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

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

Related Articles:

Jared Casazza
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.

Negotiating Pay on a Travel Therapy Contract

Pay negotiation is one of the most often asked about and least understood aspects of travel therapy. Since one of the biggest fears for new and aspiring travel therapists is being taken advantage of by travel companies and recruiters with regards to pay, it’s understandable why so many people are in search of information on negotiation.

Unfortunately, travel therapy is a niche industry and most of the advice out there about negotiation is written for those applying for permanent positions as the target audience, and that advice may or may not apply to us as travelers. To make matters worse, travel healthcare Facebook groups are often filled with unhelpful or even counterproductive advice when it comes to negotiating pay on a new travel contract. This is largely due to the fact that negotiating pay in a travel contract is complex, varies significantly from contract to contract, and impossible to explain with proper nuance in a short Facebook post. Sometimes though, the information given is purposely deceptive or vague in an attempt to convince you that the person knows some “secret” about negotiation that you can learn too, if only you work with their recruiters or buy their product. Rest assured that no such secrets exist.

Over the last six years as travel therapists ourselves as well as serving as mentors for thousands of other travelers, we’ve learned a lot about negotiating travel contracts and what all goes into determining how and when to push for more money. In this article, I’ll do my best to outline how to negotiate on your next travel therapy contract and maximize your pay package.

Working with Multiple Trusted Recruiters

Working with more than one recruiter (ideally three) is one of the most important things you can do increase your pay and negotiating ability as a travel therapist. It’s not enough to just be working with more than one though, you need to make sure that they each know that you have other recruiters also assisting you in your job search in order to find the highest paying job that fits your individual needs. Having a recruiter who understands that they have competition during a job search often makes them much more likely to stay on the ball when it comes to submitting you for jobs and also more likely to give you the highest pay offer they possibly can right off the bat in order to avoid losing your business to a different recruiter. If you only work with one recruiter, they know that the only pay offers you’re receiving are coming from them and that you have nothing to compare to in terms of pay and that they might be able to get away with underpaying you to varying degrees for a contract.

We’ve mentored dozens of travelers who were being low-balled massively, in some cases for years, due to only working with one recruiter who was taking advantage of them, and having no way to know if the offers they were receiving were reasonable. For example, let’s say that you’re only working with one recruiter, and they offer you $1,700/week take home for a job. You have no way to know if $1,700/week is high, low, or fair for that specific contract since you have nothing to compare it to either in terms of other travel jobs in the area or what a different travel company might offer you for that same job. You tell the recruiter that you’ll take the job for slightly higher at $1,750/week and they agree. You feel like you did a good job negotiating a higher pay rate, but in reality it’s possible the recruiter could have afforded to pay you $1,900/week for that job, and purposely made you a low offer knowing they could let you negotiate a slightly higher rate while still making a big profit on the contract. Of course, $1,700/week could also be a really good offer for that job too depending on the situation, but the point is that when working with only one recruiter you have no way of knowing, and the incentive for the recruiter is to start with a lower offer knowing that you might just accept it and allow them to keep a higher margin on the contract.

Of course not all recruiters are going to take advantage of you. Often if you have built a good relationship with a recruiter, or if you’ve been referred to a trusted recruiter by another experienced traveler, you have a better feeling that the recruiter is genuine and they’ll give you their best offer up front. But particularly when you’re starting out and don’t know the recruiter as well, it’s hard to know if they’re low balling you. By working with multiple recruiters who know they have some competition, the odds of receiving a low ball offer are much lower since they want to be the one to land you a job so they get paid, instead of you going with a recruiter from a different travel company.

In addition, even if you have a recruiter or multiple recruiters who you trust and don’t think are low balling you, it’s still in your best interest to work with multiple in order to compare offers. Sometimes, what one company can pay for a job is going to be higher or lower than another company based on the company’s margins and operating costs, and this may be completely outside of the recruiter’s control. So, even if the recruiter is honestly giving you their best offer up front, you put yourself in a better position to receive the highest pay by comparing offers across multiple companies.

Understanding When You Have the Power in a Negotiation

Negotiating from a position of power is vital. Even more vital though is being able to understand when you’re in a position of power and when you aren’t. In any negotiation, the individual with the most power is the one that is in a position to able to “take it or leave it.”

For this reason, one of the biggest things that gives you power in negotiation as a travel therapist is having multiple different offers either from different facilities, or from different companies for the same contract. If you have three offers from three different facilities that would all work for you, then you have a lot of power to push for higher pay from all of them and then simply go with the one that is able to pay the most. If you have offers from two different facilities, one of which pays less but is a better fit for you clinically and the other that pays more but is less ideal clinically but still reasonable, then that is the perfect position to leverage the higher offer from the less desirable clinic to increase the offer at the clinic you really want to go to.

Telling your recruiter something along the lines of, “I’d love to take this job and it sounds perfect for me, but I have another offer that is paying higher. If you can find a way to match that offer then I’ll take it, otherwise I’ll just go with the other offer” is perfectly reasonable and a great negotiation tactic. The issue here is that you have to actually be willing to walk away or take the lower offer if the recruiter truly isn’t able to match the higher offer either because they can’t decrease their margin any lower or the facility won’t increase the bill rate. “Take it or leave it.” We’ve personally used this tactic several times in the past to negotiate a much higher pay package on contracts.

