Most travel therapists have heard of the bill rate. That mysterious number is supposed to hold all the secrets of our worth. Some recruiters will tell us the number. Some are not allowed to. And many are a bit nervous to tell us, knowing that the first time a traveler hears their bill rate number.. they might be mad and confused. At face value, it could sound like agencies are taking too much of our hourly rate and it feels unfair. Well, let’s break down what this number is and learn what might be fair or not fair for us travelers.
The bill rate is the amount of money a hospital is paying for each hour a travel occupational therapist, physical therapist, speech-language pathologist, and therapy assistant works. This hourly rate is paid to your recruiting company. One important thing to make sure you know: it is paid to the agency only on the hours you work. If you call off sick or you don’t work all your hours for any reason, the agency made zero for that period of time too.
The bill rate is everything in this industry. We as travel healthcare professionals, need to understand how it works.
What does the bill rate pay for?
- It pays for us travelers and our therapy services.
- It pays for the VMS/MSPs.
- It pays for the staffing agency, recruiters, and the coffee they brew in their break room.
- It pays for the rent of the office that holds that break room (operating costs).
- It pays for liability insurance and other insurance coverage.
- It pays for medical malpractice lawsuits.
- It pays for the agencies to go to conferences (like TravCon) to market to you.
- It pays for a Christmas gift from your agency.
- It pays for your untaxed stipend and travel expenses to get to your travel healthcare job.
- On and on I can go…
Is there money outside of the bill rate?
Not at all. Everything that has a cost inside the travel healthcare industry is paid for from the bill rate. And it is all paid when and if we travel therapists actually work.
The goal of the whole industry is to get qualified and skilled travel therapists (us!) to a place that needs us to fill a gap in their patient care for usually 13 weeks at a time. The place that needs us decides a regular hourly rate that they are willing to pay to have us come. It’s a pretty high number because they know it needs to be high enough to cover the hefty cost of us for the entire contract, PLUS the monthly expenses of the staffing agencies that find us and employ us.
The agencies do a ton of work for the facilities and they also take away some of the liability. If something happens where a travel therapist gets sued (which happens every day) the agency takes the hit and does the mounds of paperwork instead of the hospital. The healthcare staffing companies are our employers after all, and everything from medical malpractice cases to short and long-term disability is paid for by them. These things are crazy expensive. And (you guessed it) they only get that money from the bill rate.
The bill rate is not “our” money as travelers. Only part of it is (the pay rate). The bill rate was designed to be shared between us and every player who helped get us to that job.
Do bill rates cover travel therapist orientation?
The bill rate is not just one set number. Contracts have all kinds of incentives and clauses in them. Many contracts do not pay agencies for orientation hours aka training time (or they are way less). Many contracts have discounts in them for overtime hours. And many contracts pay agencies net 30, net 60, or net 90– meaning the agency is paying us, travelers, each Friday, but they will not see that money until after the contract is over. They also pay us for travel expenses/transportation costs and licensure reimbursement before they ever get money from us working.
Take into account therapists who cancel their contracts. Agencies can get penalized thousands of dollars for our lack of integrity and they will never make up for the money they already gave us for travel reimbursements, training time (orientation), licensure expenses, and drug screens (etc, etc). Every time we sign a contract with healthcare staffing companies, they are taking a chance on us. They need us to work the hours we said we would so they can make some money too.
What are the common bill rate numbers?
$65-75 an hour is a common bill rate for a travel SLP, PT, or OT.
That is for your normal hours. Orientation may be fully unpaid or paid at only a fraction of the bill rate. Again, inside of that hourly rate is your insurance, your liability, your credentialing, your travel reimbursement, your licensure reimbursement, etc.
So when you see $65 an hour, much of that rate is already eaten up by these things. Then the company has to take the money it costs to run their company (overhead costs) plus take a profit before we ever get to talk about our pay package.
Who decides a travel therapist’s bill rate?
The MSPs/VMSs are a big influencer in bill rates. These are the middlemen between most of the hospitals and our agencies. MSPs can negotiate bill rates with the hospitals to have the hospital pick them to represent them. If one MSP can offer a lower bill rate than the other MSP, they will be more likely to win the contract.
