The Impact of Inflation on Travel Therapy Pay

Inflation has been a very hot topic lately. This isn’t a surprise considering, in the US, we’re seeing the highest inflation rates in the past 40 years. The latest Consumer Price Index (CPI) reading for April 2022 was 8.3% and March 2022 was even worse than that at 8.5%. The massively inflationary decade between the early 1970s and early 1980s was the last time we’ve seen numbers even close to these.

To make matters worse, the CPI calculation has changed since the 1980s and now understates inflation compared to how it used to be measured. If measured how it was in the past, the inflation rate is likely closer to 16%, making it the worst inflation in over 100 years! Anyone that’s signed a new lease or bought a house in the past year certainly knows that housing inflation is far exceeding a yearly rate of 8.3%.

Inflation Squeezing Healthcare Travelers

The housing price inflation in particular has a big impact on healthcare travelers since the vast majority of travelers are duplicating housing expenses (paying at both their tax home and travel contract location) in order to receive tax free stipends for housing, meals, and incidentals. If you’re unfamiliar with how travel therapy pay works, this article will be helpful. Along with housing though, travelers also drive a lot more than the average due to moving from assignment to assignment, which makes the historically high gas prices hurt as well.

With inflation being at the top of mind for many travel therapists lately, we’ve gotten many questions about how this will impact traveler pay, and if we can expect to see our take-home pay rise with inflation. This question makes sense because with higher expenses, travelers want to earn more per week on each contract to offset the additional cost.

When considering this topic, it’s important to note that pay rates right now for travel therapists are actually at historically high levels on average, and have been since the beginning of 2022– but this isn’t due to inflation at all. Check out this live video for insight on the recent travel therapy job market and factors that have raised traveler pay rates.

Unfortunately, the sad reality is that inflation actually has a net negative impact on our pay, not positive like you’d imagine. The cost of living in an area actually has a relatively small impact on travel therapist pay, so rising costs across the country also has a small impact. So if not inflation and cost of living, what has the biggest impact on traveler pay? Two main things: insurance reimbursement rates, and supply and demand dynamics for staffing.

Reimbursement Rates

Insurance reimbursement rates for our services have the single biggest impact on travel therapy pay packages. This shouldn’t be a surprise, since reimbursement rates are also the biggest driver of permanent therapist pay as well. The reason for this is that the amount a facility is able to pay for an employee, either permanent or travel, is dictated by the revenue that the therapist is able to generate, which is directly tied to insurance reimbursement for our services.

If the amount a facility receives from insurance companies for units billed is less than the amount paid to the therapist, including benefits, plus the costs of running the facility (building rent, utilities, support staff, etc.), then the facility is losing money and can’t stay in business very long. Reimbursement rates can vary quite a bit from state to state and setting to setting, which is a big reason why some states and settings seem to always have much higher pay rates for travel therapists than others. Unfortunately, reimbursement rates do not increase proportionally with the rate of inflation. In fact, insurance reimbursement rates for therapy services have been stagnant or declining for many years, and that’s unlikely to change in the near future.

Supply and Demand

Supply and demand is the second biggest driver of travel therapist pay. This has been on full display for the past two years. If you were a traveler throughout the COVID pandemic, then you’re probably very aware of this. You see, travel therapy job availability and pay packages have fluctuated wildly throughout the pandemic. During the height of COVID in 2020, the number of total open jobs for travelers was reduced by around 90%, and travel pay rates were down 10-20% on average compared to pre-pandemic levels. At times there were less than 50 job openings for each discipline in the entire country, and seeing pay packages over $2000 was almost unheard of for nine months or more.

Pay rates and job numbers gradually recovered throughout 2021. At the end of 2021 going into 2022, pay rates returned to pre-pandemic levels, with some pay rates even higher, and job numbers exceeded pre-pandemic levels especially for PT & SLP. In 2022, we have seen some extremely high pay packages ($2500-3500+/wk after taxes), which is over 20% higher than average pay prior to COVID, with average jobs across the country paying up to 5-10% higher than before the pandemic.