One thing to mention is that lying to one of your recruiters about having another offer in a negotiation is not something that we advise, for a couple of reasons. First, having a good relationship with your recruiters is very important and you should treat them the way that you want to be treated. You wouldn’t want them to lie and take advantage of you, so you shouldn’t do that to them either. Second, if you lie about having another offer to try to increase pay, then it’s very possible that the facility could just go with a different candidate if your recruiter tries to ask for a higher pay rate, and then you lose out on that job without having a back up plan.

It’s also important to know that if you hear about the same job from two different recruiters, you can compare pay and choose to go with the one that has the higher offer, but you need to do this before being submitted for the job by one of the recruiters. You should never be submitted to the same job by two different recruiters. Being double submitted for a job can get you in trouble and often the facility will just throw out your application.

Supply and Demand

Another thing that gives you power in a negotiation is the supply and demand dynamics both of the travel therapy market in general at that time, as well as with that specific assignment. For example, let’s say that the travel therapy market is really tight like it was in 2020 during the height of COVID, and you’re specifically looking for an outpatient PT job in Virginia. If there’s only one outpatient PT travel job in the state, then you’ll be very limited in your ability to play hardball with negotiation on that job since if you don’t land it, it could be several weeks before another similar job pops up. If you don’t take it and have to wait around for something else, you’ll lose significantly more due to the opportunity cost of missing out on that job than you’d stand to gain from increasing the weekly rate slightly. On the other hand, if the supply and demand dynamics are in favor of the travel therapist and there are a plethora of jobs that fit your search criteria, then you can be much more aggressive in your negotiation, knowing that you’ll have other options if that one doesn’t work out.

These supply and demand dynamics also apply to specific assignments that are more or less desirable depending on setting and location. For example, if you’re applying for a SNF contract in North Dakota in the winter, it’s very likely that you’re the only applicant for that position, and you can leverage that situation to push for higher pay on that contract. A facility with no other applicants that has a severe need for a therapist will often increase their bill rate significantly to get a good candidate for the job. The supply and demand dynamics are in your favor here, and you’re in a position of power which is what you need for negotiation. Meanwhile, if you’re applying for a Outpatient job in San Diego, it’s almost guaranteed that they have dozens of applicants since that’s a desirable setting in a very desirable area. If you get an offer but try to push for higher pay, then the facility will just go with a different candidate. The supply and demand dynamics are in their favor which limits your negotiation ability.

Improving and Highlighting Your Skills and Certifications

One surefire way to improve your ability to negotiate as a travel therapist is by making yourself more desirable as a candidate. If a facility has multiple candidates for a travel therapy position, but you’re clearly the best suited for the job either due to your clinical skills, experience, or ability to sell yourself in the interview, then it’s possible that they will be willing to pay more for you. Things like certifications, CEU courses, and prior experience in the setting and/or with the EMR can be bargaining chips that your recruiter can use to push the facility to pay a higher bill rate in order to get you to fill the position, which can lead to a significant increase in your pay package. Keep in mind that your strengths won’t help you in a negotiation if no one knows about them, so be sure to highlight them in your resume as well as in your interview with the facility for the position.

Putting it All Together

We’ll often have travelers reach out asking how to negotiate higher pay on a contract when they clearly don’t have any actual leverage in the negotiation for that position. We wish there was some secret for all negotiations, but unfortunately there isn’t, and every situation involves a lot of nuance.

A new grad applying for a travel job with no experience in a setting that’s in a desirable location and who has no other offers simply isn’t going to be able to negotiate a significant increase in pay. They can always try, but 99% of the time the facility will just go with a different candidate, and the therapist will be back to square one on the job search. Similarly, for a therapist who is looking for a very specific setting and location, there is often little ability to push hard in negotiations and risk losing the one opportunity that fits their search criteria. So in cases like this, telling the therapist to use hardball tactics to push for high pay is going to be counterproductive and frustrating for them.

On the other hand, an experienced clinician applying for a travel job in a less desirable location who has many other offers and job options can often negotiate an increase of several hundred dollars per week on their pay package simply by leveraging their experience, other offers, and the need of the facility to significantly increase the bill rate.

The bottom line is that negotiation isn’t ever going to be one size fits all, and anyone who tries to give you black and white blanket advice either doesn’t understand negotiation or is trying to sell you something.

When negotiating for pay on your next contract, use the tips above to analyze the power dynamics and make sure that you’re negotiating from a position of strength and are being realistic in your requests so that you don’t miss out on a great contract for you!

I hope this helps you in future travel job searches and negotiations! Feel free to message us if you have any questions, or if you want help getting connected with additional recruiters to expand your negotiating power!

Written by Jared Casazza, PT, DPT – Jared has been a Travel PT since 2015 and has mentored thousands of current and aspiring travel therapists.

Jared Casazza, PT, DPT, Travel Therapy Mentor