The nation’s largest nursing home association this week added its voice to calls for federal intervention in alleged price gouging by direct care staffing agencies amid labor shortages exacerbated by the COVID-19 pandemic.
“Our providers have little choice but to pay the exorbitant prices, and hope that the agency does not poach their staff once in the building,” Mark Parkinson, president and CEO of the American Health Care Association, wrote in a letter Tuesday to the Federal Trade Commission. “This price gouging is simply not sustainable for our providers and the current reimbursement system structure.”
Parkinson’s letter, calling inflated rates “supercompetitive,” follows on the heels of a similarly worded letter from LeadingAge on Oct. 8.
The U.S. Bureau of Labor Statistics in late August reported that nursing homes and other residential care facilities have lost about 380,000 jobs since February 2020 when the pandemic first became prevalent. The explosion of the delta variant in recent months has depleted the workforce even more, Parkinson argued.
He also explained that declines in patient census, dropping from 85% in January 2020 to 72.6% in August 2021, and increasing labor costs have led to the operators experiencing $11.3 billion billion in losses in 2020. The industry is also projected to experience $12.7 billion in losses for 2021, according to the AHCA.
Parkinson said there are countless examples of direct care staffing agencies charging supercompetitive prices to desperate LTC centers that simply need workers, and called on the FTC to step in.
“We are requesting that the FTC use its authority to protect consumers from anticompetitive and unfair practices to investigate this activity and take appropriate action to protect LTC centers — and ensure that our nation’s elderly and those individuals with disabilities receive the quality care they deserve,” he wrote.
Regulation might be helpful
Even some agencies are acknowledging the extent of the crisis.
Chris Sund is director of business development and sales for long-term care at Fusion Medical Staffing. The national contract nursing agency has seen its number of new positions to fill more than double from a baseline of 3,000 to 4,000 weekly pre-COVID to a peak of 10,000 weekly as vaccine mandate debates raged in July and August. Levels remained elevated through early fall.
In an interview Thursday, Sund said he’s seen unscrupulous temp agencies — and some individual providers — ramp up pricing for specific jobs, which then results in a vicious outbidding cycle. That can lead to a rush of applicants for a single position but create disillusionment with other jobs posted at more fair pay rates.
Facilities using Fusion set their own price after consulting with a platform that allows them to see what other providers are offering in the same areas. Sund said that, based on an internal formula, his agency clears a smaller margin when providers have to pay higher salaries.
He’s not necessarily opposed to federal regulation but says any solution involving rate caps must account for both market demand and cost-of-living differentials even within the same state.
He’d like to be able to offer some relief to clients who desperately need temporary workers to give their permanent staff well-earned rest. But Sund doesn’t believe a state-by-state strategy to regulate price-gouging will work. He said some agencies have evaded caps in the two states that have them by providing benefits, including housing, through “loopholes.”
“Regulation might be able to fix it, but it’s going to have to be all 50 states together,” he said. “If one state does it, unfortunately, a lot of their staff is coming from outside of the state and they’re going to limit their pool to just what they already have. They’re not going to be able to pull the resources from other areas, and they’re just going to hurt themselves, I think.”
