How to Build an Effective Contingent Nurse Workforce

August 30, 2022
The Trusted Works Team

During the COVID-19 pandemic, hospitals had no choice but to rely heavily on contingent labor—particularly in persistent hot spots. Travel nurses, per diem nurses, and contract staffers covered critical gaps in patient care and continue to supplement the healthcare workforce even as the pandemic wanes. However, the ongoing use of temporary staff has massively raised labor costs, increased turnover, and diminished organizational culture. In fact, mitigating pandemic staffing shortages has already cost hospitals an estimated $24 billion. Though overreliance on contingent labor will wane along with the pandemic, external nurse support will remain a necessary player in healthcare workforce planning.  

The question is how best to leverage both permanent and temporary nurses to benefit patient safety, care quality, and hospital financial health overall? Innovative, thoughtful workforce strategies are required to optimize the way talent resources are balanced in hospitals and health systems moving forward.

In the past, hospital leaders have been hindered from developing and deploying a comprehensive labor strategy by a lack of meaningful data and supportive technology. Today, that reality is evolving, and hospital executives and healthcare staffing leaders have more tools at their fingertips. When implemented and applied correctly, these tools can help build a proactive, sustainable contingent nurse workforce plan that incorporates full-time employees as well as temporary labor support. In this post, we’ll explore why it is important to build a contingent labor strategy and share some best practices for integrating contingent labor effectively.

The Growth of Contingent Labor in the Nurse Workforce

The per diem nurse staffing market had grown steadily for several years prior to 2020 due to a dwindling supply of clinicians and an aging patient population. When the pandemic struck, these concerns turned into crises. Existing nurse staffing issues—high burnout and turnover—were exacerbated by even longer hours, fewer resources, increased safety risks, more unpredictability, personal losses, and an overwhelmingly stressful environment both within and outside of hospital walls. In the face of these challenges, hospital leaders began increasing their reliance on per diem and travel nurses to fill coverage gaps.  

Travel nursing grew 35 percent between 2019 and 20201, and it is expected to grow an additional 40 percent in the coming years (in 2021, more than 90% of healthcare executives2 said they employ travel nurses in their organizations). Similarly, the global per diem nurse staffing market was valued at $7.6 billion in 2020 and is projected to expand at a compound annual growth rate of 4.9% through 20283.  

Though the pressures of the pandemic may dwindle, the challenges of nurse staffing will last. Rising nurse turnover trends persist, and remaining nurses expect to be well-compensated and intentionally cared for by their employers.

Benefits of Building a Contingent Nurse Labor Strategy

Today’s nurse staffing market demands a combination of contingency (travel nurses and per diem) and permanency (in-house employees and internal float staff). Rather than trying to eliminate the contingent nursing costs altogether, the key to success is being strategic about when and how to utilize each staffing source. Benefits of including contingent labor in your overall staffing strategy include:

Support for seasonal surges

It’s important to have a dependable supplier of external nurses for certain predictable surges in visits and admissions. Flu season, for instance, typically hits urgent care facilities, EDs, and ICUs fairly hard during the winter months. Tourist areas and event hubs also experience an influx of patients at vacation-friendly times of the year. In situations like these, it is more costly and demanding (in terms of time and money) to hire and onboard extra FTEs than to rely on temporary nurse staffing support.

Opportunity for learning

Introducing external nurses into your existing unit staff can provide the opportunity for learning for both external nurses and existing staff. Clinicians who have experience at many different organizations will often have excellent insight and a fresh perspective on what is working well and what could be improved. When nurses can be a conduit of knowledge and best practices to their peers, the entire industry will benefit.

Expansion of internal workforce

If a travel nurse’s experience at your organization is positive, they may want to stay on as an employee (in full-time or float capacity). Be thoughtful about observing the performance and culture fit of external nurses to evaluate who might be a good addition to your team (if they are interested).

