Tag: Money

Understanding a Travel Therapy Contract Bill Rate

Understanding a travel therapy contract bill rate
~ Travel Therapy Mentor ~ 16 Comments

Written by: Jared Casazza, PT, DPT

All travel therapists want to get the most money possible out of their contracts. In fact, the increased pay associated with travel therapy is the #1 reason that most people that we talk to choose to travel in the first place, so not getting as much money as possible would be no good. While there can often be room to negotiate when presented with an initial offer from a recruiter, there is, of course, a limit to how much they can actually pay a traveler for each contract. The big limiting factor in the equation of pay for any travel contract is the “bill rate.”

What is a Bill Rate?

A “bill rate” is the amount of money that the facility (hospital, clinic, nursing home, etc.) pays the travel company for each hour that a traveling therapist works. As travelers, this is a number that we rarely ever find out about, since it is negotiated between the travel company and the facility usually before they ever even list the job or present it to travelers. Most recruiters do not wish to share this number with travelers either, but you really can’t blame them for that. The bill rate is much higher than the hourly rate that the traveler receives, but that is because it has to account for all overhead costs and company profits as well, so sharing the bill rate could make the traveler feel like they’re being taken advantage of, even when that’s not the case. BluePipes wrote a great article on other reasons why travel companies don’t divulge bill rates as well, which you can find here.

How Much is an Average Bill Rate?

Bill rates vary drastically depending on setting and area of the country (just like traveler pay), but I’ve heard of ones as low as $60/hour and as high as $80/hour, which shows why there can be such variation in traveler pay across the board, since it’s all based on the bill rate. In some situations, the bill rate can even be higher if the facility is in urgent need of a traveler and is willing to pay more to get someone there quickly. In general, the facility is going to pay the travel company as little as possible, while ensuring that their opening will be filled, so how desperate they are can have a big impact on the bill rate.

So if a company is receiving around $70/hour ($70 x 40 = $2,800/week) from the facility, while the traveler is only getting a take home pay of about $1,600/week, where is that extra money going?!

Costs that have to be Subtracted from the Bill Rate

Overhead costs of running a travel company can be pretty high. The company has to pay staff (recruiters, managers, payroll department, benefits department, etc.), for rent and utilities on their offices, for marketing, for taxes, and they also have to make a profit in order to stay in business. This all usually adds up to about 20-25% of the total bill rate, depending on how big the company is and how much their overhead costs in total. That means that after overhead costs are subtracted out, that $2,800/week turns into about $2,100/week.

From there, we have to consider that the company pays for part of the traveler’s health insurance (assuming the traveler chooses one of the company sponsored plans); maintenance fees on 401k plan; CEUs (if offered by the company); FICA taxes on the traveler’s hourly pay (7.65%); and credentialing costs for the traveler for each assignment such as: license reimbursement, travel reimbursement, drug tests, TB tests, and backgrounds checks.

They also usually have to keep a small percentage to account for contract cancellations, since when a traveler’s contract is cancelled early, not only does the traveler lose out on money, but so does the travel company. I think of this as like an “emergency fund” for the travel company for when unexpected events occur.

It’s also important to keep in mind that the “take home pay” amounts that we usually use to discuss travel contracts is after the traveler’s taxes are subtracted out, which means that the travel company actually pays you more than that amount, but that’s the amount you see on your paycheck after federal, state and FICA taxes are subtracted. So “take home pay” refers to after-tax, or net pay, not gross pay.

For example, a $1,600/week “take home pay” usually means that the travel company actually pays out $1,800/week in gross pay to the traveler. It’s easy to see how the $2,100/week devoted to the traveler’s pay can quickly be reduced to much closer to that $1,800/week figure paid out to the traveler each week, once all of the above costs are factored in.

Getting the Highest Pay Possible

In most cases, honest recruiters are doing their best to offer the highest pay possible to the traveler, within the bounds of the bill rate that they have to work with. Many travelers hear about how high some bill rates can be and quickly assume that recruiters are trying to take advantage of them, without first considering all of the costs incurred by the company, taxes they have to pay, and also also the benefits offered to the traveler that aren’t seen in the weekly take home pay number. Don’t forget to consider these factors before jumping to conclusions! But, it doesn’t hurt to push for more money when you feel it’s warranted, have considered all the “extras” already included in your pay package, and have considered the type of job, location, and cost of living!

The bill rate is also the reason that it is important for travelers to push for higher pay for overtime hours worked. Overhead costs don’t need to be factored into overtime hours worked, due to them already being accounts for in the initial 40 hours. With overtime, the company will get the same bill rate (sometimes 1.5x the bill rate even), while the traveler only receives 1.5x their taxable pay rate in most cases. This is a great situation for the travel company, but a terrible situation for the traveler. So understanding how the bill rate works and how your pay is broken down is a key factor here in advocating for yourself with a higher overtime rate!

