A Tale of Contract Negotiation

travel PT contract negotiationAfter a few hours of skiing this morning, I had one heck of a day wheeling-and-dealing a travel contract. I ended up with a couple extra hours and thought I would quickly share the experience.

Kate and I are trying to return to a small, remote community hospital that we worked at a couple years ago. We absolutely loved the community and would love to return this summer for 3 or 6 months. We’ve been speaking with the rehab director over a few weeks and have established that there are 1.5 jobs (60 hours/week) available for the two us this summer. We’ve just been waiting, and waiting, for some details and pay numbers to come through. We had previously worked for this hospital through an agency, but the hospital requested we do an independent contract if we could. Finally, this past week, the ball got rolling, we filled out applications with the hospital and a proposed pay package came to us. I was pleasantly surprised with what the package offered – a rental car and housing included but a little too modest hourly pay. I sat down to crunch some numbers and with my estimates of housing cost, rental car, etc, the package fell well short of what we would be making at the same facility through an agency. I figured there was some wiggle room and while a rental car was a nice perk, we don’t really need a rental car and could perhaps negotiate it into a higher hourly pay. When I got on the phone with HR this morning, I was briskly informed that there was no room for negotiation – the offer we received was the final offer. Could we remove the rental car and turn that cost into hourly pay? No. Could any of the money be offered as tax-free per diem? No. How much are they paying for the condo? …a lot more than we would pay for a condo on our own. Bottom line, there was no wiggle in the pay package and I had to insist that we figure out a deal through a staffing agency because we would make a lot more moolah working the same exact job. But, the insanity wasn’t finished yet – just inform our recruiter to work with the hospital to set up the gig, right? No, the hospital has a policy that travel jobs must be posted publicly through a “vendor management system” (more on this later).

That’s the story on how this contract has come to be, but there’s a lot of nuance to break down and comment on that I believe offers some insight into the travel industry. First, non-negotiable!? Why wouldn’t we be able to negotiate a different pay package? While I did enjoy what was offered to us directly by the hospital, a lot of the value of the total compensation was spent on things I don’t need. Also, the tax free benefits available through an agency give them an edge on what the hospital could offer me. Here’s the factors that I believe led to the breakdown in the hospital’s ability to offer Kate and I jobs directly:

  1. A rental car. This is a huge cost. When going to remote areas, we tend to buy a Craigslist car and sell it at the end for minimal loss. If the money the hospital was pouring into renting us a car was converted into hourly pay, we  would have completed a deal directly with the hospital.
  2. Housing – When working for an agency, we typically take the housing stipend and find our own housing rather than taking housing offered through the agency. We do this, because with a little footwork, we can find housing that is better suited to our needs and costs less than the generic, supplied housing. This is exactly what happened with the hospital’s offer – we had budgeted $1200/mo for housing, and they were estimating $2000/mo. Sure it’s convenient to have housing set up for us, but not at a total of $2400 above our budget over the course of a 3 month assignment. (post-script update: We secured housing for $1100/mo – in the same exact condo complex the hospital was offering us housing in. This works out to $2700 more dollars in our pocket versus our initial  contract offer from the hospital.)
  3. Tax advantage – The hospital told me they had looked into their ability to do tax free payments (like per diem) and that they had chosen not to take it on for the tax difficulties it presented. When a portion of your pay is tax free, it really ads up. That was one reason I initially liked them supplying the housing. When they rent it for us, it’s like getting money before it is taxed. A great benefit!
  4. The nail in the coffin: HR literally told me, “We only pay a few more dollars per hour when we work with an agency, so we’re fine with that option.” A few dollars per hour!? That really ads up. Offer ME that money, man! Come on.
Kate and I enjoying the waning moments of our spring-time skiing before jetting off to the next contract in a couple weeks.

Kate and I enjoying the waning moments of our spring-time skiing before jetting off to the next contract in a couple weeks.

While I believe those are the main factors that ultimately led to the breakdown in our ability to work out an independent contract, the insanity was not finished. I mentioned that they had to use a vendor management system (VMS). There are several big VMSs and our contract was posted through the one I am most familiar with – if you have traveled for a while, you have probably had a job that was posted with this system. What exactly is a VMS, you ask? It’s the 4th party in a 3 party contract. VMSs collect job postings from facilities by handling a large portion of the foot work for the facility. These VMSs blast those jobs out to a bunch of different staffing agencies who subscribe to be a part of their listings. Have you ever had multiple agencies post the same job at the same time? If so, that job is posted through a VMS. Some larger companies that own multiple staffing agencies also own a VMS so that they can collect exclusive postings from facilities and post them solely through the staffing agencies that they own – big, shady business. The VMS that this job was posted through (where the facility, the clinician, and the recruiting agency were all known entities) charges a price of 4% of the total contract. So, again, rather than just paying the therapists, more money is being thrown at paying another company a good chunk of the available pay.

Lunacy, complete lunacy. But, you know what? Kate and I are returning to the jobs we want this summer. The contract eventually worked out through a staffing agency and we’re happy with the deal. It’s too bad that when you have a facility and a clinician that want to work together, it takes two other private companies to organize the employment. But, as long as facilities refuse to pay clinicians the money they are willing to pay to outside companies, traveling therapy will remain a strong industry and a great career choice for therapists all across the country.

There might be a second chapter to this story. We only have 60 hours of work between the two of us this summer. I’m currently working on establishing a contract with the state to do some part-time work in a very cool, very unique consulting situation. They are a little concerned with my temporary status, but I think I could do some great work for them in the time that I do have. I know, I have given you no details here …top secret… for now. Hopefully this part-time job will work out and I’ll have some very cool, very unique stories to share with you all. See you out there on the open road!

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