Assistance on specific projects

Contingent nurse labor can also be greatly beneficial when you are looking to accomplish short-term initiatives or projects. You may simply need some extra hands-on deck, or you may be looking for a temporary nurse with specific expertise crucial to the job at hand (e.g., an EMR transition nurse).

Best Practices to Build an Effective Contingent Workforce

It is important to lean on a handful of best practices to strategically incorporate contingent labor into your overall workforce management strategy.

Gain insight from current staff

Temporary nurse placements can be disruptive to unit culture and operational flow. Consult your current nurses to learn what traits and skills external nurses need to blend in well with your units and teams. Use this feedback to help you decide how to find contingent nurses. Evaluate and select a staffing partner that can match those needs.

Keep percentage in check

A good rule to keep in mind is that you don’t want more than 20% of your nurses to be temporary placements in a given year. Budget about 2-5% of that external labor for seasonal support and 10% to allow for more flexibility and work-life balance for staff nurses.

Build an internal agency

Internal agency programs are composed of flexible clinicians (RNs, CNAs, etc.) or allied health professionals employed by the health system who work long-term contracts (4-26 weeks) or day-of staffing assignments spanning multiple specialties, facilities, and even states (for nurses who have obtained dual licensure or are in COMPACT states). Most programs offer full-time or part-time employment, vacation hours, insurance, and other benefits to internal agency nurses, while also offering the higher pay and flexibility typically only afforded by external agencies. With an internal travel program, nurses also can benefit from the new skills and experiences gained by working across multiple departments, hospitals, and even geographies. Meanwhile, your facility enjoys greater visibility into contingent resources and higher control of contingent labor spend.

Take advantage of technological advancements

Technology now exists to help you more effectively manage and track contingent staff. New tools empower hospital leaders to move beyond outdated staffing strategies and take advantage of more integrated, flexible solutions. Technological advancements open a whole new world of internal contingent workforce management that was not previously available to healthcare leaders. Today, technology reduces common needs for external MSPs (like lack of data to accurately forecast hiring needs, minimal visibility into available workforce, and little bandwidth and processes to deal with hiring and managing contingent labor). Increasingly, technology distills valuable data, automates staffing processes, and gives you a more holistic view of available resources. This shift enables you to self-manage your contingent workforce without exhausting bandwidth and budget resources.

How to Overcome Contingent Labor Challenges

Health systems need a marketplace for contingent work that allows them to access the right clinician for a given need—but they may not have the structures and tools in place to enable them to do so. Many organizations are dealing with siloed data, limited reporting, manual processes, and incompatible technologies. In these conditions, it is next to impossible to predict and fill immediate demand, much less to forecast and prepare for long-term labor trends. In each case, thousands of possibilities must be evaluated and analyzed. The bare minimum requirements to accomplish this at scale are centralized data, automation capabilities, and advanced AI.  

This set of requirements might sound intimidating, but at their core, they simply repurpose models already leveraged by companies like Uber. By using data-driven technology to review all possible combinations and match each demand to the best choice in supply, hospitals and health systems can:

  • Centralize all staff and shifts to one system  
  • Categorize and stratify the modes of supply available for any given shift based on cost, availability, skills needed, and other variables  
  • Enable more flexible frameworks for managing nurse staffing  
  • Reduce administrative burden on schedule managers
  • Improve satisfaction of temporary and permanent staff  
  • Sustain a comprehensive, creative nurse staffing strategy  

Where to Find the Right Technology to Manage your Contingent Workforce

Look no further than Trusted Health Works. Works is a single platform that hospitals can use to optimize their labor costs and streamline the source-to-pay process. With powerful back-end technology and a user-friendly interface, Works:

  • Adeptly predicts your shift gaps and offers solutions
  • Intelligently combines your internal clinical teams with both long- and short-term contract labor to create a unified supply pool
  • Programmatically recruits clinicians in your network to fill open shifts in the most cost-efficient way
  • Handles source-to-pay, including tracking and validation of all compliance and onboarding documents to ensure compliance

Learn how Works can help you increase fill rates while decreasing spend by giving you the ability to match the best resource to the current need at