Conclusion

It’s very important to have an understanding of the bill rate and all the costs that must come out of that hourly pay amount the travel company receives from the facility, in order to understand how your weekly take home pay is determined as a travel therapist. The more you understand, the better you can advocate for yourself and get the highest pay possible.

I hope you have a little better insight into how the weekly take home pay amount is calculated now with a basic understanding of bill rates!

Thanks for reading and feel free to ask any questions you may have on bill rates or anything else travel therapy related in the comments below or contact us directly. If you need some recruiter/travel company recommendations that we trust to not take advantage of you as a traveler, then send us a message here and we’ll help you out!

Should You Get a Contract Extension Bonus as a Travel Therapist?

Man shaking hands with text "Should you get a contract extension bonus as a travel therapist?"
~ Travel Therapy Mentor ~ Leave a comment

Written by: Jared Casazza, PT, DPT

The Benefits of Extending a Contract

If you are a prospective or current traveler whose primary goal with travel therapy is to earn as much money as possible (likely to pay off student debt), then extending contracts when possible is a great idea. Whitney and I always try to extend contracts in places that we enjoy, and I actually extended my very first contract as a new grad twice for a total of nine months there. Extending a contract means less, or hopefully no, downtime between contracts since you don’t have to move to a new location. Most travelers choose to take at least a week off between contracts to move to their new assignment location. but that missed work means less money earned. Mitigating time off is a primary way to earn more throughout the year. Additionally, extending a contract is also easier because you’re already accustomed to the facility, staff, and patients.

Another big benefit of extending a contract is that you can almost always earn more money on the extension than you did on the original contract, either in the form of a bonus or an increase in taxable hourly pay. We usually try to get about $1-$2/hour extra when extending a contract, which ends up being $40-$80 more per week or $500-$1,000 more over the course of a 13 week contract! A dollar or two extra per hour may not sound like much, but it really adds up over time. Another option is to have the travel company reimburse travel expenses incurred while traveling back to your tax home if you plan to do that at any time during the contract. A reimbursement is almost always better than increase in taxable pay, if possible, because reimbursements aren’t taxed and therefore will mean more money in your pocket.

Understanding “Extension Bonuses”

Some travelers believe that getting an extension bonus means that the recruiter was keeping more money than they needed to be on the original contract, and now they’re somehow able to offer you more money the second go round, but that is not the case. So where does the extra money come from? Let’s investigate the answer to this question!

When you start a new contract as a travel therapist, the travel company has some upfront costs that they have to cover in order for you to start. These costs include things like: travel reimbursement for you to get to the new place, license reimbursement if applicable, background check, drug test, and TB test. All of those costs added together can end up being a significant amount of money that the company pays out in the beginning before you ever start working at the new place. These costs have to be accounted for by the company of course, so they reduce the amount that you make each week so that these costs can be recovered throughout the course of the contract. This reduction in the traveler’s pay is to be expected since all of our pay, reimbursements, and the travel company’s overhead costs, as well as their profits, come out of the “bill rate” that the facility pays the company. In other words, all the money has to come from somewhere, and that somewhere is what the facility pays the travel company. Under normal circumstances where the traveler moves to a new facility after every contract with no extensions, the company has to incur these costs again before each new contract. On an extension however, these costs aren’t incurred again, which means that there is extra money that can be added to your pay!

Negotiating Extension Bonuses with Your Recruiter

Most experienced recruiters understand that by the traveler extending in a location, there will be extra money to allocate to the traveler on the extension. But I’ve worked with recruiters in the past that say that an extension bonus isn’t possible since the bill rate is the same for the extension, and the facility “isn’t offering any additional money.” Unfortunately, they were overlooking these costs that the company would be saving on the extension. After explaining how they would be saving money on the things I mentioned above for my extension, I’ve always been able to negotiate some amount of extra pay or bonus for the extension.

It’s important to discuss this with your recruiter and make sure you are on the same page. You are your own biggest advocate and need to be an informed and educated traveler.

Bottom Line

Less missed work and higher pay on an extension make it a no-brainer if you’re at a facility and location that you enjoy AND the facility needs continued help. Always be sure to ask for more money on an extension if the recruiter doesn’t automatically give it to you, and be sure to mention the costs that they would save by you extending instead of taking a new contract to back up your request.

If you have questions on this topic or would like recommendations from us on a contract, extension, or working with travel recruiters/companies, please reach out to us and we will be happy to help!