Healthcare Systems Increasingly Turn to Gig Nurses to Remedy Their Self-Created Nurse “Shortages”

By Conor Gallagher

Hospital CEOs and the media say that healthcare systems are increasingly turning to gig nurses in order to make up for a nursing “shortage,” but the fact is there is no shortage of nurses. Nursing schools are graduating close to 180,000 new nurses every year, a 250 percent increase since 2000, while the US Bureau of Labor Statistics projects that only a little more than 275,000 additional nurses are needed by 2030.

There is a shortage of nurses willing to put their lives on the line during a pandemic for employers who treat healthcare as purely a money-making investment in horrid working conditions. According to STAT:

Hospital leaders conveniently overlook the fact that many hospitals furloughed nurses without pay after the first wave of Covid-19, after they had risked their lives to care for tens of thousands of critically ill Americans. Such labor practices do not engender employee loyalty.

High nurse turnover rates in hospitals do indeed show that nurses are leaving their employers, which gives an exaggerated perception of nurse shortages. These departures are understandable, since 47% of bedside nurses were experiencing high job-related burnout and one-third were dissatisfied with poor working conditions before the pandemic emerged.

Additionally, many of the nurses are only leaving hospitals; they do not plan on leaving the nursing profession. The struggle to keep nurses in hospitals is really nothing new. Save for a few instances of heavy government involvement, profit-driven hospital administrators have struggled for the past 100 years to come up with a solution that would allow them to get away with lower pay, less benefits, and worse working conditions for nurses.

The current situation boils down to the following:

• Nurses are striking and quitting in protest of understaffed hospitals, which threaten patient care.
• There are plenty of nurses, but they don’t want to work in such conditions.
• Hospitals are increasingly turning to gig nurses as a remedy for their self-created “shortages.”

Our increasingly private equity-run healthcare systems think they’ve come up with the perfect solution to shift to a more precarious, non-union workforce in order to reduce those dreaded labor costs, which can account for more than 50 percent of hospitals’ total expenses.

The Uber Model for Nurses

While healthcare systems drive away nurses and scream “shortage,” private equity is pouring hundreds of millions into gig nursing platform startups. The plan is that these investments will pay off as more nurses become independent contractors, enabling companies to pocket billions of dollars by cutting labor costs. In 2020 traveling/gig nursing grew by 35 percent compared to the previous year, and the practice is expected to grow by an additional 40 percent in the near future.

ShiftKey, a startup that connects healthcare workers with open shifts, recently raised another $300 million, supposedly bringing its valuation to more than $2 billion. As reported by Axios, the round was led by majority investor Lorient Capital, a private equity firm focused exclusively on the healthcare industry. ShiftKey offers a platform that lets nursing, certified nursing assistants and other healthcare professionals search for per diem shifts in their area, bid on those shifts and build their schedules.

Other startups offering similar platforms are also raising gobs of cash. In August, the nurse staffing “marketplace” Incredible Health raked in $80 million in Series B funding, sending its valuation to $1.65 billion. Nomad Health, an online job portal for temporary healthcare workers, brought in $105 million over the summer. IntelyCare scooped up $115 million in April, increasing the company’s valuation to $1.1 billion.

It’s unclear exactly how widespread these platforms are used. Shiftkey, for example, says its “software now enables work for hundreds of thousands of licensed professionals across over 10,000 healthcare facilities nationwide.” Gale Healthcare Solutions (named after Florence Nightingale, naturally), which just raised a $60 million growth equity investment from FTV Capital, claims it has 55,000 clinicians using its app in 40 states. Incredible Health claims one in four nurses in the US are now using its “healthcare career marketplace,” which is partnered with 75 percent of the nation’s top-ranked health systems, including HCA, Kaiser Permanente, Baylor Scott & White, and Cedars-Sinai.

The numbers should be taken with a grain of salt as these companies have been known to inflate their reach, but according to data from the American Hospital Association (AHA), the hours worked by gig nurses as a percentage of total hours worked by nurses in hospitals grew from less than 4 percent in January 2019 to over 23 percent in January 2022. It doesn’t look like full-time staff levels will return to pre-pandemic levels anytime soon as hospital administrators and private equity have used the upheaval to embrace these “disruptors” who act the same way as Uber, Lyft, Doordash, Instacart, and all the other gig hucksters.

