Oregon is the latest state to tackle the rising cost of workers acquired through temporary staffing agencies, but it’s unclear yet just how low rates might go. Or whether the state’s actions will be enough to bring some badly needed workers back in-house.

Lawmakers recently enacted legislation directing the state’s Health Licensing Office to create a process to investigate complaints about temporary staffing agencies. The office can impose fines and even revoke permission for an agency to operate within the state. 

The law also directs the state Health Authority to set allowable rates for staffing agencies. 

“Oregon has had some long-term care communities in more rural parts of the state close due, in part, to out of control staffing agency costs during the pandemic, with many other providers telling us that they cannot sustain these exorbitant costs for much longer,” Phil Bentley, CEO of the Oregon Health Care Association, said in a statement to McKnight’s Long-Term Care News. “Our healthcare system has a multitude of cost containment measures built into except, until now, around temporary staffing. [The bill] addresses that imbalance.”

The legislation also requires that temporary staffing agency workers be properly trained and hold the correct licenses or certifications. The bill was a priority for the Oregon Health Care Association to help providers manage costs and improve the quality of care for residents, Bentley said.

Steve Fogg (pictured), chief financial officer of Oregon-based Marquis Companies, remains “on the fence” about the legislation’s potential impact on long-term care, noting that stakeholders still have to come together and agree on the actual rate cap methodology.

“In my opinion, the primary goal of the rate cap is to ‘level the playing field’ in terms of how much we as facility operators can pay our permanent workers versus how much temp staffing agencies can pay their workforce,” Fogg said in an email to McKnight’s. “They do not have the same barriers, such as regulated rates and minimum staffing requirements, etc., that we do, which allows them to offer more dollars an hour upon hire.  If the ultimate rate cap methodology solves this, then it will be wildly successful.”

 The Health Authority will set multiple rates, based on a number of categories such as geographic regions, shift differential and the setting where the nurses will be working. The caps won’t take effect until Jan. 1, 2025.

In an interview with The Lund Report earlier this year, LeadingAge Oregon CEO Kristin Milligan said facilities have “become dependent on agencies.” She noted that one provider was paying 208% more for temporary staffers to fill 100 shifts per week. 

Fogg added that a lack of rate cap and the pandemic itself encouraged many workers that historically had been in-house, permanent staff, to leap over to temporary staffing companies. Federal subsidies passed on to states allowed some provider types to afford what he called “outrageous” hourly rates for traveling nurses. And from the nurses’ perspective, flexible agency work may have seemed a way to reduce the risk of COVID exposure during any outbreaks.

But neither factor drove an increase in supply even as costs skyrocketed, Fogg added.

“Prior to the pandemic, the profile of an individual that wanted to work in a temp staffing agency was largely due to desire for a more flexible work schedule,” Fogg said. “It was also a much smaller chunk of the macro level supply of workforce.  Since the start of, all the way through, and now exiting the pandemic, the primary reason people go to temp staffing agencies today is because they can make more money. This is what needs to change.”