New report exposes private equity’s profit-seeking tactics in medical staffing
A new report, “Profiting in Crisis: Exploring Private Equity’s Investments in Travel Nursing Amidst a Critical Nursing Shortage and a Pandemic,” by the Private Equity Stakeholder Project (PESP) examines the current national nursing crisis and the way private equity investments in medical staffing agencies are exacerbating it.
Since the beginning of the pandemic there has been an uptick in travel nursing, accompanied by record levels of private equity activity in the medical staffing space. With this in mind, Mary Bugbee, healthcare researcher at PESP, explored the current nurse staffing crisis, the travel nurse industry, and the increased private equity investments the sector is seeing.
“We know there is a nurse staffing crisis in the United States right now,” Bugbee said. “This wasn’t caused by the pandemic, but has certainly gotten worse during it. Travel nursing agencies and investors have taken advantage of a health crisis and government relief funds to hike up rates charged to hospitals for travel nurses.”
Rate hikes from travel nursing companies and the large influx of COVID-19 funding for hospitals have disrupted healthcare labor markets. Meanwhile, many hospitals have failed to implement the changes that staff nurses are calling for, such as higher pay and safe staffing ratios. In the absence of change, some nurses are leaving the profession or choosing to work under short-term travel nurse contracts that pay much better and give them greater flexibility around taking time off.
Bugbee explains, “We’re in a vicious feedback loop where hospitals are losing staff nurses—then needing to over rely on expensive, contingent labor to close the gaps, which they increasingly cannot sustain financially. The exacerbated staffing shortages further drive more nurses to leave due to high levels of stress and even moral injury.”
Since early this year, COVID-19 relief funds have been dwindling, and there are less lucrative opportunities for both travel nurses and travel nursing agencies. Many travel nurses are reporting canceled assignments and reduced wages mid-assignment, as well as experiencing issues with both the travel agency they are contracted with as well as the hospitals to which they are being assigned. Yet, staffing problems at hospitals have not gone away, and in some places staffing shortages have resulted in some hospitals choosing to pause elective surgeries or temporarily close units they cannot staff.
In light of this, private equity investment in travel nursing is cause for concern. With a history of prioritizing profits over patient care and employee wellbeing, private equity’s growing investments in medical staffing could compound the vulnerabilities our health system has been facing.
“Private equity firms were already investing in travel nursing and other types of medical staffing companies prior to the COVID-19 pandemic,” Bugbee said. “As a fragmented industry with considerable opportunities for consolidation, this sector has been attractive to private equity. Plus, the combination of an aging population and long-term projected shortage of nurses to meet the needs of this population has also attracted investors.
“We saw record levels of private equity activity in the medical staffing space in 2021. What this shows is an opportunistic influx of private equity into the medical staffing industry during an ongoing health crisis when a lot of government money became available to subsidize labor costs in healthcare.”
Various policymakers and the hospital industry have called upon federal and state agencies to investigate travel nursing agencies and their rate hikes during the pandemic. Unfortunately, current regulations and enforcement of those regulations have been insufficient to contain costs and address the acute labor shortage within our healthcare system. This report highlights how our under-regulated for-profit health system has substantial vulnerabilities, especially apparent during a pandemic.
You can view the full report by PESP researcher Mary Bugbee HERE.