TTATN 017: Travel Nursing Bill Rates

The Truth About Travel Nursing Podcast

In this episode, we’re going to take an in depth look at travel nursing bill rates. There’s a lot of mystry and controversy surrounding bill rates. But they’re really not all that big of a deal once you know the basics. Our goal here is to help you get an in-depth understanding of this issue so that you can be more confident in with negotiating and the system in general. So, we’ll define different types of bill rates and discuss how they affect travel nurses and agencies. Then, we’ll dive into a discussion about why bill rates are typically kept private or at least aren’t publicly divulged. [Please note that this is a transcript of a podcast episode. As such, grammar and spelling are not optimized for written content.]

What is a Travel Nursing Bill Rate?

Okay, so let’s start off by defining the various types of bill rates. Of course, we have to start by defining what a bill rate even is. As we’ve mentioned in various previous episodes, a bill rate is the hourly rate that the agency is able to charge the hospital for the traveler’s time. The reason that the bill rate is important is because it’s the fundamental basis for the pay package. Essentially, it’s the amount of money that the agency has to cover all the costs associated with the travel assignment.

Before we begin looking at all the different types of bill rates, it’s important to note that bill rates vary from contract to contract. And the contracts I’m talking about here are the contracts between the agency and the hospital. In most cases, that’s where the bill rates are set. And this is true for the dollar amount of the bill rate as well as the type of bill rates included in a contract. So not every type of bill rate is included in every contract.

Now, one of the most common questions that I get on a routine basis is, “What are the bill rates?” I mean, people want to know exactly what the dollar value of the bill rates are. And this question really isn’t answerable. I mean, bill rates vary so much. For example, in southern California, there might be a hospital with bill rate of $55 an hour that’s 2 miles away from a hospital with a bill rate of $68 per hour for the same specialty. And with that level of disparity, you’re really not going to get much value out of asking general questions like that.

What Are Standardized Travel Nursing Bill Rates?

So with that in mind, let’s take a look at several different types and classifications of bill rates and how they affect the traveler. I think the best place to start is by discussing the idea of “Standardized Bill Rates”. This is the idea that bill rates are, for the most part, tied to a set contracted rate between the hospital and agency. They don’t fluctuate based on the level of experience or education. The agency typically can’t expect to be able to negotiate a different rate on a traveler by traveler basis. So the rate is the same for someone with an MSN and 15 years of experience as it is for someone with an ASN and 3 years of experience. There’s no mechanism for the agency to negotiate a special deal for one traveler.

Now, that said, there are some contracts that do indeed have different rates based on experience levels. So, for example, you might have one rate for nurses that have 3 to 5 years of experience and a higher rate for nurses that have 5 years of experience or more. These contracts are very rare though. And more importantly, this is still a form of Standardized Rate; it’s just tiered according to experience.

At this point, you may be wondering what the big deal is with standardized rates. I mean, what other form of bill rate is out there. Well, in theory, the opposite of standardized rates would be negotiated rates. I’ve never actually seen a contract that operated with negotiated rates, but from what I understand, they were quite common back in the day. These contracts may have offered a range of rates or even no rate at all, so each contract had some level of negotiation that took place between the agency and the hospital. Of course, that would be a nightmare for the hospital and would create a pretty inefficient system.

So, the main thing to take away from this is that the vast majority of contracts operate with standardized rates. However, there are some nuances to be aware of. First, different agencies may have negotiated different rates with a particular hospital. For example, many municipal and county hospitals have this. What happens is that these entities put out what are commonly referred to as a Request For Proposal for travel healthcare professionals and/or PRN staff. Agencies then submit their proposals in writing, which includes a bid for the services to be provided. So different agencies will bid different prices and the hospital will accept multiple vendors.

Similarly, there are certain vendor management services that maintain tiered relationships with their vendors that affect the bill rates. We discussed vendor management services in episode, so we don’t need to go into great detail here, but vendor management services are basically services that help hospitals work with multiple agencies more efficiently. So in these tiered systems, different agencies are classified in different tiers. For example, there might be a bronze, silver, gold and platinum tier. Each tier gets a different set of bill rates with platinum receiving the highest and bronze receiving the lowest. This model is pretty rare. Most vendor management services give the same rates to all companies.

So that’s one nuance. Another nuance is that it’s still possible for an agency to negotiate a special deal on the bill rate for a particular assignment. For example, if the hospital in question is having a particularly difficult time getting a position filled, then the agency may come to them and say, “Hey, look, I can fill this order if you increase the bill rate.” Or, “I have the perfect candidate for this job, but they need a bill rate of X.” This approach is much more successful when we’re in a tight labor market and demand for travelers exceeds supply.