Why did all of this happen during the pandemic? Reimbursement rates stayed about the same for most settings during this time period, so that wasn’t it. What changed was the supply and demand dynamics in the travel therapy job market. At the beginning of the pandemic, elective surgeries were halted around the country, resulting in lower caseloads across all medical settings from the hospitals, to SNFs, home health, and outpatient. Some outpatient clinics closed down completely for a period of time, and there were mass lay-offs through various settings. This meant that the demand for travel therapists was reduced drastically in a very short period of time, but the supply of therapists looking for travel contracts stayed the same or even increased to a degree. We saw many permanent therapists that had been laid off from their jobs looking at travel contracts to bridge the gap until they could find a new perm job.

With less demand for travelers and the same or higher supply, the power was completely in the hands of the facilities. Every open travel job was getting dozens of submissions for a while, plus caseload and need for staff was very uncertain, so facilities started to reduce the bill rate they would pay for travelers since they could easily fill the job even at a lower rate with so many candidates, and because they didn’t want to be on the hook for paying high rates if the caseloads weren’t there.

That dynamic shifted completely as elective surgeries resumed during 2021, and there were more post-COVID patients needing therapy, causing a resurgence of caseloads in all settings. The demand for travelers gradually increased throughout 2021 and into 2022, and it eventually passed pre-COVID levels (2019 and prior) and reached all-time high job openings for travel therapists. The supply of travelers remained steady or even decreased slightly due to some therapists taking perm jobs or leaving the healthcare field completely during 2020. This meant that the negotiating power shifted rapidly in the traveler’s favor, and bill rates were forced higher due to low paying contracts often getting zero applicants, and a more urgent need for staff to cover the rising caseloads.

As we progress through 2022 though, the really high paying contracts are getting much harder to find. The reason for this is that the supply and demand dynamics are constantly in flux and starting to normalize. The demand for travelers has leveled off now, and the supply of travelers has increased due to some permanent therapists choosing to give travel a shot after seeing the recent high pay rates. With supply and demand dynamics starting to shift from extremely in favor of travelers to a more moderate position, naturally the upward pressure on bill rates is dissipating as well and we are starting to see pay packages go back to the averages from pre-COVID.

Why Downward Pressure on Travel Pay?

The supply and demand shift I explained above will put downward pressure on pay rates, but counterintuitively, so will inflation as I mentioned above. The reason for this is that inflation doesn’t only affect therapists, but it affects the facilities as well. Their costs are also increasing rapidly with inflation. From rent, to utilities, to having to pay more to keep support staff as entry level wages increase, there’s no doubt that lots of pressure is being applied to these companies. With the cost of running a facility increasing, and reimbursement rates staying the same or even decreasing, the only variables that can realistically be adjusted are therapist pay and facility profit. For many facility owners, especially private practice outpatient clinics, profit has already been reduced significantly in the past few years, which leaves therapist pay to take the brunt of the impact.

This is the big reason that inflation will actually push travel pay down, not up. Except in certain cases, such as hospitals that receive government funding, most facilities would close their doors before paying a traveler so much that their profit margin goes negative. After all, why keep a facility open that’s losing money after accounting for all costs?

Obviously the amount of downward pressure on pay will vary based on the setting and location. A hospital will have a lot more leeway to absorb increased costs than a private practice outpatient clinic will. Also the cost increases from inflation will be very different for a Skilled Nursing Facility in Alabama than for a Home Health agency in California. This doesn’t change the fact that the overall impact on travel pay from inflation is clearly going to be negative unless reimbursement rates suddenly increase substantially.

What Will This Mean for Travelers?

Even though the rate of inflation likely peaked in March 2022, it will still almost certainly be a long time until the CPI is anywhere near the historical 2% target. Even when we do get back to 2% eventually, that doesn’t mean that costs will decrease back to where they were before, but only that they will just continue to increase at a slower rate. This is bad news for all therapists, travelers included, in an environment of stagnant reimbursement rates. Combine this with a normalizing supply and demand dynamic in the travel therapy market, and it’s much more likely that the average travel therapy pay package decreases than increases going into 2023, barring any sudden change in the market.

