If you’re considering working with a staffing agency, you might wonder how they generate revenue and what that means for you as a job seeker.
Healthcare staffing agencies and medical staffing companies serve as a bridge between employers and candidates, earning money through job placement fees, staffing service charges, and temporary staffing solutions.
Gaining a deeper understanding of the agency-based hiring process reveals its value in streamlining everything from recruiting top healthcare talent and job sourcing to managing contract staffing payments and payroll processing.
However, while agencies play a crucial role in workforce management, their effectiveness can vary.
When Agency Fails, An Analysis of the Association Between Hospital Agency Staffing and Quality Outcomes explores the challenges and impact of agency staffing on healthcare quality, shedding light on areas that demand attention for better patient outcomes.
Learn how staffing agencies pay employees, factors affecting earnings, and what to expect in temporary roles. Get insights into payment structures now!
In this blog, we’ll break down how staffing agencies work, how they earn money, and what it means for your earnings through medical staffing agencies.
How Do Medical Staffing Companies Operate?
Whether an organization needs short-term medical professionals or is building a long-term team, a reliable healthcare staffing agency serves as a bridge to top-tier talent.
A well-optimized hospital nurse-staffing model not only enhances patient care but also fosters a more efficient and satisfied healthcare workforce.
Ensuring Fair Pay and Wage Transparency
A key function of staffing agencies is maintaining transparency in wages and ensuring fair compensation for healthcare workers.
Through thorough applicant screening, credential verification, and salary negotiations, these agencies help both employers and employees understand the pay structure. This ensures that medical professionals receive competitive compensation while healthcare facilities remain compliant with industry standards.
Suggested Read: Why Do Hospitals Use Locums?
How Do Medical Staffing Companies Get Paid?
Understanding the Medical Staffing Agency Payment Model
Staffing agencies charge a percentage of an employee’s pay, sometimes up to 100% in markup.
For example, if a nurse earns $30 per hour, a staffing agency cost structure might involve charging the employer $60 per hour, retaining the difference to cover recruitment expenses and staffing agency wages.
- Temporary contracts: Paid hourly, with an agency markup.
- Permanent placements: Agencies charge a flat fee or a percentage of the first-year salary.
Medical Staffing Agency Payment Terms
To maintain fair pay structure for staffing agency workers, employers and agencies sign employment contracts that outline:
- Hourly wage calculation for temp workers
- Employee salary distribution schedules
- Wages through staffing companies (weekly, biweekly, or monthly)
- Contract-based employment terms and duration
By ensuring pay structure transparency, both parties maintain a fair and competitive hiring process.
How Do Staffing Agencies Make a Profit?
The Financial Model of Staffing Companies
A staffing agency pay model is based on the difference between the bill rate and pay rate.
- Pay rate: What the employee receives per hour.
- Bill rate: What the company pays the agency per hour.
For example, if a hospital pays $80 per hour for a doctor, but the doctor only receives $50 per hour, the remaining $30 per hour covers agency expenses and profits.
This ensures that the agency remains financially viable while offering temporary worker benefits such as:
- Health insurance
- Retirement contributions
- Paid time off
How Staffing Agencies Compensate Workers
Most contract staffing payments are structured as follows:
- Fixed contracts: Pre-negotiated, non-adjustable rates.
- Commission-based: Some agencies deduct a recruiter commission fee from an employee’s paycheck.
- Hourly wages: Standard model, with weekly or biweekly payments.
By understanding how staffing agencies compensate workers, job seekers can compare options and negotiate competitive salary expectations.
How Do Staffing Agencies Pay Employees?
Most staffing agencies handle payroll outsourcing, meaning they process paychecks from healthcare recruiters rather than having employers do it.
Key considerations in payroll processing for agency hires:
- Direct-hire vs temp hire: Direct hires receive salaries from the employer, while temps receive wages from the staffing agency.
- Employee compensation: Agencies ensure timely wage distribution in agencies, preventing late payments.
- Hourly vs salaried staffing: Some staffing firms pay hourly, while others offer full-time contracts.
Payment Structure for Agency Employees
The payment structure for agency employees depends on the employer-staffing agency agreement.
- Some companies pay fixed wages.
- Others offer performance-based compensation.
- Bonuses may be included for high-demand positions.
By knowing the healthcare staffing agency wages, professionals can make informed career choices.
Suggested read: What are the benefits of locum?
The Cost of Hiring Through Agencies
Staffing Agency Cost Structure
Employers often wonder about the staffing agency fee deduction. The recruiting company fees depend on:
- Temporary vs permanent hire
- Industry demand (higher fees in healthcare)
- Geographic location
A healthcare staffing agency cost is typically higher than other industries due to specialized training and licensing requirements.
Employer Hiring Assistance & Cost-Saving Strategies
To reduce employer hiring costs, companies can:
- Compare multiple staffing agencies before signing contracts.
- Negotiate workforce recruitment fees for long-term partnerships.
- Opt for direct-hire placements instead of temporary solutions.
Employers should always weigh the benefits of contract work against the pay structure for contractors.
Are Staffing Agency Benefits Worth the Costs?
Staffing firms offer more than just recruitment.
They provide:
- Flexibility in hiring (temporary or long-term placements)
- Access to pre-screened, qualified candidates
- Reduced in-house hiring costs
- Payroll processing services
While contractor vs full-time pay varies, job seekers often find contract work salary insights helpful in choosing the right role.
Wage Comparison in Staffing
If you’re a job seeker, understanding staffing agency salaries can help you negotiate better pay rates. Factors influencing job seeker earnings include:
- Industry demand for the role
- Location-based wage differences
- Experience level and certifications
Knowing how to negotiate with agencies can result in higher earning potential for temp staff.
Final Thoughts: Making Informed Decisions in Staffing
Whether you’re an employer looking to hire or a job seeker exploring opportunities, understanding the staffing agency compensation structure is essential.
For healthcare professionals, working with a medical staffing agency can provide contract-based employment, stable paychecks from healthcare recruiters, and competitive hourly wage calculation models.
