ShiftMed CEO discusses rate hikes, supply and demand for nursing home staff

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Established staffing agencies have had to rethink — and defend — their relationship with skilled nurse operators at this point in the pandemic, with opportunistic players entering the space and rates doubling during a historic staffing crisis.

ShiftMed CEO Todd Walrath said the agency’s relationship has become much more “strategic,” in terms of maintaining a constant flow of communication to see what providers want from them.

The McLean, Va.-based recruiting agency has also been working “on the other side of the ledger,” lowering rates to secure shifts for agency staff and possibly strengthen relationships with contractors. clients.

Walrath shared his thoughts on this changing relationship, excessive price demands, new players in the space, and ShiftMed’s place in it all. Founded in 2019, ShiftMed employs more than 60,000 healthcare workers nationwide.

This conversation has been edited for length and clarity.

Do you have any initial thoughts on how the pandemic has affected the relationship between agencies and carriers?

With the influx of patients, okay, people get sicker, the count goes up, the count goes down – the fluctuations are bigger. It is much more difficult for an operator to plan for the necessary manpower if it has hovered 15% in the last two quarters of a given month, and now it is hovering at 30%. It just means that their contingent labor must have increased in that window.

So what drove this necessary workforce change?

There are really three things driving this swing. It is more patients in some cases, or less. Even if they have a burst of a lot of patients for a week or two, then it subsides due to some variation or a number of different things that affect the census.

The second variable is their own workers or the workers of their partners. The difference we saw between the fourth and third trimester last year was that in the third trimester everyone had delta and the patients were sick. In the fourth quarter, we found that workers were much more likely to get sick. This adds a second layer of more patients, less of your own workers.

And the third variable?

At the beginning of January, we saw the mandates resume – which also removed the last 8 or 9% of unvaccinated workers from the equation. So you kind of have those three things hitting an operator at once.

I think that’s part of what’s causing an increase in agency usage, there’s no way for them to forecast, there’s no way for them to have a bench of people, and they are regulated. They have to have people on the floor to cover those hours.

So how have these variables changed ShiftMed’s relationship with operators?

Our relationship became much more strategic over the past year as we went through this together. We had to sit down with them and say “hey, we know this is going to be harder for you”. Budgets are increasing. The number of new workers entering your facilities is higher, which creates many operational challenges. What can we do to help? How do we just make sure you get the manpower to care for the patients, to get the results you want? At the lowest cost?

What do you think of price increases in your sector?

Overall frontline worker pay rates are clearly higher now than they were pre-pandemic, but I’d say that’s about 80% to 90% of the variability of any rate change we’ve seen , compared to companies that boost and might only have 50 workers that they send out every week and they can sell them to the highest bidder. Our rates have been fairly consistent.

What about new companies, new business models entering the recruitment agency space?

We’ve seen an influx of what I would call 1099 platforms and agencies that don’t pay overtime, they don’t pay unemployment, they don’t have compensation for these workers if they get hurt. They don’t pay for health benefits. These are all the costs that providers and W2 platforms like us therefore incur [the 1099 platforms] have a slightly unfair cost advantage. It’s not even really a legal model. You can’t have 1,099 workers coming in and working for a nurse on site telling them how to do the job, when to do it, when to be there. This oversight would essentially prevent them from being an independent contractor, especially for hourly workers like that.

What have you seen at the legislative level to curb 1099 platforms?

Some states like Texas will pass a law prohibiting entering a qualified nursing facility in Texas if you are not someone’s W2 employee. Hopefully we will see more regulation and definition on this.

Do you consider that the excessive price demands of the operators are valid?

From our perspective, at least the way we price, our customers ultimately set the price. They agree on a price and we put that price in the app. So it’s not a price that we set, it’s a price at which people take their shifts. Is it higher than before? Yeah, but it’s all there, right? Wages went up, minimum wage went up, inflation went up. Gasoline prices have gone up to keep these workers working, the milk they drink in the morning has gone up.

These salaries must have the possibility of reflecting the market that exists. At present, the offer has remained essentially the same. Maybe it went down a bit and the demand went up 50%. I mean, any economist will tell you that the wage has to go up for that worker. There are also alternatives, right? We have Amazon and Target and Walmart paying $15 to $17, paying for your college. It’s competitive there and it can be as much as the salary increase because you have alternatives that are equally compelling.

Do you have any other thoughts on agency price hikes, new players in the space?

I have a slightly more philosophical view of pricing which is more oriented towards the law of supply and demand than a conspiracy theory against the recruiting industry. I think there are a few bad actors who have taken advantage of this – you have to manage your vendors. The first time this happens, when you look at your set of suppliers that provide you with casual labor and you see one that’s outlier, you probably need to either restructure that relationship or stop using that relationship. if it is not sustainable. .

What has ShiftMed done to help break the agency stigma?

We kind of work on the other side of the ledger. Last year, we implemented guaranteed shifts. One behavior in staffing that we believe hurts our relationship with caregivers is the fact that we can assign a caregiver to a building for a shift and when they arrive there, [the caregiver] sends them home; one of [the caregiver’s] the workers resumed that shift; it creates ill will towards that building. It’s harder to fill the shift next time. So we said if you guarantee the shift, you don’t have to put a premium on it. You could pay a lower rate and the worker will trade the lower rate for more certainty.

Have guaranteed shifts been widely implemented?

We did a case study in Pennsylvania with the Pennsylvania Senior Living Association, where we showed we reduced rates by 12% during the test period. The feedback I received on this was that it was the first time a recruitment agency had reduced the cost of staffing since working with recruitment agencies.