So the MSPs and VMSs did lower the bill rates a bit when they got popular. They also standardized the bill rates more so we see less fluctuation than in the past. Many great things came with the MSP and VMS popularity but for bill rates, it mostly drove them downward.
Ultimately though, it’s up to the hospital or facility hiring us what they are willing to pay. Recruiters can sometimes go back to the facility and ask for a higher bill rate. This is especially useful if they are having a very hard time filling the position and you are very qualified. Or sometimes recruiters will go in and negotiate/bid at a lower bill rate to try to make their candidate with less experience be more desirable. I don’t like the race to the bottom with bill rates and encourage recruiters to not use this tactic.
For future trends, bill rates seem to be mostly holding steady.
Calculating the total amount of money
Say we have a bill rate of $65/hour. Let’s do some math to find out an example of a whole package we’re working with:
- $65/hr bill rate
- 13 weeks
- 40 hours a week
- $65 x 40 hours per week x 13-week contract
- The total package (the amount we have to share): $33,800
Keep in mind $33,800 is if everything goes to plan. If you call in sick, the recruiting company is not paid that day and the total package goes down. If you are taking a lot of time off in the 13-weeks, same thing. If you cancel a contract, you can really hurt an agency since they pay so much upfront to you before you work your hours. The agency is taking much more of the risk than you at the start of a contract.
On a $65/hour bill rate, our blended rate might be around $47 hour. The reason it’s called a blended rate is that many things are included in that $47/hour, such as:
- Taxable (W2) hourly wages (regular hourly rate is commonly around $20/hour)
- Your tax-free money to reimburse housing costs (if you qualify)
- Your tax-free money to reimburse meals and incidentals (if you qualify)
- Licensure reimbursement
- Your transportation costs aka travel reimbursement
- Other more rare reimbursements like CEUs or sometimes scrubs
- Bonuses (but remember, bonuses are taxed)
From this, your take-home pay each week might be around $1600 if you work all your hours.
What are the common profit margins?
An agency will usually take around 30% of the full bill rate and of that, profits might be around 20-25%.
Agencies usually make profits somewhere around the ballpark of $5,000 – $6,000 per 13-week contract depending on the specialty, if we work all our hours, and how big they are. An agency’s overhead costs play a big part in this. This is not what your recruiter makes- just the agency as a whole and it gets spread around to many people and places.
Here is an example of a $65 bill rate over 13 weeks:
- $33,800 total pot (When multiplied over 13 weeks)
- $10,000 to the agency: (This is profits + costs to do business combined)
- $23,800 to us (That is our profits and comes to us in tax-free stipends and taxed hourly wage- about $1830 a week)
In the business world, a 20% profit is pretty average. And with the vulnerabilities in staffing and the high cost and risk of lawsuits in the medical industry, this number makes a lot of sense so that one big lawsuit can’t put a company under. A profit margin under 15%-20% indicates a high risk of negative market changes. 20% is fair.
Why can’t travelers know the bill rate?
Here are common reasons I hear:
- “We sign non-disclosures with MSPs and are not allowed to share.”
- “Travelers are not business people. They will hear the high bill rate numbers and not understand the monthly expenses and tools it takes to run this kind of company. They’ll think it is unfair.”
- “It takes a long time to explain this complex subject to travelers.”
- “It’s none of their business. Their business is learning what we are willing and able to pay them, but they don’t need to know the exact profits we are making. That is not how business works.”
- “They don’t understand all the complexities in our contracts, like how we don’t get paid for orientation or that our malpractice price keeps going up.”
- It is true that contracts have non-disclosures and agencies can’t always share the bill rate number with travelers.
- Instead of worrying about bill rates, learn to read your pay packages and learn how to get high offers.
- Always calculate your true blended bill rates and don’t overthink just one part of your pay.
- Keep in mind the benefits you need, like health insurance prices per week. This can impact your take-home pay a lot.
- The overtime hour rate and extra shift bonuses can matter quite a bit if you like to pick up extra shifts.
- Compare your blended hourly rate to other company offers and pick the best rates and opportunities for you.
- When you work with 3 honest recruiters and compare offers between each assignment you are setting yourself up for fair pay every time!
- Use the fair pay calculator – this is the tool that will help you negotiate!
- If you don’t have 3 recruiters you love and trust yet use Nomadicare’s honest recruiter custom matching.
Cheers to fair pay!