Last year, the Mercy health system, which operates across Missouri, Arkansas, Kansas, and Oklahoma, rolled out Mercy Works on Demand. From Becker’s Hospital Review:

Mercy launched a pilot program at Mercy Hospital Springfield (Mo.) and, last spring, rolled out the on-demand platform across the health system. Providence is also testing ways to enable employees to choose the shifts — ranging from four to 12 hours — that they want to work. It is all part of embracing the gig mindset model, Dr. Till said.

“What if we thought of all of our positions as gig economy positions where workers can work when they want to, where they want to and potentially [in the future] even choose the pay rates they want?” he said.

Sounds amazing, doesn’t it? And gig nursing does indeed offer “flexibility” and what on the surface can look like better pay. What they don’t advertise are all the downsides, which National Nurses United sums up as the following:

If nurses are misclassified as independent contractors through legislation or other corporate schemes, we will lose our federal rights, including the right to a minimum wage, overtime pay, workers’ compensation, paid sick days, paid family leave, health and safety protections, and discrimination and sexual harassment protections. Independent contractors also bear the burden of paying a higher rate for unemployment insurance and must set aside and manage their own income taxes.

Hospital administrators have pushed nurses to the breaking point, and platforms like ConnectRN are all too happy to exploit it, pushing polls that show nurses need a better work-life balance and more “control” over their careers. What’s their solution? Come become a gig nurse.

Throughout the pandemic, many nurses, lured by higher pay, have been doing just that at record rates. WCIA in central Illinois tells the story of Jennifer Kowalewski who left her position as a staff nurse to become a gig nurse and began making a lot more money. There were sacrifices, however:

When she finishes her shift, she doesn’t go home to her family – a husband and two stepdaughters. They live in Rockford. Instead, she drives 15 minutes south to the Double J Campground in Chatham, where she has a camper she stays in through the workweek.

If that sounds familiar, that’s because it’s reminiscent of Uber and Lyft drivers who work far from home and sleep in their cars. From The Bold Italic:

Outside a 24 Hour Fitness in San Mateo, side-saddling a commercial office space and a tiered parking structure, a swath of strategically tinted cars sit parked, veiled by thin layers of condensation coating their windshields. It’s obvious that people have spent the night inside them, presumably cocooned somewhere either in the back seat or the spacious hatch. Many attempt privacy measures — some using towels or sheets or other fabrics stuffed under the windows to block out wandering eyes.

Most display a shared vocational decal: Lyft or Uber. While most don’t associate hailing a rideshare with the notion of stepping foot inside someone’s home, that’s exactly what some passengers are doing.

And just like Uber and Lyft, the enticing pay for gig nurses didn’t last long. A September Newsweek report showed how nurses were drawn by staffing firms and gig work at a high rate, only to see their pay reduced by up to 60 percent.

The AHA spent much of the past few years whining about having to pay gig nurses high wages. What they never mention is that a shift to gig workers typically results in cost reductions of approximately 30 percent since they don’t have to provide any worker benefits. Now that gig nurse wages are dropping and are expected to level off, health care systems and private equity will see big gains by transitioning to a more precarious workforce.

Private equity firms also cashed in by investing in these travel nurse staffing agencies, but many angry nurses are now joining class-action lawsuits over wage cuts that range from 25 to 70 percent. Many nurses feel stuck as Kaiser Health News explains:

For some travel nurses, the abrupt drop in pay has been a shock. Since December, registered nurse Jessica Campbell had extended her 13-week contract at an Illinois hospital without any hiccups. In early April, a week into Campbell’s latest contract, her recruiter said that her rate would drop by $10 an hour and that she could take it or leave it.

“I ended up accepting it because I felt like I had no other option,” Campbell said.

It could always be worse (or better depending on your point of view). Nurse staffing companies are also turning to human trafficking (allegedly) to fill positions. A class-action lawsuit against Cincinnati-based Health Carousel claims the company deceptively recruits and hires healthcare workers primarily from the Philippines, steals wages, forbids its workers from leaving the company for years unless they pay the company tens of thousands of dollars, and sues them if they try to leave without paying.

Where did all the pandemic money go? 

 After the pandemic began, Congress, states, and both the Trump and Biden Administrations adopted a number of policies to ease financial pressure on hospitals and other health care providers. There was $178 billion from the Provider Relief Fund, $8.5 billion in American Rescue Plan rural funds, an increase in Medicare payments, and hospitals benefitted from the Paycheck Protection Program.