Travel Nursing Bid Bill Rates

Okay, so that’s the basic information you need to know about standardized bill rates and bill rates in general. So let’s move on to some of the other bill rate issues you should be aware of. First, there is at least one vendor management system that operates with a Rate Bidding System. Medefis is the company I’m thinking of. Remember a vendor management system is a software package that hospitals use to manage their client agencies through. With Medefis, the hospital posts the job order to the system and agencies can submit their candidate profiles along with a bid for the bill rate. Other agencies can see the bids placed by competing agencies, so the system is designed to help the hospital get the best candidate at the best price. It’s also important to note that hospitals are able to set a desired bill rate for the assignment through Medefis. Of course, the rate they set is typically pretty low, so the bids they receive are usually at or above the rate requested by the hospital.

Standard and Specialty Travel Nursing Bill Rates

Next, it’s important to know that a large percentage of contracts include what are referred to as the Standard Bill Rate and the Specialty Bill Rate. These are rates for various specialties. The Standard Rate is typically for Med/Surg, PSYCH , PostPartum, Peds and sometimes Telemetry. The Specialty Rate is typically for the highly specialized units like ICU, ER, PICU, NICU, L&D, OR, PACU, and others.

The Specialty rate is higher than the Standard Rate which is the reason for having the two rates in the first place. Usually the Specialty Rate is anywhere from 3%-10% higher than the Standard Rate. So if the standard rate is $66 per hour, then the specialty rate might be anywhere from $68 to $72 per hour.

In addition to the standard and specialty rates, some contracts will have a “Mid-Rate”. The mid-rate is for units like SDU, PCU, DOU, and maybe even for Telemetry. Now, this is something important for travelers to know about. Again, different specialties might be under different rates. So if you get hired as a Med/Surg nurse and the hospital has you working a ton in the Telemetry unit, or maybe even the floor you’re on is mixed where they’re taking Med/surg and tele patients, which happens a lot these days, then you should at least let your recruiter know. You should let the recruiter know and ask if this particular contract has a higher rate for the unit you’re in. I mean, technically, your agency should really want to know this, because they’re ultimately getting ripped off too if this is happening. In other words, the hospital hired you for one specialty but worked you in a unit that commands a higher bill rate. Again, in many cases, the bill rates may be the same for both units, but it’s always worth it to take this up with your recruiter just in case.

What Are Travel Nursing Overtime Bill Rates?

Okay, so I think the next thing we should discuss is the overtime bill rate. The common assumption is that the overtime bill rate is 1 and a half times the regular hour bill rate. This is hardly ever the case. Sometimes, there isn’t even an overtime bill rate included in the contract. There usually is though and the overtime bill rate is usually $10 more per hour. Sometimes it’ll be $20 more per hour.

You may have heard that these overtime bill rates are higher than that. And it’s true that in some cases they are and we’ll talk about those cases in a bit. But these cases are the exception, not the rule. I think there is a lot of misinformation out there about how high overtime bill rates actually are and we’re going to look at an example to illustrate.

In one of the travel nursing Facebook groups, I recently came across a conversation in which a traveler had posted some questions about the overtime bill rate. A recruiter commented that the overtime bill rates are almost always 1.35 to 1.5 times the hourly bill rate. But if you look closely at the numbers provided by the recruiter, they just don’t add up. Here’s the quote from the recruiter:

yes, standard OT multiplier is 1.35-1.5x that base bill rate. HCA/Parallon is base rate + $8 so those are on the lower end. Of the current nurses I work with, the lowest OT rate is $58 (HCA hospital) and the highest is $90 (rapid response rate). Most average $65-$75 for OT/CB it all depends on that magical mythical base rate

So that’s the quote. Let’s take a look at the numbers the recruiter provided to see how they stack up. What we’re going to do is work backwards to see what the base rates are given the ot rates that the recruiter quoted. First, notice that they’re highest ot Rate is $90 per hour and it’s for rapid response. So if this ot rate was 1.35 times the base rate, then the base rate would be $66.66 and if it was 1.5 times the base rate, then the base rate would be $60 per hour. Bill rates in this range are definitely not rapid response. In fact, 60 to 66 is pretty much average depending on what part of the country you’re in.

