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Have you ever wondered how much money the travel staffing company is keeping when you accept a travel healthcare contract? If so, you’re not alone.

We very often get questions about what percentage of the bill rate (the amount being paid to the travel company by the facility) should be kept by the travel company, and how much of it should go to the traveler. It’s a logical question, and we understand why travelers are curious to know. They want to make sure they’re not being taken advantage of by travel staffing companies. They want to make sure they’re getting their fair share.

Many travelers look at the situation like this: we as the healthcare professionals are doing all of the work, and the travel company is an “unnecessary evil middle man” who is taking a way bigger cut of the pay than they should be. Many travelers also jump to the next logical conclusion: maybe if we just cut out this unnecessary middle man we would make so much more money and get our fair share. This leads them down the path to considering being an independent contractor.

While I understand both of these thought processes, and went through them myself in the past: now, having looked much deeper into this topic, I’ve come to the conclusion that the financial relationship between the facility, the staffing company, and the traveler is much more nuanced than meets the eye.

While I wish the answer to the question “How Much of the Pay Does the Travel Therapy Company Keep on a Travel Contract?” (and the implied question: how much is fair for them to keep) was easy, unfortunately, it’s definitely not. The first barrier to these questions is understanding the math itself. The second barrier is looking at what costs have to come out behind the scenes before we get our pay AND before the travel company sees any actual profit. After looking at these variables, we then need to determine what we deem “fair” for each party involved.

After discussing this topic with dozens of recruiters and industry leaders over the last few years, it’s clear that even most of the recruiters themselves don’t exactly understand what all goes into calculating pay packages from a given bill rate. Almost always the calculations are done on a program or an excel spreadsheet with only a few numbers being inputted and adjusted by the recruiter.

I originally wrote about travel therapy bill rates and pay packages over 3 years ago in 2018 (currently it’s 2022 at the time of writing this). While my understanding of these topics was pretty good at that time, I’ve learned significantly more over the least 3 years about just how nuanced these topics are.

In this article, I’ll attempt to explain why determining an exact percentage that is being kept and/or should be kept by the travel company on a contract is very difficult, with lots of variables to consider.

Is the Travel Company Keeping Too Much?

Most travelers who contact us, both new and experienced, are skeptical of travel companies and recruiters. Based on stories that they’ve heard from others, they often have the belief that recruiters are always out to take advantage of them by purposely low-balling them on pay for a job. While there certainly are recruiters like that out there, based on our experience of interviewing almost 100 different recruiters since we started traveling in 2015, they’re not nearly as common as most travel therapists believe. The horror stories about really bad recruiters spread much more widely and rapidly than the less gripping stories about the really good or even just decent recruiters out there. Travelers think that the recruiters have a huge incentive to keep more of the bill rate for themselves and their company, when in reality the recruiter’s pay is often not affected by the traveler’s pay package at all. Additionally, it’s usually more beneficial for recruiters to give you their best offers up front, because they want to keep your business. So they know that by giving you their best offers possible, you’re more likely to continue to work with them and take more contracts with them, which incentivizes them to be truthful and up front with you.

When travel therapists reach out with a question about the bill rate and their pay package, usually they’re either trying to find out the bill rate in order to calculate if they got a good deal. Or maybe they somehow already know the bill rate, and they know their take home pay, and they’re trying to calculate it out to see if they’re getting screwed over.

If they know the bill rate, it often goes something like this: “I’m getting paid $1,650/week after taxes, and I just found out that the bill rate for the contract is $65/hour. That means the travel company is keeping over 35% of the money each week. Are they taking advantage of me?”

Now, on the surface, this calculation seems legit and like the travel company is keeping a lot for themselves, but in reality it isn’t as simple as first meets the eye. The traveler is simply taking the bill rate and multiplying by 40 hours, then dividing their take home pay into the product, and from there calculating the percentage that they’re receiving. Then they’re using that to extrapolate how much the travel company is keeping.

Here’s the math for this example:

$65 x 40 hrs = $2,600

$1,650 (their weekly pay) / $2,600 (total the company is getting) = .635 (63.5% = “the amount the traveler is keeping”)

1 – .635 = .365 * 100 = 36.5% (“the amount the staffing company is keeping”)

However, unfortunately this math is incorrect because it does not take into account taxes, among other factors. The big factor the traveler is forgetting in this example is that the bill rate is a gross (pre-tax) number, while their weekly take home pay is a net (after-tax) number. So simply calculating $65/hr x 40 hrs = $2600 would be an amount before taxes, while their weekly take home pay ($1650) is after taxes.

