who is coordinating the COVID-19 Response Team for the White House.

The groups are concerned that staffing agencies “have been exploiting the severe shortage of health care personnel during the COVID-19 pandemic by charging uniformly high prices in a manner that suggested widespread coordination and abuse of market position.”

“It appears many of these agencies are engaged in anticompetitive practices that are detrimental to hospitals’ and long-term care facilities’ ability to care for their patients,” the groups wrote in the letter. They said there are “countless examples” of agencies raising prices two or three times what they were charging before the pandemic, “and retaining up to 40% of those amounts for themselves.”

The groups noted in the letter that they have urged the Federal Trade Commission to investigate these practices on the grounds that they may violate antitrust or consumer protection laws.

Earlier in the week, House members also sent a letter to Zients about the same concerns, asking him to enlist one or more federal agencies to look into the matter.

“The situation is urgent and the reliance on temporary workers has caused normal staffing costs to balloon in all areas of the country,” they wrote, noting that while prices “rose precipitously” with the latest COVID-19 surge, it is not the first time that agencies have engaged “in this sort of conduct. As the first wave of COVID-19 swept the nation in 2020, they similarly inflated their prices to hospitals.”

In addition to exacerbating the staffing shortages and straining the health care system, the high costs are “simply unsustainable for many health systems,” they wrote.

Our Take: Hospitals, nursing homes, and long-term care facilities have been dealing with staffing shortages throughout the pandemic as physical exhaustion and emotional burnout have taken their toll and nurses (and other health care workers) have left the workforce in droves.

Making matters worse, the highly contagious omicron variant has ravaged remaining staff, obligating infected workers to isolate themselves and others to quarantine. The shortages have been so severe in some instances that infected workers have been told to stay on the job if they are asymptomatic or mildly ill.

Traveling health care professionals have been in high demand for the better part of two years to help ease the vacancies. It didn’t take long, though, for the higher wages that traveling professionals earn to lure employed staff members away from their permanent positions, compounding a situation that travel staffing was meant to mitigate. Hospitals that can afford to do so have raised their pay rates and/or offered bonuses in an effort to retain their staff, but many just can’t compete.

Citing data from a company named Proculent Health, Healthcare Dive reported that advertised pay rates for travel nurses jumped 67% from January 2020 to the present, with rates as high as $240 per hour in some areas. Staffing agencies bill hospitals an additional 28% to 32% above those rates, according to Proculent Health.

It would be bad enough if the problem were limited to hospitals, but post-acute care facilities are also experiencing severe staffing shortages. As a result, hospitals are having to delay discharging patients — at a time when they need every bed they have and then some for incoming patients.

And, as noted earlier, nursing staffs aren’t the only ones experiencing shortages. Other clinical staff, such as respiratory therapists, have also left their permanent positions to accept temporary travel assignments.

National Guard members have been deployed in some states to help alleviate the shortages, and President Biden said earlier this month that 1,000 military health personnel would be dispatched to hospitals in six states. The Federal Emergency Management Agency (FEMA) has also sent staff in response to requests for support.

To help hospitals contend with staffing shortages and increased labor expenses, the Department of Health and Human Services (HHS) distributed $9 billion from the Provider Relief Fund in December to more than 69,000 providers throughout the country, and last Tuesday the agency said it would distribute another $2 billion to more than 7,600 providers. Hospitals have asked HHS to distribute the remaining funds in the Provider Relief Fund and for another $25 billion to be added.

Staffing shortages will ease to some extent when the latest COVID-19 surge relents, but there’s no guarantee that the issue will be resolved. According to Healthcare Dive, an analyst with CreditSights said wage inflation is going to be a “persistent theme” for hospitals “for the years ahead.”

To address part of the underlying problem, HHS said earlier this month that it would spend $103 million toward reducing health care worker burnout. That funding will come from the American Rescue Plan and will be disbursed to 45 organizations in the form of grants to help promote mental health and resiliency in health care professionals.

What else you need to know
The FDA expanded the approved indication for Gilead’s Veklury (remdesivir) to include use as an outpatient treatment for mild to moderate COVID-19. The drug can now be used to reduce the risk of hospitalization in high-risk individuals, whereas before it was approved for use only in those whose disease was severe enough to require hospitalization. The step gives medical professionals another viable alternative to use during the omicron surge, as the FDA just revised the authorizations for Eli Lilly’s combination COVID-19 treatment (banlanivimab and etesevimab) and Regeneron’s REGEN-COV (casirivimab and imdevimab) because it said the monoclonal antibody treatments “are highly unlikely to be active against the omicron variant.” However, Veklury must be infused daily for three consecutive days, making it less convenient than other authorized treatments that are effective against the omicron variant but are in short supply. Gilead has initiated a Phase I trial for GS-5245, an oral antiviral that is a prodrug of remdesivir.

Pfizer-BioNTech and Moderna have begun clinical trials of a potential omicron-specific vaccine. “Vaccines continue to offer strong protection against severe disease caused by omicron. Yet, emerging data indicate vaccine-induced protection against infection and mild to moderate disease wanes more rapidly than was observed with prior strains,” Ugur Sahin, CEO of BioNTech, said in a press release. Pfizer and BioNTech will test their omicron-specific vaccine in three cohorts: people who have previously received two doses of the original Comirnaty vaccine, those who have received three doses of the original Comirnaty vaccine (the initial two-shot series plus a booster), and vaccine-naive people, who will be given three doses of the omicron-specific vaccine. In its Phase II trial, Moderna said it will test its omicron-specific vaccine in two cohorts: people who received the initial two doses of Moderna’s Spikevax vaccine, and people who received the initial two doses plus a half-dose Spikevax booster.

CMS released new data for the Medicare Shared Savings Program (MSSP) Wednesday, stating that 66 new ACOs joined the program for 2022 and 140 existing ACOs renewed their participation for a new agreement period that started on Jan. 1. That brings the total number of ACOs participating in the program to 483; last year there were 477. The total number of beneficiaries covered by an ACO in the MSSP is up 3%, or 324,000, from 2021. The National Association of ACOs (NAACOS) said in a news release that these figures are “disappointing” and should serve as a “wake-up call,” noting that there are still fewer patients in ACOs and ACOs in the program than in 2020. Participation in the MSSP has not rebounded to the level seen in 2018, the year before the rule changes under CMS’ Pathways to Success took effect and “forced more ACOs into risk,” the organization said.

CenterWell Senior Primary Care will expand into several new markets starting later this year: Dallas-Ft. Worth, Phoenix, Louisville, Ky., Nashville, Tenn., and Charlotte, N.C.; CenterWell is the brand name for Humana’s “payer-agnostic” health care services. Humana said in a press statement that 26 new centers are planned for these markets, noting that the ones planned for Arizona, Kentucky, and Tennessee will be CenterWell’s first in those states. Like existing centers, the new ones will be staffed by board-certified physicians and care teams trained specifically to treat older adults.

HCA Healthcare reported net income of $7 billion for 2021, up from $3.8 billion a year earlier. Total revenue for the past year was $58.8 billion, up from $51.53 billion the year before. Compared with last year, the company estimates that capital expenditures will increase by 17% in 2022, at approximately $4.2 billion. Plans include the construction of eight more hospitals — three in Florida (announced in November), and five in Texas (according to a press release from last Wednesday).

The Dysfunctional Health Benefits Market and Implications for U.S. Employers and Employees. JAMA Viewpoint, 1.7.22
Transparency and the Doctor–Patient Relationship — Rethinking Conflict-of-Interest Disclosures. NEJM, 1.27.22

What else we’re reading
share

Contact Darwin Research Group and we will get right back to you.