The negotiation aspect of travel nursing is one thing that makes being a travel nurse so different from working as a staff nurse. As a staff nurse you likely accept the pay and work conditions the hospital offers you, however; as a travel nurse you get to negotiate pay and decide if you want to agree to the terms before you sign the contract.
The negotiating process is often times foreseen as a complicated and unenjoyable part of travel nursing. The main reason these nurses struggle with finding and negotiating contracts is because they do not fully understand the business model of a staffing agency and how the process works. This leads to the nurse losing all of their leverage or not using it correctly. Finding and negotiating a contract does not have to be complicated.
My goal with this blog is to help you get a better understanding of the travel nurse industry by learning how the money flows from the agency to the hospital to the travel nurse, and what happens to the money along the way.
Even though this knowledge might seem insignificant do not overlook the importance of it. Having a good understanding of how the industry works has helped me negotiate higher pay rates and avoid mistake several times throughout my travel nurse career.
LET'S GET STARTED!!!
The Flow of Money
One way to get a better understanding of the travel nurse industry is to follow the money and see what happens to the money every step of the way.
Hospital pays the Agency
The flow of the money always starts with the facility (hospital). When a hospital has a need for a travel nurse, the hospital typically uses an agency to fill that need. The hospital will pay the agency a previously agreed upon amount. This amount is called the bill rate.
The bill rate amount and terms of the contract (guaranteed hours/hours required/holiday, weekend requirements, etc.) are most likely already set by the hospital and written in the master contract. This contract is rarely mentioned but it is usually called the master contract and it is a contract between the hospital and the agency. The master contract is where the hospital lists their expectations for the contract.
The master contract explains all the details including what the hospital will pay for and how much they will pay for it (bill rate). When the nurse is negotiating a contract, the agency should not have to “go back and talk to the hospital” because most things are written in the master contract. Hospitals typically do not negotiate/change the terms of the master contract (bill rate) when a nurse is demanding more money because in most situations, hospitals know another nurse will accept the contract if one nurse will not.
Since the hospital pays the agency and the agency pays the nurse, all negotiations regarding pay is done between the nurse and the recruiter.
Agency takes Money for the Bill Rate
The flow of the money can get slightly more complex when after it is passed from the hospital to the agency because each agency can be setup differently there are always two things each agency has in common that is "costs to operate" and "the need to make a profit."
Costs of the Contract
With the money from the bill rate, the agency has to pay all associated costs related to the contract. This includes paying the nurse, the nurse’s benefits (if applicable), paying the recruiter (salary and commission), cost of on-boarding the nurse (drug screen, physical, fit test, modules, etc), and a percentage of overhead cost of running the agency (office rent, utility bills, advertising, third party payroll services, etc). Every agency is run differently and some have higher costs than others. Usually, but not always, larger agencies have higher costs to operate.
Profit Margin
The agency not only has to cover their costs, but they also have to take an additional amount from the bill rate to make a profit. If the agency doesn’t make a profit, there is no reason for the founders of the agency to take the risk of starting the company. The amount taken for profit is called the profit margin. This amount varies among agencies just like the associated costs to run an agency mentioned above. The profit margin amount is set by the agency based on how much profit they wish to make.
Profit Motivated
All agencies are motivated by profit just like a lot of travel nurses. Typically, the more we make, the happier we are. However, some agencies are more profit-driven than others. Some agencies are very profit-driven and are willing to do almost anything to make the maximum profit; while other agencies focus a little less on profit and set their agency up in a way that is fairer to the travel nurses.
Once the agency has covered its costs and taken out its desired profit margin, the rest is left for the nurse to potentially get. This potential amount is not guaranteed and usually dependent on the travel nurse's ability to negotiate. When a travel nurse is negotiating pay, they are usually negotiating to get 100% of what is left after the agency takes out the amount needed to cover all costs and meet the desired profit margin.
However, at this point, some recruiters/agencies will try to take even more of what is leftover because they want to make as much profit as possible.
The amount the nurse is able to negotiate is broken down into a pay package.
Hospital > Bill Rate > Agency > Pay Package > Nurse
Congratulations on just completing Module 1 of the Maxed Out Negotiations Course. If you are not familiar with the Maxed Out Negotiations it is an online, self paced course, with lifetime access that teaches travel nurses everything they need to know to be able to find and negotiate good contracts. Check out the short video below too learn more about the rest of the course content.
The Maxed Out Negotiations online course will teach you how to do your own research, how to know what is a good contract, find contracts quickly, how to talk to recruiters, how to use multiple agencies without completing multiple agency applications, how use leverage to negotiate for higher paying contracts, how to avoid common mistakes, and much more.
I am hopeful this course will give you the confidence to be able to repeat this process successfully on your own over and over again. Using the process taught in this course will not only help you get paid higher rates, but will also save you hours of time from having to fill out several agency applications just to get them to talk to you.
If you're interested in learning more about the Maxed Out Negotiations online course use the CHAT box on the right side of your screen to send me message saying "MAXED OUT" and I will send you more information.
You can also purchase the Maxed Out Negotiations online course by clicking HERE.
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