The traveler’s net take home pay amount is determined after deducting federal, state, and payroll taxes (social security and Medicare) from the taxable pay. Those tax withholdings are going to the government, not being kept by the travel company. In addition, the travel company also has to pay an additional 7.65% of the taxable pay to the government for their half of the traveler’s payroll taxes. These taxes are unavoidable, and have nothing to do with the company’s revenue or profit. Even if the traveler was working as an independent contractor and “cutting out the middle man,” they would be responsible for these taxes which would cut into their pay.

To get a more accurate representation of how much the travel company is keeping the traveler should, at the very least, account for all of the weekly monetary compensation paid to them including the taxes withheld by the government on both their end and the end the of the travel company. The math for the example above would look something like this assuming a $21/hour taxable rate and $1,000/week in stipends:

Math for this example accounting for weekly taxes:

$21 x 40 hours + $1,000 = $1,840/week gross pay

$21 x 40 hours x .0765 = $64 employers portion of payroll taxes withheld on behalf of traveler each week

($1,840 + $64) / ($65 x 40 hours) = .732

1 – .732 = .268 * 100 = 26.8% (percentage of bill rate the staffing company is “keeping” after accounting for taxes)

After doing the math this way, we can see that about 10% of the money that looked like it was being kept by the travel company was actually being sent to the federal and state government for taxes and future social security and Medicare benefits.

26.8% may still seem like a lot for the travel company to keep, but there’s more we need to consider here. This number we’ve come to still does not include the full extent of compensation being paid to the traveler and expenses paid by the travel company on the traveler’s behalf. Besides taxes paid to the government out of the bill rate, the traveler in this example is also not taking into account any reimbursements paid to the traveler (for example: state licensing, travel to/from the assignment, along with any others that might have been included in the pay package) as well as onboarding and credentialing costs that the travel company usually pays for on behalf of the traveler (background check, drug test, PPD test, etc.).

On top of those things, the travel company also pays for liability insurance and workers compensation insurance for the traveler and subsidizes some of the cost of the health insurance offered to their travelers. The travel company may also pay for access to an online service offering free CEUs like Medbridge or other smaller benefits that they pay for as well.

Once all of these taxes, reimbursements, and costs paid on behalf of the traveler by the travel company are factored in, we can see that although it initially looked like the company was “keeping” between 26 to 36% of the bill rate — in reality the amount they are actually keeping after all these costs is almost certainly closer to 15%-20% in the above scenario. Of course this amount will depend on the taxable hourly rate of the contract (which impacts the taxes withheld for both the traveler and the travel company) and the amount of reimbursements paid to the traveler and onboarding costs for that particular assignment.

Now you might be thinking 15%-20% still sounds like a lot of money for the travel company to keep after these costs are accounted for, but there are still additional factors to consider in the costs. An often overlooked factor is whether the contract was set up through a Vender Management System (VMS) or a Managed Service Provider (MSP). These are basically services that manage travel job openings and candidates for facilities to make finding a good fitting traveler easier for them. You can think of the VMS or MSP as the intermediary in large number of travel jobs and for the service they provide they charge a fee that can be up to 6% of the bill rate. The majority of travel jobs go through either a VMS or MSP, so this fee needs to be considered for many travel jobs. I discussed the impact of VMS’s and MSP’s in a little more depth in a recent article I wrote about which travel companies pay the highest, which you can find here.

Travel Company Expenses and Profit

All of the above costs are paid to or paid on behalf of the travel therapist and should be considered part of the total compensation that the traveler receives. Usually after all of this is accounted for, the travel company is actually keeping somewhere in the 15%-20% range of the bill rate. But is this how much they’re actually profiting? Is the company making tons and tons of money off our contracts?

The above percentage must go toward both covering the expenses of the travel company as well as allowing them a profit so that they’re able to stay in business. Some of the biggest expenses for travel companies include: payroll for their staff (recruiters, account managers, staff managers, payroll, HR, marketers, etc.), rent and utilities for offices, and marketing (conferences, ads, swag for travelers, and referral fees). Depending on the size of the company, which impacts the amount of staff they need and size of the office buildings, these costs can be pretty high.

