5 Things to Know About Contract Nursing: Facility Guide

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Written by Kayla Tyson Editor, B2C Content, IntelyCare
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Reviewed by Diana Campion, MSN, APRN, ANP-C Education Development Nurse, Content Writer, IntelyCare
Nurses meeting with physicians in a healthcare facility's hallway.

If your healthcare organization is dealing with short staffing, you’re certainly not alone. Facilities across the country are finding it challenging to fill shifts and must often turn to alternative staffing solutions to keep positions filled. One such solution is contract nursing.

Using independent contractors to fill shifts can be a good choice as long as you understand the factors involved in the decision-making process. In this article, we’ll explore some aspects of contract work that can help you decide whether these types of professionals could be beneficial for your organization.

What Is Contract Nursing?

Contract nurses are nursing professionals that work for a specific period of time —- typically around 13 weeks —- at a healthcare facility with short-term staffing needs. They’re also referred to as travel or agency nurses, and usually work for a nurse staffing agency that can serve as their employer of record, unless they also hire their nurses as independent contractors.

Many facilities hire contract nurses to fill temporary vacancies without having to commit to the expenses of hiring long-term staff. Many nurses enjoy the flexibility of being a contract nurse when it comes to work locations and schedules, as they can choose assignments in different cities or states. They also receive higher rates of base pay when compared to other types of nursing professionals.

1. Contracting Is a Distinct Type of Nursing

There are many kinds of nurses and each type provides unique benefits to the facilities where they work. The differences between full-time, per diem, and contract nursing range from scheduling and compensation to hiring and training. Understanding these distinctions is key to choosing the professionals that best meet your facility’s needs.

Full-Time and Part-Time vs. Contract

Full-Time: As the name implies, these types of nurses work full-time hours at your facility. They’re hired by your organization as W2 employees and their pay is subject to withholding for payroll taxes. They typically receive benefits and retirement plans as well. When it comes to training, facilities are responsible for the development and training of their full-time staff, investing in ongoing professional development, and conducting performance reviews.

Part-Time: Nurses hired as W2 employees may also work part-time hours and typically receive partial benefits.

Contract: Unlike full-time staff nurses, contract nurses are not employees of the facility where they work and often receive their compensation from a third-party staffing agency. Keep in mind that they can still work full-time hours during their contracted period. A contractor’s access to benefits and training depends on the agency and whether they’re hired as a 1099 or W2 employee. We’ll discuss the potential legal ramifications of using 1099 workers in healthcare in more detail below.

Per Diem vs. Contract

Per Diem: Per diem nurses typically fill last-minute staffing needs in an organization and their schedules can differ greatly from week to week. They’re not guaranteed a set number of shifts per week and often work in a variety of locations or units. Their hourly rate is often higher than full-time staff, but their access to benefits depends on their employer.

Contract: The main differences between per diem vs. contract nurses involves scheduling and locations. While per diem nurses aren’t guaranteed any set number of hours, contract nurses often work full-time hours and have a guaranteed number of shifts each week. Contract nurses are sometimes known for traveling to their assignments, while per diem nursing is usually done locally.

2. Hiring Contractors Can Decrease Expenses

Because many contract nurses are employed by staffing agencies, your organization doesn’t have to carry the full burden of the hiring process. This can result in cost savings related to recruitment, interviewing, and onboarding. Once you hire a contract nurse, you’ll also save money on benefits, payroll taxes, and ongoing training.

In addition, contract nurses offer a flexible solution to short-term staffing needs that arise due to extended employee leave or seasonal increases in patient census. This means that your organization can adjust the number of nurses you need based on demand and avoid unnecessary costs associated with maintaining full-time staff when census is low.

3. You’ll Need an Effective Contract

Contract nursing requires a legally binding agreement between the nurse, their agency, and your organization. The staffing agency generally serves as an intermediary during negotiations with the nurse, who may advocate for preferred shifts or time off requests.

There are a number of key components of a nursing contract. First, it should include the start and end date, types of shifts expected, and the number of shifts per week. Be sure to include a disclaimer if there’s a possibility that the contract could be canceled at any point before or during the assignment.

The contract should also clearly outline compensation, which includes base rates, travel and meal reimbursements, and housing stipends. Some contracts include stipulations that the agency or organization will provide housing — an important detail to work out in the contract negotiation process.

4. Your Culture Might Be Impacted

Healthcare facilities might find that the use of contract nursing has an impact on their staff dynamics. Since the contractor is only there for a short time, they may not be as interested in becoming a part of the company culture.

A strong company culture is key to recruiting, productivity, retention, and creative innovation. If your organization lacks a cohesive group of employees who are committed to the organization and its goals, you may see a negative impact on the overall culture. Keep this in mind when deciding how many contract nurses you’ll use as part of your staffing plan.

5. Don’t Forget Liability Considerations

Since contract nurses aren’t employed by your organization, there can be gaps in regard to supervision, training, and quality of care. Also, nursing contractors have shorter onboarding when they arrive at your facility and don’t undergo performance reviews during their time there, so you’ll have less control over the training they receive.

It’s a good idea to know whether your contract nurses are employed by their agencies as 1099 independent contractors or as W2 employees. If they’re identified as 1099 contractors but perform the same functions of a W2 nurse and you exert some level of supervision and control over them in your facility, you could risk legal exposure related to employee misclassification. Be sure to refer to your state’s employee classification laws as you make your staffing plan.

Fill Shifts Fast With Peace of Mind

We’ve explained some of the key considerations with contract nursing. If you’re looking for a staffing partner that gives you peace of mind when it comes to employee classification, look no further. At IntelyCare, our nursing professionals are hired as W2 employees so you get the best of both worlds — flexible staffing to stabilize your workforce and another employer to manage the process.

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