Watch CBSN Live

Hospitals Cut Back on Temporary Staff as Recession Takes Its Toll

Like the rest of the economy, the healthcare industry remains in a financial deep freeze. As a result, hospitals are trying to cut back as much as they can on temporary help, including nurses. This approach could harm patient care at times of heavy demand for hospital services, but it's unlikely to change anytime soon. One particularly ominous indicator is the Chapter 11 bankruptcy of Medical Staffing Network Holdings. The Boca Raton, Fla.-based company is the largest provider of per diem healthcare staffing and one of the largest traveling nurse providers in the U.S. Its travails result directly from hospital cutbacks in the hiring of temporary staff.

Partly owned by the investment firm Warburg Pincus, Medical Staffing is a very substantial firm, with 101 branch locations, 915 corporate employees, and about 19,000 field employees nationwide. Its bankruptcy filing lists assets of $10 million to $50 million and liabilities of $100 million to $500 million. A group of first lien holders -- including GE Capital Corp., SunTrust Bank, Bank of America, and Hewlett-Packard Financial Services Co. -- have formed a holding company to acquire Medical Staffing's assets in lieu of loan repayment.

Medical Staffing is not the only staffing firm that has suffered huge losses. According to Medical Staffing Chairman and CEO Robert J. Adamson, other companies in the field suffered income drops of 50 to 62 percent in 2009. And contract nurses are not the only type of nurse that the recession has hit hard.

Looked at one way, the recent settlement of the Minnesota nurses' strike suggests that nursing unions now have the strength to stave off assaults on their pensions and benefits. In fact, though, that resolution looks more like a standoff between two parties that had more to lose than to gain from a prolonged strike. Moreover, the union yielded on its central demand that the hospitals maintain certain nurse-to-patient ratios. That could easily open the door to more nurse layoffs.

What really struck me about the pact was that the hospitals agreed not to increase the number of "low-need days" when they can send nurses home without pay because there isn't enough work for them to do. Now, you might wonder why hospitals should pay people to stand around when the flow of admissions slows down. The reason is twofold: First, nurses need full-time work, like anyone else, so they can pay their bills. And second, when hospital admissions spike and the need for their services rises, they might not be on hand to take care of patients. So treating highly skilled, experienced nurses like day laborers is penny-wise but pound-foolish.

Moreover, my nodding acquaintance with hospital staffing methods has convinced me that many institutions do not utilize their staff wisely. Instead of planning for peak periods by staggering shifts, varying patient load by acuity, and making smart use of "resource" or "float" nurses, many of them just muddle along the best they can. One nursing unit in a southeastern hospital, for example, ordered temporary staff from a contract agency while float nurses were sitting idle. If that hospital had had a central staffing office, that never would have happened.

There really isn't much that can be done about hospitals' decreased need for temporary staff. Chalk it up as one more casualty of the recession. But a more intelligent use of nursing staff would be a victory for hospital nurses and their patients and could also boost hospitals' profits.

Image supplied courtesy of flickr.nurse. Related: