In the healthcare industry, maintaining adequate staffing levels is a constant challenge and balancing act. For many facilities, healthcare staffing agencies are an easy solution to filling vacancies in a timely manner.
However, it is important for facilities wishing to stretch their budget to know the cost of staffing agencies, the common pricing models, and what other options exist out there.
Healthcare facilities are constantly grappling with:
- Maintaining adequate staff levels
- Coping with complex regulations
- Paying high recruitment costs
How much should you be paying when relying on a staffing agency?
In this article, we will address the average nurse staffing agency cost, typical fee structures, and what influences these costs, so you can budget wisely and avoid overpaying.
We will also consider alternatives to a traditional nurse staffing agency: alternatives that will provide your facility with flexible and cost-effective solutions.
Why healthcare facilities depend on agencies to hire talent
Facilities rely on agencies to hire talent because they give them multiple benefits:
- Access to a deep talent pool: Agencies maintain extensive, pre-screened candidate lists of qualified nurses and healthcare workers, making it possible to access candidates with defined specialties and availability in a specified timeframe.
- Support with the recruitment process: Recruitment processes like sourcing, interviewing, credentials verification, and background checks are executed by staffing firms, therefore reducing the facility's internal recruitment workload and overhead.
- Staffing flexibility: Agencies provide temporary, contract-to-hire, or permanent placement arrangements to address variable hospital census and volume fluctuations, allowing facilities to ramp staffing up or down as needed.
- Compliance and credential management: Agencies manage compliance requirements, including licensing verification and credentialing. This helps facilities reduce risk and ensures staff meet all legal requirements. Credentialing costs often fall within agency fees, saving internal resources.
- Reducing turnover within the facility: With agency networks, facilities can fill vacancies quickly and reduce gaps that could result in burning out workers or compromising patient care. However, nursing turnover expense still remains a key determinant of staff retention initiatives.
While the advantages are strong, the average staffing agency markup fees can be high and impact your facility's labor budget overall. Let’s dive into the common services a healthcare facility can expect to pay for by using an agency.
Types of staffing agency services in healthcare
Let’s compare the costs of temporary staffing against permanent placement. Healthcare staffing agencies usually provide different models of services customized to meet the hiring needs of a facility:
Permanent placement
Agencies find, screen, and submit candidates who are hired directly by the facility. In most cases, a placement fee, usually a percentage of the candidate's first-year salary or a flat amount, is charged. The fee covers the agency's recruiting efforts and is a one-time expense.
Facilities might benefit from permanent placements if they are looking to hire for the long term. However, permanent placements won’t help facilities that need to fill and cover temporary or seasonal absences.
Contract-to-hire
This hybrid option allows healthcare facilities to pilot-test healthcare professionals temporarily before agreeing to permanent hire. If the facility wishes to employ the contractor permanently, a conversion fee or contract fee—usually lower than the placement fee for permanent hire—may be added.
A few modern healthcare staffing platforms—Nursa included—don’t charge facilities for permanent hires.
Temporary staffing
Companies offer healthcare professionals temporary placement ranging from days to months. Some examples of temporary staffing include the following:
- Travel nurses: Nurses employed on out-of-area assignments, typically for a period of 13 weeks.
- Contract staff: Longer-term temporary assignments for more predictable labor needs.
- Per diem staff: Well-suited for unexpected or shift-only coverage. This works for facilities that need contingent staffing. Per diem staffing is useful for unexpected call-outs and absences, sudden increases in patient census, or covering drops in staffing levels from turnover while a facility finds a full-time replacement.
Temporary staffing normally costs more than the staff member's pay rate to account for the agency's markup and overhead.
Key cost drivers for staffing agencies
Understanding what fuels healthcare staffing agency expenses can help facilities identify if agency solutions are within budget. Major cost drivers that affect the nursing agency bill rate include:
Recruitment cost
Agencies will incur some costs. For example, when recruiting, agencies normally conduct the following tasks for each applicant:
- Sourcing
- Screening
- Interviewing
- Background checks
These recruitment costs are wrapped up in the fee they charge your facility, whether it is a placement fee, a conversion fee, or packaged in hourly fees.
Credentialing and compliance costs
Some necessary resources that agencies incur are, for example:
- Licensure maintenance
- Certification authentication
- Healthcare compliance
Such credentialing and compliance costs are built into agency pricing to reduce risk for facilities.
Nursing turnover costs
High healthcare turnover requires agencies to recruit and backfill continuously, which can result in additional operational costs reflected in the agencies' fees and markups.
Specialty coverage
Sourcing nurses with experience in unique specialties or units (like ICU or OR nurses) could entail more expensive staffing fees due to limited availability and strict vetting requirements.
