Nursing shortages have significantly increased overall healthcare facility costs and are one of the biggest drivers of margin pressure. These nurse staffing shortages are largely due to increasing frustration with mandatory overtime and burnout. Data from a 2023 report titled Evolving Contract Labor Opinions in the Healthcare C-Suite indicates the alarming state of nurse turnover in healthcare facilities:
- Eighty-six percent of surveyed hospitals and health systems saw 10 percent or more of their nursing staff quit in 2023.
- Over half of surveyed hospitals and health systems saw 20 percent or more of their nursing staff quit in 2023.
Healthcare executives are concerned about the financial impact of relying on travel nurses and traditional staffing agencies to cover these gaps in clinician coverage. In this context, the number of independent nurse contractors in facilities more than doubled from 2019 to 2023.
Learn what an independent nurse contractor is and the pros and cons of using per diem nurses nurses to meet staffing needs at your facility.
What Is an Independent Contractor Nurse?
An independent contractor nurse is not economically dependent on an employer for work. In other words, independent contractor nurses are self-employed.
Classifications of Self-Employed Workers
Workers are typically self-employed if they fall into one of the following categories:
- They are members of partnerships that carry on specific trades or businesses.
- They are in business for themselves.
- They carry on trades or businesses as sole proprietors or independent contractors.
Per diem or PRN nurses are self-employed since they work as independent contractors.
Are Independent Contractor Nurses Counted as Employees?
As independent contractors, PRN nurses are not W-2 employees. Healthcare facilities do not pay Social Security or Medicare taxes on behalf of these workers. Independent contractors pay these taxes themselves in their entirety. They must also file income taxes if net earnings from self-employment are $400 or more.
Since they are self-employed, independent contractor nurses don’t receive employee benefits, such as medical coverage.
Independent Contractor Nurse Pros and Cons
Working with independent contractor nurses offers healthcare facilities significant advantages, although these clinicians cannot make up the entire nursing workforce.
Contract Nurse Pros
“What you need on a weekly or monthly basis changes…Agility and how fast you can fill the roles is very important. When you talk about the financial aspects and strategic planning related to labor, that’s tons of additional hours.”
– CNO of a western community hospital with 325 beds, Evolving Contract Labor Opinions in the Healthcare C-Suite
Contracting nurses as needed allows healthcare facilities to reduce costs and maintain safe clinician-to-patient ratios. Meeting these goals is significant in the context of alarmingly high nurse turnover rates.
- Lower costs: Although per diem nurses typically earn higher hourly rates, contracting independent nurses lowers costs for facilities in many ways. Facilities only pay contract nurses for the hours they need them to work; they don’t pay them regular salaries and don’t have to pay taxes or employee benefits for these workers. Contracting nurses only when needed—instead of maintaining high staffing levels at all times—helps facilities avoid challenges related to a low census. On the other hand, during periods of high demand, facilities can also avoid paying staff nurses overtime, which is at least one and one-half times the regular pay rate. Furthermore, with Nursa, facilities don’t pay the excessive hire-away fees that agencies demand.
- Safe clinician-to-patient ratios: The purpose and primary goal of any healthcare facility is to provide patients and residents with safe and quality care, and facilities can only achieve this goal with adequate staffing levels. Contracting independent nurses is a short-term staffing solution to address vacancies caused by high nurse turnover rates and employee leaves of absence. This 1099-workforce model also allows facilities to contract nurses to cover temporary increased demands for healthcare services, such as during seasonal patient spikes.
Although these are the most noteworthy advantages of contracting independent nurses, facilities can benefit in other ways as well:
- Low commitment and low risk: As mentioned regarding cost, facilities only commit to one shift at a time with contract nurses. Therefore, if a facility is unhappy with a particular clinician, the facility need not contract that individual again or they can even block them from requesting shifts in the future. On the other hand, if the nurse or nursing assistant is a good fit, the facility can offer the clinician full-time employment. In other words, contracting an independent nurse is like giving a potential employee a trial run before making a long-term commitment.
- Decreased burnout among staff nurses: Covering staff vacancies and maintaining adequate nurse-to-patient ratios translates into a lower prevalence of burnout among staff nurses, in turn reducing turnover rates.
Contract Nurse Cons
Despite numerous advantages, contract nursing cannot cover all of a facility’s staffing needs. Contract nursing is effective as a temporary solution to address staffing shortages when a solid base of in-house nurses is in place. In other words, it provides much-needed extra hands on deck in an otherwise functioning system. Here are some reasons contract nurses cannot constitute the entire workforce of a facility:
- Limited roles: Contract nurses cannot enter healthcare facilities for single shifts to take on leadership roles. They cannot reasonably work as charge nurses, preceptors, or case managers.
- Limited collaboration: Effective teamwork is developed over time as healthcare team members learn about each other’s strengths, weaknesses, preferences, and pet peeves. Effective collaboration is also based on trust, which depends on time spent together and shared experiences. Therefore, it is difficult for long-term clinicians to work as effectively with contract nurses as they may with other staff members.
- Limited oversight: During initial job interviews, orientation periods, and stand-up meetings, among other opportunities, healthcare managers continually evaluate staff. Since contract nurses may only work at a given facility for one shift, opportunities for healthcare managers and nurse leaders to get to know them well and evaluate their work are limited.
Independent Contractors Are a Great Option for Facilities
No question about it—contracting independent nurses offers healthcare facilities numerous advantages.
Therefore, you are likely wondering how to find independent contractor nurses to cover gaps in your facility’s clinician schedule. The answer is Nursa, a nationwide platform that exists to put a nurse at the bedside of every patient in need quickly and safely.
Nursa’s real-time technology allows skilled nursing facilities, hospitals, health systems, and community organizations to find qualified local nurses and nursing assistants for per diem shifts with no upfront fees or restrictive contracts. Facilities simply post the shifts they need to fill, and qualified clinicians request the jobs. Sign up with Nursa for free and find effective solutions to your facility’s staffing challenges.
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