Next, note how the recruiter said that the average OT rates they have are $65-$75. Is $65 was 1.35 times the base rate, then the base rate would be just over $48 per hour. I’m sorry, but there is no way you’re going to get a registered nurse on contract with a bill rate of $48 per hour. Their total compensation package would be worth like $32 per hour, and that’s total folks…housing and everything. I mean, even the $75 OT bill rate would equate to $55 per hour as the base rate at a multiplier of 1.35.

The bottom line is that these numbers just don’t add up. The make no sense. And that’s because it’s very rare for OT bill rates to be 1.35 to 1.5 times the bill rate. As I stated a before, OT bill rates are usually $10-$20 per hour higher than the base rate.

This is one of the problems with the Facebook groups. I mean, don’t get me wrong, they’re a great place to exchange certain types of information and they can be really helpful, but there is a boatload of misinformation out there regarding things like pay rates, tax issues, bill rates, paperwork issues and a host of other issues. So just be careful when you’re getting your information from these groups.

Now, as we mentioned in episode 4 of the podcast, the important thing to remember is that the bill rate for any extra hours or overtime hours is as much or more than the regular bill rate. So agencies should be able to pay you as much as your total blended rate or more for any hours that you work in addition to your contracted hours. You’ll find some agencies that only pay you time and a half of your taxable hourly base rate and others who will pay you much more. This is something you always want to be mindful of if working additional hours is important to you.

Okay, so another thing to know about the overtime bill rate is that it typically applies to any holiday hours that you work. And the contract between the agency and the hospital will also include a clause defining what the holiday hours are. Some of these can be really tricky. Sometimes a contract will not include a major holiday in its holiday schedule. Other times, the way that they work when the holiday starts and ends is a little whacky. Most agencies will pay holiday rates according to how the holidays are defined in the contract between them and the hospital, so it’s always a good idea to check with your recruiter on what days are considered holidays unless you like to be surprised.

Now, the last thing I want to discuss about overtime bill rates pertains primarily to the state of California. But because it’s such a popular travel nursing destination, it’s worth it to discuss. As you know, the overtime law in the state of California requires overtime to be paid after 8 regular hours are worked in a day and after 40 regular hours are worked in a week. At the same time, most nursing shifts are for 12 hours. But California is certainly a location where you’ll find 8 hour shifts for travel nurses. So how do hospitals handle the bill rates for this?

Some hospitals handle just as you might expect they would. They have a regular hour bill rate and an overtime hour bill rate and they allow the agency to bill them for these hours based on the way the state law works. So the regular hour rate is billed for the first 8 hours of the shift and the overtime rate is billed for any hours in excess.

Now, at some of these hospitals, the overtime bill rate is actually 1 and a half times the regular hour rate, which as I mentioned previously is pretty rare. So, for example, if the regular our rate was $60 per hour, then the overtime rate would be $90. This may seem as though it’s going to be an awesome thing…I mean, like it’s going to be a really great pay package. But if we average those two rates together, then it really only comes to $70 per hour. And that’s a pretty solid bill rate, so the pay will be good, but it won’t be anything spectacular. Instead, any contract for only 8 hours will actually have a pretty low pay package because the regular time bill rate is actually pretty low.

On the flip side, there are other hospitals in California where they use one rate for all hours worked. In this scenario, the agency bills the hospital the same amount for every hour. So in this case, if the bill rate is $70, as it was in the previous example, then it becomes pretty lucrative to work 8 hour shifts. You get an additional 4 hours of work per week and you’re getting a pretty decent rate for every hour worked. These used to be some of my favorite contracts to offer my travelers because they really were a good deal.

Travel Nursing On-Call and Call-Back Bill Rates

Okay, so let’s move away from overtime rates and take a look at the on-call rate. The on-call rate is the rate the agency is able to charge per hour that you’re waiting on call. On-call rates are typically pretty low. I’ve seen them as low as $3 per hour and as high as $12 per hour. I think 7-$10 per hour is pretty common. Remember, the agency is going to take their profit margin out of that, usually 20-25%, and then they have to pay payroll taxes on top of that, so you’ll get something like 5-$7 per hour. And here again, if you’re working a contract that didn’t include call at the outset and then the hospital starts treating you like you’re on call or puts you on call, then let your recruiter know so that they can either put a stop to it, or at least bill the hospital and pay you.

This is even more important if or when you get called in because the call-back bill rate is typically the same as the overtime bill rate. And it’s important to remember that if you get called in, then 9 times out of 10 it’s going to be for hours that are in addition to your contracted hours. For example, if you’re contracted to work 36 hours, then they’ll put you on call on your days off so the hours that you work will be in addition to the 36 you’re already scheduled for. So you want to make sure that your agency pays you a fair rate for that time. Most nurses feel that going in to work for $30 per hour simply isn’t worth it. So when a contract has call, then you should be especially mindful of how the agency pays for the extra hours you work.