Geographic location and market demand
Agency staff rates vary geographically according to supply-demand relationships for nursing and clinical professionals. Rates can vary for rural and urban areas, high cost-of-living and low cost-of-living areas, and locations with varying levels of nursing labor supply.
Common staffing agency pricing models in healthcare
Staffing agencies employ multiple pricing models, and understanding them allows facilities to estimate and compare costs. When you're ready to make a decision, it can be incredibly helpful to ask for a healthcare staffing agency rate sheet so you can see a clear, itemized breakdown of all potential charges and compare them easily.
How much do nursing agencies charge clients? Exact pricing will be dependent upon each staffing agency’s specific operating costs and pricing structure, but the following estimates can provide a helpful baseline to help you understand how the cost structures work.
Hourly markup model
Common to most temporary staffing models, agencies charge the facility an hourly bill rate slightly greater than the clinician's pay rate. This simple pricing structure allows facilities to meet demand for care with a lower upfront investment.
For example:
- Pay rate to nurse: $40/hour
- Bill rate to facility: $60/hour
- Staffing agency markup: $20/hour (50% of what the nurse makes)
Placement fee model
Applied to permanent placements, the agency bills this as a single fee for a successful placement, normally 15-25% of the employed staff's initial year's salary. The placement fee is the agency's cost recovery for hiring.
For example:
- First-year nurse salary: $80,000
- Placement fee percentage: 20 percent of the salary
- Placement fee to agency: $16,000
- Bill rate to facility: $96,000
Staffing agencies will often allow facilities to hire temporary clinicians full-time by applying a placement fee.
Pro-tip: Nursa never charges facilities fees for “hiring away” a nurse for a full-time role.
Conversion fee
Under contract-to-hire arrangements, when the agency converts the temporary employee nurse to an employee, the facility might pay a discounted conversion fee instead of the full placement fee.
For example:
- Initial placement fee: $16,000
- Conversion fee: $8,000 (50% discount)
- Savings for facility: $8,000
This means the facility saves $8,000 by converting the temp nurse to permanent staff instead of hiring a completely new nurse through the agency.
Retainer-based fees
A retainer is a payment for services in advance, ensuring at least some degree of commitment and effort on the part of the agency. These fees are paid for successful placements, and are less common.
For example:
- Retainer fee (first): $2,000
- Additional fee when permanent placement is successful: $10,000
- Overall facility expense: $12,000
As you can see, agencies use different models and fees based on services that a facility needs. In addition to pricing, there are other aspects to consider when choosing a staffing solution for your own facility such as labor quality, relationship support, and more.
Key staffing agency considerations for facilities
Considering the cost when you choose a staffing option is vital, but remember that your facility should also consider other aspects:
- Specialty coverage: Is the agency or platform an expert in your high-end specialties?
- Candidate pool: Are their applicants highly qualified and fully pre-screened?
- Labor quality: What are the agency's quality assurance and retention practices?
- Reliability: Can the agency consistently supply immediate needs?
- Ease of partnership: Is the agency's support responsive? Is the billing transparent?
Some facilities believe traditional nurse staffing agencies lack the flexibility required to respond to changing needs. In terms of advantages, other solutions can be equal to or superior to them.
Alternatives to nurse staffing agencies
If your facility wishes to reduce nurse staffing agency costs and increase flexibility, you can consider:
- Float pools: In-house pools of cross-trained staff used to fill gaps and shifts without additional outside agency costs.
- Healthcare staffing platforms: Technology-enabled platforms like Nursa that connect facilities with vetted healthcare clinicians directly, facilitating on-demand staffing without agency markup.
These platforms offer transparent pricing, lower fees, and direct clinician access, supporting cost containment efforts and reducing agency reliance.
Explore more staffing resources on Nursa
Understanding healthcare staffing agency cost, pricing, and healthcare staffing cost drivers empowers healthcare facilities to negotiate their labor budget more effectively. While agencies are beneficial for recruitment and compliance support, they are often expensive with markups that differ substantially by service type and region.
But what if you didn't have to choose between quality care and your budget?
Your facility needs to examine its staffing needs and explore modern, cost-effective options, such as alternative healthcare staffing platforms like Nursa.
Nursa is a healthcare staffing platform with on-demand, per diem clinicians to help you build a sustainable staffing plan without overstretching your resources.
By achieving balance across quality, cost, and flexibility, your healthcare facility can build a resilient workforce that provides consistent, compliant patient care.
If you are interested in a more efficient and affordable approach to solving the healthcare staffing crisis, sign up with Nursa today and see how easy it is to find the clinicians you need, on your terms.
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