Another often overlooked expense for travel companies is money that they keep aside for things like contract cancellations, short hours, and “orientation hours”. Since travel companies have a big upfront cost on contracts with paying for credentialing and some reimbursements before the traveler ever actually works any hours, if the contract is cut short early on either by the facility or the traveler, they often lose money on that contract. The risk of losing out on those costs in case of cancellations has to be accounted for in their margins. The same goes for short hours if the traveler has a 40 hour guarantee in a contract or guaranteed stipends. In some cases, the facility won’t pay the travel company for those hours, but the travel company is still on the hook for paying the traveler. This means that the travel company has to account for that by keeping some money set aside from the bill rate on each contract to be paid out to the traveler. Along these same lines, some facilities will not pay for what they consider to be orientation hours. This can be 1-2 days worth of hours that the facility doesn’t pay the travel company for at the beginning of a contract due to the facility asserting that the traveler is getting oriented and not being as productive. This may seem crazy since experienced travelers know that the majority of contracts have little actual orientation or sometimes none at all, and we’re expected to be productive right off the bat, but that doesn’t stop some facilities from sometimes refusing to pay for those hours. The travel company still pays the traveler for those hours though and this also has to be accounted for in the margins.

After everything above is accounted for, the actual profit kept by the travel company from the bill rate is probably less than 10%. The profit amount will obviously vary drastically depending on how the contract actually unfolds as well. On some it might be 10% while on others they might actually lose money if a traveler or a facility cancels the contract very early on, or if there’s some major unforeseen event that causes the facility to stop paying the travel company completely, like during the beginning of the pandemic.

How Do You Calculate How Much You Should Be Keeping From a Contract Bill Rate?

As you can see, even if you know the bill rate on a contract, determining how much the company is actually keeping and the amount of money that’s going toward other costs is a difficult task. Therefore, determining what is a fair percentage of the pay you should be keeping is even more difficult.

At the minimum, to start doing these calculations, you would need to know:

whether the job was through a VMS or MSP
whether the facility is paying or not paying for orientation hours
whether stipends are being guaranteed on missed hours
whether the travel company is subsidizing a portion of your health insurance cost
how much they’re paying for liability and worker’s comp insurance on your behalf
the combined amount of reimbursements and credentialing costs paid upfront
and the amount of tax being withheld from your taxable pay and from the travel company for payroll taxes on your behalf

If you were able to find out all of this information, which is very unlikely, then you would need to deduct those costs out first to then see what’s left for you to take your fair share and the company to take their fair share.

But, if you don’t know all of these variables, then determining a fair percentage of the bill rate that you should be receiving in compensation each week is all but impossible. Because of this, most recruiters won’t even share the bill rate for a contract because, with all of the factors involved, the transparency often causes more confusion and skepticism than clarity.

Like I said, this is all pretty confusing. Therefore, a recruiter telling a traveler (especially one not well informed on all of the variables above) the bill rate usually leads to quick back of the envelope calculations that are wildly inaccurate and cause the traveler to think they’re being taken advantage of when they aren’t.

What’s the Solution?

As you can see, for a traveler working with a staffing company, there are a lot of costs and calculations that go on behind the scenes that we don’t have much control over. For some travelers, it may be worthwhile to consider being an independent contractor to “cut out the middle man” and try to recoup some of the extra money. However, for most, this is more work than they want to take on. As an independent contractor, you have a lot more to deal with, such as finding and negotiating your own contracts; setting up the legal contract itself; handling your own benefits, taxes, credentialing, liability insurance, and more. Additionally, since there is no “middle man,” there’s no safety net & no pay guarantees. You take on all the responsibilities yourself. Plus, as we outlined, there are many costs that are unavoidable (taxes, insurance, etc) that you’ll just be taking on yourself instead of the company paying on your behalf. So, you’ll really only keep a little bit more (the amount that the travel company is actually keeping). If this seems like something you’re interested in, then you’ll have to do a lot of research to determine how to make it work.

However, for most of us, we’d prefer to go through a staffing agency who takes care of all of these headaches for you. They deal with all the behind the scenes work and help you set everything up. And of course for providing this service, yes they must also have a profit. But how do you make sure they’re not keeping too much?

