Per diem nursing replaces travel nursing to fix labor shortages

Modern Healthcare – Friday, December 27, 2024
By Hayley DeSilva 

Per diem nursing is replacing travel nursing as the preferred solution to providers’ staffing issues.

During the COVID-19 pandemic and shortly thereafter, health systems became more reliant on travel nurses, spurring growth of staffing agencies helping fill vacant roles. While travel work was lucrative for nurses and agencies, hospitals incurred the cost of higher wages and took a big hit financially.

The spending was necessary because of the vast number of nurses who headed for the exit during the public health crisis, burned out by the demands of the job. But more providers are aiming to lower their contract labor expenses and find alternate ways to fill positions.

Many employers, including Franklin, Tennessee-based Community Health Systems and Dallas-based Tenet Healthcare have said they’ve lowered their contract labor costs. And a June survey from employment firm Incredible Health found 67% of health executives did not increase travel nurse positions in 2024. The survey also found nurse interest in travel work dropped by 22% in 2024.

Per diem nurses typically operate “on-demand,” picking up shifts for permanent staff who call out, are on a short leave or when a hospital needs extra help when a patient population is high. They are usually local residents and do not require long-term contracts, compared with travel nurses who often require relocation assistance and guaranteed pay regardless of whether a facility needs extra nurses.

SSM Health partnered with ShiftMed, a per diem staff provider, in 2023.

“We have essentially been able to replace travel labor with [per diem] and that typically is better from almost every metric that we look at,” said Seth Lovell, SSM Health’s vice president of nursing transformation and innovation. “It’s cheaper, we have caregivers who actually live in these markets [that are] familiar with SSM and those individuals typically come back over and over and over again. The majority of our [per diem] pool actually works near full-time hours.”

According to a September report from Staffing Industry Analysts, 41% of per diem staffing firms were expected to increase their number of new orders from clients within the next six months. The report also projected per diem staffing companies would hit $5.4 billion in revenue by the end of 2024, and increase to $5.7 billion in 2025.

“The directive broadly in nursing, because of the skyrocketed labor costs, is to get rid of travelers,” said Katie Boston-Leary, senior vice president of equity and engagement for American Nurses Enterprise, a trade group that includes the American Nurses Association. “That’s why per diem becomes that option for a number of folks.”

National staffing companies like Shiftmed, CareRev, Nursa, Incredible Health and AMN Healthcare have also contributed to per diem’s growing popularity through their platforms connecting nurses to available shifts. Some offer existing employees the first chance to sign up for the work.

For nurses, per diem roles can offer work-life balance, give them a chance to brush up on their skills and make more money while not having to navigate what can be the burdens of a full-time role, Boston-Leary said. The work also can help nurses balance their responsibilities.

“A number of nurses that work full time also [work] part time somewhere else or have their own business,” Boston-Leary said. “Then, [more] nurses are getting older [while] nurses that are younger have families that get sick, and you have the sandwich generation, who have multiple generations they’re caring for, and they [all] have to call out.”

One issue per-diem programs haven’t been able to get past is cancellations.

Boston-Leary said nurses frequently are seeking shifts at multiple, competing facilities in one local area, which can lead them to cancel one shift they’ve committed to in favor of another.

“What I hear from a number of these companies is that the biggest killer for them are the cancellations,” Boston-Leary said. “You think you have a healthy list of folks, but they’re really not available to you because they’re also filling in shifts through other venues.”

ShiftMed said less than 10% of shifts picked up by nurses through its platform are canceled, while CareRev had a cancellation rate of 8%.

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