Traveling-Nurse Bubble Bursts

 It was the best of times, it was the worst of times…for nurses.

Hospitals across the US have had to dig deep to treat patients during the Covid-19 pandemic as some of the most lucrative parts of their business, elective surgeries, were constantly postponed, The flip side of that has been a bonanza for the companies that helped them keep staffing levels adequate as well as for the brave and flexible people who filled those positions.

Nurses willing to pack up and travel to a new hot spot every few months earned as much as $10,000 a week at the height of the pandemic to fill in a shortage of medical staff. The economics of nursing was further thrown out of whack by federal subsidies, which allowed hospitals to pay distorted wages, briefly creating a new class of highly paid nurses. Some have flaunted their fancy Louis Vuitton bags or simply expressed relief over finally being able to pay off their student loans on TikTok.

The shortage of nurses, a persistent problem in the US even before the pandemic, has hurt profitability at hospitals, which have had to increase pay not only for traveling nurses but also for their regular staff, sending average nurse salaries soaring nationwide. Because of rising wages,

HCA Healthcare,

HCA 2.67%

a large operator of hospitals, earlier this year had to sharply lower its full-year guidance. Meanwhile, shares of

Cross Country Healthcare

CCRN 2.65%

and

AMN Healthcare Services,

AMN 0.27%

large providers of temporary medical staff, have more than doubled in the past five years. Travel-nursing revenue has tripled in the past 6 years to about $12 billion.

But the traveling-nurse market might finally be coming back down to earth. HCA last Friday released second-quarter profit figures that beat Wall Street estimates and, more importantly for investors, reaffirmed its full-year outlook, sending its stock soaring by more than 11%.

Tenet Healthcare,

THC 0.69%

another hospital group reporting positive results after the market close on Thursday, shot up 6%.

During a call with analysts, HCA Chief Executive Officer Sam Hazen said expenses for temporary staff were down about 22% in June compared with April. Chief Financial Officer Bill Rutherford predicted that “over the course of the year, we’ll continue to see hopefully a reduction in the utilization of that contract labor.” After HCA and Tenet released those results, Cross Country’s stock tanked 17% while AMN fell 11%.

Brian Tanquilut, an analyst at Jefferies, sees weekly pay for temporary nurses dropping about 15% more to the low $3,000’a week, helping to improve the bottom line at hospital groups. While a far cry from the peak, it won’t go back to how it used to be either because of what Tanquilut and other industry watchers see as a structural shift in the market.

Some travel nurses have discovered they like the flexibility and better wages that come along with traveling. Cross Country CEO John Martins said in a recent conference that the work-from-home culture means nurses can more easily bring their remote-working spouses along with them. He estimated the market will grow from 40,000 travel nurses in 2018 to 80,000 in 2023.

The upshot might be that, while hospitals are seeing a reprieve from the extreme costs of the pandemic, they have to permanently reset their pay expectations. As for the nurses and companies that saw a silver lining in a health emergency, the boom times might be over but the demand for their services will persist as long as America fails to fix its broader nursing shortage.

https://netionaldastak.com/traveling-nurse-bubble-bursts-wsj/