In order to try to mitigate this, some travelers will choose to work with only smaller companies which theoretically have less overhead and keep lower margins, meaning theoretically the traveler keeps more of the money. But there is always some give and take when you consider “big” vs. “small” companies. While big companies may keep larger margins, they also may have access to direct jobs that don’t require any VMS or MSP fees, while the smaller companies may have these fees. Additionally, larger companies may offer some additional protections, like guaranteeing stipends. This comes out of their margins, but it also means more security for you as the traveler. As you can see, nothing in the travel healthcare world is black & white. There’s no perfect solution.

Because of this, we recommend having a few recruiters at different companies (both large and small) that you can trust that will be open and transparent with you on all things regarding travel jobs and pay. That way, whether you know the bill rate or not, or whether you know the operating costs of the company or not, you can rest assured that the recruiter is going to bat for you on negotiations and paying the most they possibly can for any given job. Then, you can eliminate that factor and concern from your mind, and you can just focus on comparing the rates that each company offers you, and choose the ones that work best for you. Of course you can always negotiate and try to ask for more, but if you have a trustworthy recruiter, you really should not have to push for more. They’ll give you their best rates up front and be open and honest with you about what each job is paying and how much their company can offer for a contract.

Since finding good recruiters can be hit or miss, we created Travel Therapy Mentor to do some of this work for you in finding trustworthy recruiters and companies (in addition to all of the great educational content of course :D). We’re constantly interviewing, adding, and removing recruiters from various companies based on our interview with them, their reputation, their performance, and feedback we receive from travelers that we send to them. We do our very best to work with and send travelers to only the highest quality recruiters and companies that meet their individual needs. If you’d like recommendations to companies and recruiters that we trust to not take advantage of travelers, that should work well for your specific situation, fill out our recruiter recommendation form here.

I hope this article provides some additional clarity on pay packages and all that goes into calculating them based on a given bill rate. If you need further clarification on anything, send us an email, or let us know in the comments!

Watch the video we did on this topic to learn more

**Written by Jared Casazza, PT, DPT** – Jared has been a traveling physical therapist since 2015. He has mentored and educated thousands of healthcare travelers and is a leading expert in the field of travel therapy.

While we have always traveled as a pair, most travel therapists actually travel solo! We are excited to share a guest post from Traveling Occupational Therapist Morgan Lauchnor, who travels on her own. We hope her insights will help give you the confidence to pursue this path on your own as well if you think it’s right for you!

When looking into travel therapy, the ability to travel with a spouse, significant other, or with friends sounds like the ideal situation, but often times this isn’t an option for some people. That shouldn’t prevent you from still deciding to try out travel therapy though! In fact, a good majority of travel therapists are solo travelers. Some people, like myself, even wanted to travel solo. Venturing into it on your own might seem daunting and scary, but it can also be one of the most rewarding experiences of your life. The world is way too big and life is too short to wait around for someone to go with you on this opportunity of a lifetime!

Benefits of Traveling Solo

Enhances Independence & Empowerment

Any time you follow your dreams, go after what you want, and face your fears, it’s going to be the most empowering feeling. Solo travel is the definition of freedom, independence, and living life on your own terms.

Builds Self-Confidence

Taking the leap to go into the unknown on your own is brave. There is so much growth that comes from pushing yourself out of your comfort zone, and there’s nothing that pushes you outside your perceived limits quite like traveling solo, because you really have no choice but to handle whatever challenges get thrown your way. You develop a ‘can-do’ attitude and become more relaxed and comfortable figuring things out on your own. And not just in the cities you travel, but any new job assignments you take on.

Gives You Total Freedom

On your own, you have the freedom to choose the states/cities where you want to take assignments. You also get to decide how you spend your weekdays, weekends, and everything in between, without worrying about disappointing or negotiating with other people. In traveler pairs, it often limits options because you have to find places that will accommodate both of you, and they might not want to go/explore the same places that you do.

Boosts Your Problem-Solving Creativity

Traveling rarely goes smoothly or according to plan: cars get flat tires, assignments get cancelled, you get lost (a lot in my case). It’s all a part of the solo adventure and the stories you’ll share of how you got through. The best stories never come from the things that went smoothly, right? And as healthcare professionals, we are creative problem solvers for our patients, so this skill can be carried with us into our practice as well.