Travel Nursing Bonuses

Okay, so this next bill rate isn’t necessarily a bill rate, but it’s pretty much the same thing, and that’s contract bonuses. I mean, essentially, the agency is going to bill the hospital for the bonus, and pay the traveler, so it’s pretty much a bill rate. Now, there are several unique things to consider when it comes to bonuses.

First, it’s important to know that agencies sometimes add bonuses to pay packages when they’re not being offered by the hospital. How do they do that? Well, they simply set aside some money out of the contracted bill rate to pay it as a bonus just like they would with a travel stipend. They do this as a sales gimmick. It’s like a shiny, pretty lure. This is yet another reason why it’s so important to break down the entire travel nursing pay package when you’re evaluating them as we discussed in episode x.

The second thing to know about bonuses is that they typically have some pretty strict stipulations attached to them. If the stipulations aren’t met, then the bonus isn’t paid. The most common stipulation is that every single hour must be worked. So if the manager asks the traveler if they want they want to go home early one day and the traveler agrees, then the bonus might not be paid. So watch out for that.

The third thing to know is that many agencies will not pay the bonus until the hospital pays it to them. I’ve always thought this was a bit odd. I mean, the agency always pays the traveler for their hours despite the fact that bill for the hours won’t be collected for 60 to 90 days, so what’s the difference. Either way, it’s a good idea to ask your agency about when they’ll pay a bonus if it’s offered. It’s probably a good idea to get that put in your contract as well.

Finally, it’s important to note that bonuses do indeed have some interesting tax issues involved with them. First, the agency is technically required to pay the employer portion of the FICA taxes on the bonus. Normally, when a permanent employer offers a bonus, they’re already factoring in the payroll taxes, so a $5000 bonus shows up as a $5000 bonus. But if a hospital offers a $5000 bonus for a travel nursing contract, then the agency has to pay the payroll taxes out of that $5000 because the bill rate, in this case the bonus rate, is the only source of revenue they have to make this payment to the traveler. So this automatically reduces the bonus amount before it even gets paid.

Next, there are two methods that the agency could use for applying the income taxes on the bonus and one of them is certainly better than the other for the traveler. The first one is called the aggregate method. In this case, the agency adds the bonus to the total for the paycheck that it’s paid on. This makes it look like income, so the tax calculator thinks you’re going to make a lot more money for the year than you actually are. Of course, when you make more money, you get bumped into a higher tax bracket, so you’ll get a higher percentage taken out of this particular pay check. Now, you should be able to get that money back at the end of the year, but the downside is that you’ll have to wait until then to get your money.

The better alternative is for the agency to tax the bonus using the percentage method. This way, the agency enters the bonus as a one-time payment so that it gets taxed at your normal rate. My experience indicates that you’ll have to request that agencies tax it this way, otherwise, they’ll use the aggregate method.

Travel Nursing Crisis Bill Rates

Okay, so now let’s shift gears and talk about Crisis Bill Rates. Now, this particular bill rate might go by different names but the idea is always the same. The contract might include a set of rates that are substantially higher than the regularly used bill rates. These rates are activated when the hospital determines that they have an urgent need for travelers. Crisis rates can be as much as $20 per hour higher than the normal rate…even more in some cases.

As a result, the agency has substantially more to pay the traveler. The problem is that it’s difficult for travelers to know when the job they’re interested in has a crisis rate. Often times, recruiters and agencies will make it very clear. Obviously, the additional money is a huge selling point and a lure. But even then, it’s difficult for travelers to know just how much extra they can squeeze out of the pay package. On the flip side, the travel nursing market is really competitive among agencies, so most agencies are going to put out a good rate, otherwise, they’ll just get blown out of the water by the competition. But a lot of agencies go for the short term gain and do indeed offer lower rates than they could in order to pocket more for themselves.

Why Don’t Travel Nursing Companies Make Bill Rates Public?

Of course, this all plays into the discussion about why agencies don’t make their bill rates public. Many travel nurses ask this question. I’ve seen it posed in forums like the DelPhi Travel nurses forum since at least 2006. And from what I’ve heard, there are certain recruiters and perhaps even certain companies that will indeed divulge the bill rates when discussing pay packages with you. However, these recruiters and agencies are the exception, not the rule. The vast majority of agencies aren’t going to make their bill rates public and there are good reasons for this, but first let’s take a look at why there are so many calls for agencies to publish their bill rates.

