During the Covid-19 pandemic, providers leaned heavily on travel nurses, as the demand for healthcare workers reached meteoric heights. But now a major provider and a staffing firm are at odds over wages, taking their battle to the courts.
Dallas-based Steward Health Care filed a lawsuit against Aya Healthcare, and the latter responded in kind. The dispute centers on the cost of hiring nursing staff during the Covid-19 pandemic.
Here are four things to know:
Steward Health Care reportedly filed its lawsuit against the San Diego-based staffing firm in March. The suit alleges that Aya Healthcare engaged in price gouging and stopped providing services, according to an article by Modern Healthcare.
The health system claimed that Aya Healthcare was charging $160 or more an hour for nurses, a huge jump from its rate of $75.61 pre-pandemic.
The court issued an injunction, and Aya was required to provide clinical staff to Steward Health Care facilities through April 4, if the health system paid $10 million via a bond, Modern Healthcare reported.
In a statement, Aya said Steward Health Care had agreed to its staffing rates across the country, and now, refuses to pay the contract balance of over $40 million for the services.
The companies entered into a crisis staffing solution agreement on March 23, 2020. Since then, Aya said it has provided over 2,000 staff members to Steward hospitals nationwide.
“Holding that money hostage, Steward now baselessly demands, and has employed extortion-like tactics, to coerce Aya to accept an across-the-board discount of nearly half of that debt,” the staffing firm said.
Further, Aya Healthcare claims that the health system refuses to pay the balance despite receiving over $400 million in government subsidies as part of the Coronavirus Aid, Relief, and Economic Security Act.
Aya Healthcare filed a counter-compliant against Steward on April 6, asking the court to award the staffing firm damages in excess of $40 million as well as a jury trial.
Aya alleges that as Steward’s debt grew, the health system ignored its inquiries, and never expressed concerns about price gouging or overbilling.
Earlier this year, the provider even acknowledged that it owed $40 million-plus to the staffing company, the lawsuit states.
In a proposed payment plan sent to Aya on March 2, Steward said it would pay $1 million a week, even though “Aya was providing Steward roughly $2.5 million in weekly services — which included what Aya actually pays its nurses in wages, benefits, traveling, housing, and other expenses,” according to the lawsuit.
Aya also claims that its prices increased due to the pandemic creating a high demand for healthcare staff. This led to an increase in the market rate of compensation for staff services and raised the costs of employing and providing workers.
Steward Health Care did not respond to multiple requests for comment from MedCity News.
The tension between providers and staffing firms
The lawsuits come as relationships between healthcare facilities and staffing agencies grow increasingly strained.
Ealy in the pandemic, wages for travel nurses increased by 25% and job openings tripled, according to a study by the University of Chicago and Yale University based on data provided by staffing firm Health Carousel.
A separate analysis by investment bank Capstone Headwaters shows that approximately 60% of travel nurse firms secured increased bill rates between April and July 2020.
This has led to an environment where providers say they have to compete for staff. The added competition is also coming as hospitals are looking for ways to cut corners amid ongoing financial difficulties.
In addition, providers are trying to get the government involved. In February, the American Hospital Association sent a letter to the Federal Trade Commission asking the agency to investigate reports of anticompetitive pricing by nurse staffing agencies
With needed patient care hanging in the balance, it remains to be seen how providers and staffing firms will resolve their issues.
Photo: Hailshadow, Getty Images