Fosters Self-Discovery

Traveling solo is the best way to get to know yourself. Exploring new places and new cultures, outside your comfort zone, figuring things out on your own, you discover just how much you’re capable of.

Challenges of Traveling Solo & How to Overcome Them:

Being Alone/Lonely

One of my first assumptions as a solo traveler was that I would be on my own most of the time, especially since my first assignment was all the way across the country in a state where I knew no one. But once I was out there, I realized there are SO many opportunities to meet people. I ended up being surrounded by friends and mentors, some becoming lifelong friends. I also always try to take advantage of visiting any family/friends nearby who I might not ever get the chance to see otherwise.

Ways to meet people:

Doing things with co-workers outside of work: There might be other travelers at your assignment that will go on adventures with you, or you might get to know the perm workers who are typically great assets to show you around your new city/give you tips on the best spots!
Connect through apps and social media: Travel therapy/nursing Facebook groups, following other travelers and travel therapy companies on Instagram, and apps like MedVenture, designed specifically for connecting with other traveling healthcare professionals, are all great ways to find people in your area and also to just have a supportive community to lean on.
Get involved with local organizations and community groups.
Just get out and explore the area! (This was a lot easier to do before the pandemic, but hopefully now that there’s a vaccine and more things are opening, this will be more of an option again)

Another thing to consider if you’re worried about feeling lonely is bringing a pet with you on your travels! I got a puppy while on assignment in CA, and she’s now traveled with me to TX and NC as well. It definitely makes things a little more challenging, but I can’t imagine the travel life without her anymore!

To learn more about traveling with a pet, check out this post.

Safety

This has never been an issue for me personally, but it’s always something to keep in mind traveling by yourself, especially for female solo travelers. Before committing to a new assignment, research the area to see if it is somewhere you’d feel comfortable living, look into the housing options available to make sure you’d feel safe, and always trust your gut if something feels off. When you’re on assignment, tell people where you’re going, bring mace with you on hikes and while out exploring, and ask the locals of places to go and if there are areas to avoid.

Boredom

Sometimes you might live and work in areas that are rural or with limited things to do. In cases like this, I focus a lot on hobbies and things I wish I had more time for—like CEUs, reading, cooking, planning future travels, blogging, etc. But ultimately, you’re choosing where you want to work, so if you’re someone who needs to be doing things and wants to be around people, consider choosing assignments that are in busier locations.

Costs

Traveling alone can definitely be more costly than traveling as a pair, since you are the sole provider. Housing is usually one of the biggest costs that you incur as a solo traveler. One way you can cut down on housing costs would be to consider living with roommates. Traveling therapist/nursing pages are a great way to reach out to people in the area to see if anyone is interested in splitting housing costs, or ask your supervisor if any of your coworkers have a room for rent or are looking for a roommate. This can also be another great way to meet people and have people to do things with!

Summary

Ultimately, I truly believe that the pros of traveling solo far outweigh the cons. If it’s in your heart to do travel therapy, don’t be afraid to take the leap. There’s a whole community of other travelers out there who are here to support you and help you along the way!

Even if you go for it and it doesn’t work out, you still win. You still had the guts enough to head straight into something that frightened you. That type of bravery will take you places.

About Morgan

I’m a traveling occupational therapist who started right out of school as a new grad. Originally from eastern PA, I got my Bachelor’s degree in Exercise Science from the University of Pittsburgh and went on to get my Masters in Occupational Therapy degree from the University of St. Augustine in St. Augustine, FL in 2019. I was introduced to travel therapy at a job fair there and knew right then that’s what I wanted to do. I completed my fieldwork rotations in Greenville, SC and St. Louis, MO, so I already felt like I was traveling before taking the leap. But once I did start my official travel therapy journey, I road tripped cross-country from PA to OR to begin my first travel assignment in Ashland, OR and have been traveling ever since! I’ve now been on five assignments in OR, CA, TX, and currently NC, and my pup Zoey has traveled with me since CA. We love exploring new cities, getting outside any chance we can, visiting breweries and wineries, and meeting the best people along the way!

If you’d like to connect, the best way to contact me is through social media: Instagram: @zoandmo_onthego or through email at mlauchnor@gmail.com. I am also currently in the process of starting a blog, The ChrOnic WanderlusTer, so keep your eye out for that soon!

Tag: travel therapy company

How Much of the Pay Does the Travel Therapy Company Keep on a Travel Contract?