At the heart of it, many travelers feel like they’re getting ripped off by agencies. And I can certainly understand that feeling. You know, travelers have to negotiate new pay packages much more often than the average professional. And in America, we’re not big fans of negotiating for some reason. There’s always that feeling that someone’s pulling the wool over your eyes or pulling a fast one on you. Moreover, some travelers come to find that other travelers are making much more than they are for the same job. And sometimes travelers find out the bill rate and it seems as though the agency is keeping 50% of the bill rate or more.

Now, these scenarios certainly exist. There are certainly some agencies that pay more than others. And there are certain circumstances in which recruiters do negotiate deals that are highly favorable for the agency. However, more often than not, there is another explanation for these issues.

As we discussed above, certain agencies might have different bill rates at the same facility. Or one traveler may have gotten on with a crisis rate while the other didn’t. Also, when travelers find out the bill rate they often assume that the difference between their pay package and the bill rate is what the agency is keeping when in fact there tons of other costs involved that can total anywhere from 10%-20% of the bill rate. And I’m not talking about the agency’s overhead, I’m talking about liability coverage for the traveler, non-billable orientation hours, FICA and Workers Comp costs and a host of others. We discussed this in detail in episode 14.

You know, as evidence we can look at the quarterly reports of the largest travel nursing companies in the business. Because these companies are publicly traded, they’re required to report all their revenue and profit margins. They average between 25% and 30%. I’m willing to wager that they profit less from their travel nurses than they do from other operations.

That said, I think it would be great if agencies published the bill rates for their jobs. I mean, in an ideal world that’s exactly what would happen. So again, I understand when travelers call for this. But I highly doubt that’s ever going to happen. In fact, I’m pretty sure that’s never going to happen. And here’s why.

First, there’s not really a difference between this and a permanent job. And we wouldn’t go to a permanent employer and ask to see exactly how much revenue they generate off us so that we could be certain we’re getting a good deal on the salary they’re offering us. We wouldn’t ask them to open their books so we could examine their revenue.

Moreover, most agencies consider their bill rates to be a company secret. I mean, remember that agencies are competing with another to win business from hospitals. So if they know each other’s bill rates than they lose a certain competitive advantage. You know, since starting bluepipes blog, I’ve been amazed at the number of new agencies who call me and ask for information about bill rates, so agencies are indeed justified in wanting to keep this information private.

Additionally, agencies are concerned that showing bill rates would lead to mounds of confusion. As I mentioned a second ago, it’s often assumed that the difference between the value of the pay package and the bill is the agency profit margin. This is understandable, but it would leave the agency to explain a ton of additional details to every new traveler they worked with. And as everyone in sales knows, the simpler explanation is the winning explanation.

Finally, agencies sometimes need to take higher margins on certain contracts because they take lower margins on others. If the bill rates were always made public, then they may have a rough time balancing things out like this.

At the end of the day, negotiating would be a lot easier and more transparent if agencies published their bill rates. However, that’s not going to happen. So the best thing travelers can do is sharpen their negotiating skills. Hopefully, knowing all the information we’ve covered here about bill rates will help you out in this regard. You’ll have a better idea of what to watch out for and what to expect.

Additionally, I highly recommend our free eBook on travel nursing pay negotiation. In it, we discuss the single biggest mistake that travelers make when negotiating and offer tons of useful tips that will help you negotiate the best deals every time. Epstein Larue of highway hypodermics reviewed it and said “Don’t negotiate your next contract without it!” All you have to do is sign up for our email list and share one of blog posts on social media to get the eBook. It’s got over 70 pages of information devoted to negotiating travel pay. You can get it at blog.bluepipes.com/negotiate. We’ll put the link in the show notes.

The show notes will be found at blog.luepipes.com/episode17. As always, if you have questions or comments about this episode, please post them there. And we’ll have links to all kinds of related information there as well. And while you’re there, be sure to join BluePipes to take advantage of all the free services designed to help you manage your travel healthcare career more effectively and efficiently. We’ve got a resume builder, full job application builder, free skills checklists, document storage, networking and much more.

That’s it for this episode, we hope you found it useful and until next time, have a safe and prosperous travel healthcare adventure.

Links:

Travel Nursing Pay Negotiation eBook

Travel Nursing Overtime Bill Rates

12 Types of Bill Rates That Affect Travel Nursing Pay

Why Don’t Travel Nursing Companies Divulge the Bill Rate?

5 Factors That Depress Travel Nursing Bill Rates

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