THE MORNING RANT: Healthcare Executives, Traveling Nurses, and RNs who won’t work for “the wage they deserve”

I’ve spent a lot of time recently bashing corporate executives, so I am going to start off with a disclaimer…

There are many thousands of executives in corporate America doing great work, inspiring loyalty among their employees, showing reciprocal loyalty to those employees, and growing their companies through inspired leadership. A great many of them built those enterprises or rose through the ranks of the companies they now lead, which provided them motivation to proudly lead the only company they’d ever want to helm. The most valuable education they brought to their role was expertise in both their industry and within that specific company, and these exemplary executives typically leave their companies stronger when they retire.

But today’s rant is not about them.

No, today I’m going to focus again on awful executives, specifically those whose elite business school training has created a nurse staffing crisis in this country, putting in place all the worst incentives, and creating high turnover that is detrimental to patient care.

In my post a few days ago about the UAW strike, I touched on the obscene pay of auto company executives, focusing on Ford CEO Jim Farley, whose $21 million compensation has nearly doubled in two years, despite Ford recording multi-billion dollar losses under Farley’s EV-focused mismanagement. A discussion of executive pay ensued in the comments. Among them was this witty exchange regarding America’s nursing mess:

Commenter Mike Hammer succinctly summarized the management formula of the elite MBAs running health care companies, noting that the hypothetical executive earns his $20 million annual compensation without even needing to understand the industry. Instead, his role is simply to reduce services and cut costs, because that is now the recipe for profit among our business elite.

Commenter Bruce Wayne then pointed out the predictable, yet destructive, result of that hypothetical health care executive’s cost cutting. ”Deciding not to give nurses a 6% raise so they all quit, then hiring them back as travel nurses at rates that are MUCH higher than the asked increase. That’s what he does.”

This is exactly what is happening! And the executives are clueless about how they are incentivizing this.

In my circle of friends, family, and professional acquaintances, there are quite a few Registered Nurses, several Doctors, and a handful of managers/executives in businesses that employ nurses.

One executive I know is outraged at the nurses who keep quitting, because they refuse to work for “the wage they deserve,” which in turn is causing their hospitals to spend a fortune on travel nurses, who not only cost more, but also need to be trained on systems and protocols. This has the effect then of making operations less efficient, which impacts productivity goals, and also negatively affects survey results, which are apparently very critical to hospital operations.

High turnover of nurses might even impact patient care, but that, of course, is a much lower priority than goals, efficiencies, and surveys.

The RNs I know often find that they must change jobs to get a raise. For instance, a nurse making $30 per hour cannot get the raise to $33 an hour at her current employer, because that would be a 10% raise and they don’t give double-digit percentage raises. So, she quits to go work elsewhere for $33 an hour, at which time her old employer must now hire an all-new nurse – who must be trained – for at least $33 per hour, to replace the fully trained nurse who they would not pay the same amount.

When it comes to their own pay, these executives are very principled free marketeers, but somehow when it comes to paying front line workers, they reject the reality of supply and demand pricing, and instead they quote their industry-produced market surveys of what healthcare workers should get paid. ”Thirty dollars per hour is the going wage for an RN” says the executive who can’t keep his RNs from quitting for higher pay.

All this has created the “travel nurse” market distortion. Healthcare providers that can’t keep their operations staffed, and who are desperate to suppress the compensation of nurses they actually employ, plug the emergency staffing need with travel nurses hired on a contract basis. These travel nurses aren’t simply making more per hour than their full-time peers, they are making a LOT more money.

Travel nurses can work part time and make more money in fewer hours. Plus, they can often control their schedule and availability, whereas that may not be the case for nurses employed full time.

“With travel nurses making $150 an hour, hospital systems are forced to innovate” [CNBC – 3/28/2023]

The national average pay for travel nurses was $150 an hour in early 2022, which analysts say tempted more nurses to leave staff jobs, increasing turnover and exacerbating shortages.

As hospitals have become increasingly reliant on contract nurses, travel nurse expenditures have risen more than 250% since the start of the pandemic.

“There continues to be significant volatility in hourly wages paid to registered nurses, which represent a significant share of overall labor costs,” said Flint Brenton, CEO of Syntellis Performance Solutions.

At the same time, using high-paid workers from travel-nursing agencies also made for a vicious circle when it comes to staffing.

“Agency staff were paid significant salary rates and had complete control of their work schedules,” explained Carol Boston Fleischhauer, managing director and chief nursing officer at the Advisory Board, and as result “more in-house nurses left their permanent positions for external opportunities, increasing turnover.”

An individual that I respect greatly is an executive at a small operation that employs RNs, and he has expressed his frustration about how the big hospitals’ mismanagement of nursing compensation has created problems that go beyond pay. He states that his operation will pay whatever it takes to hire full-time nurses, and they do pay significantly better than hospitals, but they still suffer from turnover because of the appeal of the scheduling freedom that travel nurses have. Plus, when there is such a demand for their labor, they know they can quit if they want a break, and then just come back and get a job whenever they desire.

It pleases me that nurses have options to go seek better remuneration than cost-cutting executives want them to have. But as a health care consumer, it also saddens me that there is such a market distortion causing high turnover in this critical health care field.

[buck.throckmorton at protonmail dot com]

posted by Buck Throckmorton at 11:00 AM

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