Hospital Contract Labor: Where Has It Been and Who Is Using It?

Many industries rely on individuals who are not considered either part- or full-time employees to provide mission-critical services to an organization. These individuals are loosely referred to as “contractors.” In the healthcare industry, the terminology used for the group of these individuals is “contract labor.” These temporary workers allow a hospital to be flexible in its capacity to provide services without incurring the expense of employing an individual full or part time. Companies provide contract labor in the form of traveling nurses to hospitals, therapists, radiology technologists, pharmacists, and medical laboratory technicians, to name a few. Increasing turnover rates, union strikes, and poor preparation for departures often leave hospitals with little time to find replacement staff; instances such as these result in the employment of contract labor to temporarily fill gaps.

Contract labor is crucial to hospitals. These individuals provide immediate services across a variety of specialties. Specialty service hospitals and emergency rooms are constantly in need of contract labor; and less traditional sites of care, such as microhospitals and urgent care, are starting to employ contract labor more frequently.

While hospitals may find contract labor beneficial to their short-term staffing needs, they may also experience downsides to employing temporary staff. For example, the cost of contract nurses is high, as the hospital could be responsible for their housing, food, and travel. Additionally, having to train and orient contract labor results in lower productivity, in addition to the individuals being less familiar with the protocols in place.

In this paper, we analyze the use of contract labor in short-term acute care hospitals, rural primary care hospitals, and children’s hospitals. We analyze how the utilization of contract labor differs between different types of hospitals (e.g., urban vs rural, hospitals with different numbers of beds, etc.). The first section of the paper describes trends in the contract labor market over the past several years. The second section of the paper explains the types of hospitals that rely upon contract labor.