While it is well known that travel or contract nursing is often associated with higher pay, there is less information about how the compensation actually works. You may be aware that it is typically a combination of stipends and wages, can be subject to recruiter or agency commission, and is paid out weekly, but that is just the starting point.
You may also have heard the term ‘bill rate’, which is the hourly rate that healthcare facilities pay per hour a nurse works. It’s often assumed that an individual’s compensation is what’s left after the agency, and recruiter take a cut, but in reality, it's not that simple.
At Trusted, we believe in providing as much transparency as possible into how it works, so you can make informed decisions and understand how it impacts you. In this article, we’re going to break it down, starting where compensation starts - the Bill Rate.
The Bill Rate
The Bill Rate is the hourly rate that healthcare facilities pay per hour you work. It is set by the healthcare facilities, sometimes with guidance from Managed Service Providers based on what trends they may be seeing in the market.
One thing to note about the Bill Rate is that it is paid to an agency only for the hours you work, unless the facility calls you off beyond their allotted number of times. If you are unable to work for any reason at all, then the agency will not be paid for that time either. Additionally, the Bill Rate must account for every cost associated with employing travel nurses including onboarding and compliance costs, professional liability and other employee insurances, employment taxes, and paid sick time. Additionally, agencies need to be able to pay for their operational cost and profit margin out of the bill rate paid by the healthcare facility to support continued automation and service delivery.
Bill Rates also fluctuate based on supply and demand. This means that when healthcare facilities urgently need additional nurses or are having trouble attracting them such as during a surge or at times of high census during winter needs, they may increase their rates in order to compete. Conversely, Bill Rates will usually lower in response to a decreased need or an abundance of nurses willing to work the opportunities.
Ultimately, healthcare facilities set Bill Rates for what they’re willing to pay per hour of work and they can change those rates at any time due to changes in the industry given overall supply and demand for travel nurses.
The Bill Rate is what powers the total sum of money that ends up resulting in a compensation package but there are variables that nurses need to take into consideration when assessing a compensation package.
The Bill Rate is often subject to an administrative fee before an agency receives any of it. These fees are associated with Managed Service Providers (MSPs) and/or technologies that the healthcare facility uses to help manage their staffing agencies.
Delayed Payment Timeframes
Additionally, there is a significant delay on when agencies get paid. It can take up to 90 days for an agency to receive money from the healthcare facility from the time the hours are worked, yet the agency pays the nurse the week after the hours are worked.
Agencies must account for costs directly related to employing nurses. Note that while the Bill Rate is paid only when a nurse works, some of these expenses may exist for the agency even when the nurse doesn’t work.
- Employer tax, which is a % of pay rates
- Employer-sponsored benefits, such as medical, dental, vision, mental health, and wellness
- 401(k) employer matching
- Paid sick time, which is not billable to the healthcare facility
- Holiday pay, which may not be billable to the healthcare facility
- Overtime, which is subject to state employment law and may not be billable to the healthcare facility
- Liability and insurance coverage
- Workers’ compensation insurance
- Onboarding costs, such as background check, drug screen, health requirements, certification or license reimbursement, payment for pre-employment modules, scrub reimbursements, etc.
- Facility fees for nurse cancellation or termination
Compensation varies for every assignment due to variables related to the location of the assignment, facility billing rules, contract length, contracted hours per week, and shift type (3x12, 4x10, etc). Some specific examples of these are:
- Whether a nurse qualifies for stipends/tax free reimbursements
- The overtime and/or double time state employment law
- Whether the facility allows for a billing multiple for overtime and/or double time
- The minimum wage local to an assignment
- The maximum allowable stipends per day (GSA ‘per diems’)
- Whether the facility has a call-off policy
- Whether the healthcare facility allows for billing of orientation or holiday hours
- Whether the healthcare facility allows for a billing multiple for holiday or charge hours
After all the variables mentioned above are accounted for, a maximum compensation allotment is calculated. And then, from this number a company or agency takes a percentage. Every company or agency applies this in a different manner - whether it’s a flat or variable percentage - and utilizes it for different things, but often to continue operating and growing the company.
While it might seem pertinent or advantageous to know what the bill rate applicable to your assignment is, this number is impacted by so many different variables at the end of the day it’s likely not as helpful as one might imagine. Additionally, contracts often have different incentives and clauses that can range from no paid orientation to discounted overtime hours. And some of these variables are entirely unique to each circumstance. Your best bet at successfully finding pay that’s right for you is to learn to read your full pay package and keep in mind any benefits you might need along with their costs while calculating your true blended rate rather than focusing on the bill rate.
Trusted has built a salary explorer to help nurses compare and filter average salaries by region, specialty, years of experience, and more while also considering cost of living in those areas. We’re dedicated to empowering you to make informed decisions as you navigate your career successfully and this is one small step of that journey.