(Bloomberg) -- Hospitals are facing a new budget-buster as dependence grows on highly paid travel nurses who are poised to take on a larger role in staffing even after the pandemic threat fades.

Rising rates of hospitalization during the pandemic forced many institutions to increase their use of travel nurses who work on short-term contracts, often for more pay than their full-time counterparts. Now the surge of pent-up demand for non-Covid care along with the departure of many nurses from full-time staff positions is forcing institutions to look far and wide for staffing help. 

In New Mexico, where the coronavirus has ravaged health-care systems across the state, hospitals are facing more than $400 million in losses, with almost $250 million of that due to staffing costs, including travel nurses. And the damage will likely grow, according to Troy Clark, chief executive officer of the New Mexico Hospital Association.

“Everybody is searching for more staff, asking your staff to take on longer shifts,” Clark said. “That encourages them to go, ‘If I’m going to do all this work, I might as well go become a traveler and get paid a heck of a lot more.’”  

Travel nursing revenue tripled to an estimated $11.8 billion in 2021 from $3.9 billion in 2015, according to research firm Staffing Industry Analysts. Hospitals and health systems say their finances have taken a hit from having to rely on the temporary workers and that there’s no clear fix in sight.  

There are more than 5 million nurses in the U.S., of which 4.2 million are registered nurses, according to the National Council of State Boards of Nursing. Exhaustion, burnout and other pandemic-related factors have pushed many to leave full-time bedside positions for less stressful jobs in insurance and telehealth, hospital and recruitment executives said. And some are moving to travel nursing for the scheduling flexibility and variety. 

The U.S. has an ample supply of nurses who could be working full time, said Linda Aiken, a nursing and psychology professor at the University of Pennsylvania who studies workforce issues. The problem has more to do with harsh working conditions and insufficient wages for full-time nursing that preceded the pandemic, she said.

“This is not a failure of our supply of nursing,” said Aiken. “It’s really a failure of hospitals to invest enough of their resources, to have enough nurses working for them.”

The University of New Mexico Sandoval Regional Medical Center never had to to use travel nurses before the pandemic. Now, monthly payroll for about 60 of the temporary staff ranges up to about $1.5 million, almost has half as much as for the full-time staff of 580, who receive about $3.3 million.

‘Not Budgeted’

The center lost almost a third of its 200 nurses to traveling positions during the pandemic and had to raise staffing levels further to cope with Covid patients, said CEO Jamie Silva-Steele. Faced with potential travel-nursing costs of $18 million next year, she’s looking to replace 40% of travel nurses with full-timers by the end of June, and considering hiring more contract nurses from Canada.

“We are not budgeted for another $18 million in compensation, so we have to have those strategies to gradually reduce those types of staff in the organization,” she said. 

Average monthly postings for open travel nursing jobs rose 15% in January from a year earlier, according to ZipRecruiter Inc. The increase is likely to continue as a backlog of patients needing elective procedures return to hospitals and population ages, said Sinem Buber, the lead economist for the online job-search and recruiting company. 

“I don’t see the trend going down or getting flat anytime soon, even if the pandemic wanes,” she said. 

The Provider Relief Fund, established in 2020 with federal stimulus money, allocated $178 billion to help thousands of health-care providers with additional expenses incurred due to Covid-19. About two-thirds of funds have been distributed, according to a review of data provided by the U.S. Department of Health and Human Services. But administrators say that money, used for everything from medical purchases to staffing wages, is exhausted.

“There was some protection, but nowhere near the amount of financial support that the industry needed,” said John Morrow, a health industry analyst at Franklin Trust Ratings, about federal payments health systems have received.

And as the need for travelers drags on, some hospitals say the cost of increased wages will be passed onto patients. That could either be indirectly through insurance and benefits payers or directly via out-of-pocket costs. 

“We’re going to have to be as efficient as we can, but there’s no question that this is going to cause the cost of health care to escalate,” said Steven Michaud, president of the Maine Hospital Association. “You can’t just manufacture all of this money out of cutting here and there. It’s going to be a combination.”

Growing Interest

Interest in travel nursing continues to grow, with job searches more than five times pre-pandemic levels, according to data from Indeed, an online employment site. Wages for travel nurses have surged during the pandemic to as high as a 3.4 times that of regular full-time nurses in January 2021, according to ZipRecruiter.  

Zachary Shepherd, a 36-year-old ICU nurse, has spent the past four years traveling across the U.S. and helping across hospitals where there’s a need. Having worked in intensive-care units in Covid-19 hot spots like Newark, New Jersey, and Long Beach, California, Shepherd said he enjoys the flexibility traveling provides and doesn’t mind the uncertainty of what’s to come. 

“I like the empowerment that I feel from being a traveler and having a lot more control over the direction of my career,” said Shepherd. 

Persistent Gaps

Meanwhile, hiring for staff nurses is falling across the U.S., dropping 3.2% in February compared with a year earlier, according to the Labor Department. While the number of nursing school graduates has risen steadily over the past five years, filling Missouri’s vacant positions will take time, according to Dave Dillon a spokesman for the state’s hospital association. 

To reduce the financial strain, hospital administrators are making efforts to reduce the amount of travelers, with some considering not renewing their contracts, according to Clark, the president of the association. 

“We want our nurses and all of our clinical staff to be paid fairly, but we have to be able to keep the doors open,” Clark said.

With the strain of dealing with the pandemic leading many nurses to quit or retire from the profession, experts say there will continue to be a persistent demand for travel nurses as health systems struggle to fill permanent positions.

 “As long as these gaps exist,” said Sophia Morris, vice president of account management at travel-nurse staffing agency Aya Healthcare, “I believe that hospitals will continue to utilize travelers to fill those holes.”

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