Why didn’t hospitals use all that money to staff up?

A 2021 report from Public Citizen revealed that at least at least $5.3 billion in CARES Act money went to 611 portfolio companies owned or backed by private equity firms that held $908 billion in cash reserves. More:

Public money for private equity-backed companies not only went to companies that already had deep-pocketed backers, but also effectively allowed private equity owners to continue and even expand their predatory tactics during an economic and public health emergency. With improved balance sheets shored up by government money, private equity firms were able to finance a buyout spree during the pandemic-driven economic downturn as well as to extract dividends and fees from their portfolio companies.

A study from the Petris Center at the University of California, Berkeley revealed that in addition to the vast majority of the funds going to hospital systems with large reserves, the health systems with market power that had raised prices also resulted in higher relief payments, which meant that markets consolidated by private equity hoovered up the greatest share of relief.

A Long History of Nurse “Shortages”

The pandemic did not cause healthcare system staffing shortfalls — it exposed them. It is something hospitals have been dealing with for 100 years as hospital administrators keep nurse staffing at the bare minimum knowing full well that research over the past three decades has established that inadequate nurse staff in hospitals is associated with increased patient morbidity and mortality.

According to Jean C. Whelan, a former adjunct assistant professor of nursing at the University of Pennsylvania School of Nursing, shortages began during the 1930s due to increased hospital use, changes in hospital construction, more technologically complex patient care requirements, and a reduction in the working hours for nurses, which necessitated an increased number of nurses to deliver bedside care. How did hospital administrators deal with the problem? They blamed the nurses for “failing to live up to the ideals of their profession and refusing to work.”

The problem worsened when the US entered World War Two as nurses were needed in the armed forces, and many also left for better paying war-related industries. The government stepped in The 1943 Bolton Act created the Cadet Nurse Corps and provided $160 million for nurse education funding and financial support for nursing students, a much larger amount of federal money for both students and hospitals than had previously been allocated. Students enrolled in the program received a free education as well as a monthly stipend and uniforms. The intent of the Cadet Nurse Corps was specifically to maintain nursing services to hospitalized patients by increasing the number of students within nursing education programs. Students were not required to serve in the military. Including a requirement that participating schools reduce the length of the educational period raised expectations for meeting the goals of the program, which was to produce more nurses, quickly. Over 160,000 students took part in the Cadet Nurse Corps that was considered contemporarily a huge success.

But as soon as the program ended in 1948, the shortages returned. Whelan explains: 

Findings of the study indicated that there were insufficient economic incentives either to attract a large number of new recruits or to keep experienced nurses in the profession. Nurses identified the lack of retirement pensions, a low rate of pay, and limited opportunities for promotion as sources of major dissatisfaction with their jobs. One nurse who took part in the study forcefully described the economic situation facing nurses: “As it stands today nursing offers only enough to cover the bare essentials of living with no chance to save for the future or for emergencies. It is obvious that a nurse cannot live on the gratitude of patients; she must have sufficient income.”

Hospitals however did not follow this logic. Instead, relying on familiar tactics, hospitals continued to put their efforts into recruiting new students into nurse education programs. To deal with the immediate problem of care delivery, they continued wide-scale use of assistive personnel.

The 1964 Nurse Training Act provided significant funding for nurse education, and in the late 1960s hospitals, reaping the financial benefits of the passage of the Medicare and Medicaid legislation, began offering nurses better salaries. This produced another brief reprieve from nursing “shortages” until the 1970s when administrators once again began aiming for increased productivity and cost reduction.

So we’ve seen two periods over the past century when competent government involvement remedied the issue, but that’s not on the horizon. Bernie’s Medicare for All plan would have attempted to root out the greed that’s causing the nurse “shortages” and mandate sufficient, well-paid nurse staffing, but of course the Democrats did everything they could to make sure that would never come to pass.

Still, the federal government can require hospitals participating in Medicare to adhere to specific quality standards, which could include nurse staffing standards, but there are no indications that will happen either. Instead we’re getting more efforts by major healthcare systems to conspire to suppress nurse wages – both directly employed and gig nurses.

And we’re getting even more gutting of healthcare systems by private equity. And now private equity funds are sitting on enormous amounts of money they have amassed from investors and are required to spend or return within the next several years. Widespread expectations are that much of that money will be spent devouring what’s left of the US healthcare system.