Health systems weigh future of internal staffing agencies

During the peak of the COVID-19 pandemic, several provider organizations turned to so-called internal staffing agencies or float pools, through which workers are paid a premium to rotate to different facilities within the health system. The organizations using such strategies often do so when they aren’t able to bring on full-time employees. The practice allows them to shift individuals—usually nurses—to the areas of highest need, without having to pay a third party.

While use of external contract labor remains above pre-pandemic levels, the number of filled travel nurse positions and the rates paid to staffing agencies both declined by about 25% over the course of 2022, said Erik Swanson, senior vice president of data analytics at Kaufman Hall, a healthcare consulting company.

As priorities evolve and contract labor costs decrease, some organizations have shifted their approach to the internal staffing agencies that have helped them save money and fill gaps in care.

“The challenge is not establishing the float pool. The challenge is doing it well,” Swanson said. “It’s logistical, knowing how large that float pool should be and the types of individuals you need.”

Right place, right time

Getting float pool workers to the right place at the right time is a particularly challenging aspect of running an internal staffing agency.

Detroit-based Henry Ford Health has had an internal staffing pool, known as BestChoice, for nearly a decade. But the pandemic pushed the system to adapt as needs changed, said Eric Wallis, senior vice president of patient care services and chief nursing officer.

In response to increased demand, for example, the system began offering a small percentage of full-time roles with benefits through the internal staffing agency, as opposed to part-time.

Henry Ford also worked to improve its internal staffing team operations. The system has for several years been using a predictive intelligence software platform to schedule float pool workers, matching their availability with unit needs and tracking time, attendance and credentialing.

In the past six months, unit and BestChoice leaders also began meeting every day to determine how to best direct floating staff to the areas of highest need. Because float pools require managers to direct a workforce spread across an entire health system instead of consolidated in a single unit, communication is vital, Wallis said.

The BestChoice leaders transitioned some non-nursing positions, such as environmental services and transporting, back to on-site employee roles after determining those jobs benefited from consistent peer groups and direct oversight.

Wallis said the health system intends to keep deepening its float pool—which comprises more than 500 people—to reduce its dependence on contract labor. In January 2021, Henry Ford worked with 1,000 travel nurses, compared with nearly 300 now.

“Our goal is always that we would like to be in a place where we do not have need for external agency staffing. But we realize that there will always be circumstances that arise where we may need short-term staffing support in an area,” Wallis said. “Part of what we’re doing is trying to figure out how we do a better job of recruiting internally.”

Returns on investment

York, Pennsylvania-based WellSpan Health created its internal program, WellStaffed, in 2021 as a flexible staffing solution for nurses. The company has saved about $5.4 million by using WellStaffed throughout its eight hospitals.

“This is an appealing program for our nurses,” said Kasey Paulus, WellSpan’s senior vice president and chief nursing executive. “It’s been a really competitive option for us to be able to offer this, to be able to stay internal.”

Last year, after evaluating which clinical specialties needed more support, the health system began adding more part-time nurses to the WellStaffed team to provide 24/7 dialysis care at its acute-care hospitals, Paulus said.

As external agency rates continue to decline, however, WellSpan’s savings through WellStaffed will likely decline as well, Paulus said. The system, which employs 114 full-time workers through WellStaffed, has already limited the total number of hours the float pool is working in order to meet the organization’s business needs. A WellSpan representative declined to comment on how much WellStaffed clinicians are paid.

The organization will continue to adapt the model based on changing costs and staffing gaps in clinical specialties, Paulus said.

“I think some level of an internal agency is going to be critical for the future,” she said.

WellSpan also plans to examine how the internal staffing team addresses overall patient needs, including by consulting with nursing leaders over time.

Sustainable growth

Allegheny Health Network, headquartered in Pittsburgh, formed its internal staffing team toward the end of 2022, after 600 nurses left during the pandemic. Most of them went to work for external staffing agencies, said Claire Zangerle, chief nurse executive.

To recruit for the internal team, company leadership connected with current employees and made calls to former ones, explaining how the team offers short-term travel assignments, travel reimbursement, health insurance and other benefits, she said.

The system’s internal staffing team can be called upon for medical, surgical and telemetry needs; intensive care support; and to fill in at the emergency department. Every six weeks, the nurses in the staffing pool move on to a different Allegheny Health facility. They are given a full day to navigate hospitals’ various Epic charting systems and learn how to use the technology.

The full integration of mobile nurses into the hospital culture is key, Zangerle said.

“There is a connotation around agency nurses that they are not invested in the organization,” she said. “That they come in, they do their job, they leave and they have a negative impact on the culture. We didn’t want our internal staffing team to have that same connotation. We wanted this team to be seen as our SWAT team.”

System leadership has started to consider opportunities for expansion. Allegheny Health has hired a director and coordinator to manage and schedule the internal team of nearly 200 float nurses, while pulling a nurse educator from one of its 14 hospitals to assist with onboarding.

“We have to be careful about increasing the numbers too great, because once you start this, you can’t take candy away from a baby,” Zangerle said. “[Nurses] are used to being on this team. They’re used to the rate they’re being paid, which is more than an average staff nurse.”

Zangerle declined to disclose how much nurses in the float pool are paid, compared with non-mobile staff nurses. The system conducts regular market reviews of compensation to ensure both float pool and staff nurses are paid adequately and asks for feedback on salary amounts on employee engagement surveys, she said.

Since establishing the team, the organization has saved around $1.5 million in labor costs, Zangerle said. In the past several weeks, the health system has let various contracts expire with outside agencies, reducing its external labor pool by 30 individuals.

When asked whether changing agency rates could affect the float pool strategy, Zangerle said the focus has always been to reduce external contracts.

“Our first strategy is to decrease agency [contracts] as we see an increase in permanent hires; secondary to that, we will increase the internal staffing team as needed,” she said.

Ongoing advantages

While an internal staffing team is a viable option for organizations looking to cut back on external agency costs and attract a wider group of potential employees, not every hospital or health system has the necessary resources or infrastructure to create one, said Akin Demehin, senior director of quality and patient safety policy at the American Hospital Association.

A health system first must have enough candidates interested in participating in an internal agency, and enough staff to manage them, he said. It’s slightly easier to train nurses who are working and moving around within the same system than it is to work with external agencies, but clinicians must still learn about different practices, procedures and available clinical resources, Demehin said.

If health systems decide to build an internal float pool, they should make the staff part of the organization while leveraging their experience and ability to be mobile from unit to unit, Zangerle said. She also argues for float pools to be offered benefits such as health insurance. The expense of doing so is worth it, she said, because it makes the positions more competitive and attractive to workers who commit.

Having the team as an option “really speaks to the flexibility that an organization needs and to the gig work desire that some nurses have,” Zangerle said.

Wallis pointed to the ongoing advantages of an internal staffing agency. Though he declined to comment on how much Henry Ford pays BestChoice staff, he said the model is typically a more cost-effective resource than spending money on employee overtime or external labor even as contract worker costs decrease.

Health systems can model their internal teams using other organizations’ staffing pools as guides, learning from their mistakes and consulting them for advice, Wallis said.

“It’s something that’s constantly in flux,” he said. “Part of the work of the leaders on the BestChoice team is to meet with hospital leaders and try to understand what their needs are. How are we meeting them? How are we not meeting them? Do we need more people? Less? Do we need different roles? … At the end of the day, it can actually save an organization significant dollars if you execute it well.”