I hate to be the bearer of bad news in situations like this, but it’s better to be realistic and honest so that travelers can make informed decisions than to be overly optimistic. The best thing that we can do as therapists is to put pressure on CMS and other insurers/payor sources to increase therapy reimbursement rates and encourage our professional organizations to do the same in light of the unprecedented inflation we’re seeing. Whether or not this will be fruitful remains to be seen.

To end on a positive note, although pay rates for travelers are likely to decrease in response to supply/demand dynamics and inflation, that hurts a lot less coming off significantly elevated pay packages compared to pre-COVID levels than it would otherwise. All indications are that travelers will continue to make significantly more than perm therapists, making travel still a good choice overall. It’s just that now travelers may have to be more selective on the assignments they take especially in high cost of living areas, and more mindful of their fixed costs at their tax home than before, in order to ensure that travel therapy remains lucrative for them after accounting for expenses. We went into more detail on managing expenses even with rising housing costs in this video.

Tune in as we will be doing an updated video discussing the topic of inflation & traveler pay very soon!

Message us if you have any questions!

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Jared Casazza
Written by Jared Casazza, PT, DPT – Jared is a traveling physical therapist with a passion for personal finance and economics, having done thousands of hours of research on finances and economics since graduating from his DPT program.

Pursuing Travel Healthcare Later in Your Career

Guest Post by Traveling SLP Pair Courtney & Tim for Travel Therapy Mentor

Many healthcare professionals choose to pursue traveling healthcare early in their careers, perhaps right out of school, or within the first few years of practicing, before they “settle down,” and have a family. However, we get questions from healthcare professionals who are in other stages of their careers, such as during the time they have a young family, when they’re empty nesters, or close to retirement. Fortunately, we do know many healthcare professionals who have pursued traveling opportunities later in their careers, and have made it work in various different ways depending on their personal situation. We are excited to share a guest post from Travel SLP duo Courtney & Tim who started traveling in their 50s once their children were out of the house. Keep reading to learn more about their situation & insights to traveling later in your career!


Background

As the credits rolled for the movie, Nomadland, I looked at my husband (and co-worker) and said “that’s us!” I totally can relate to that feeling of no matter how good a situation/location is, there’s a powerful pull of finding out what else is out there that doesn’t seem to ever release you.  As Fern seemed to discover in the movie, there’s almost its own special joy in not getting too attached to one place or knowing that it doesn’t have a complete hold on you.  But like the movie and in life, every positive aspect has its negative as well.

While Fern had her nomadic life initially thrust on her, we chose to become modern-day nomads, as traveling speech-language pathologists.  We had heard about “travelers,” or therapists that take short term placements all around the country, since grad school (we met at the University of Louisville) but thought that was for young, unattached therapists.  But after a trip to Australia for their national speech and language convention (one of the perks of both being in the same field), we learned people of all ages are travelers and even do work abroad! 

As we had young kids at the time with special needs and relied on the support system we had in our hometown, we agreed that traveling at that point wasn’t feasible.  But the seed had been planted and, as a natural planner, I started mapping out when and how we could pull off this mid-life career change.  It took about 12 years, but in 2019, with one son teaching in Spain and the other doing gap year experience(s) during his deferred enrollment in college, we set off for Northern California for our first school-year Travel SLP contracts.  Last year was the Maryland/Northern Virginia area.  We are now currently in our third contract, in our third school district, in Salem, Oregon for school year 2021-22.

Pros and Cons of Being an Older Travel Therapist

I skipped over a lot that happened in there, but perhaps that is fodder for a future article.  What I really wanted to share were some of the unique positives of being older travel therapists.  But my brutal honesty means I will also share the negative side of each of those positive elements, as well.

1. Being an older, experienced therapist means you have a LOT of experience doing “the job,” which makes it easier to, well, do the job.

Positive: You know how to get clients/students to make progress; you know how to communicate with families; there is usually an immediate trust/respect given you by co-workers, families, etc. when they realize you have 25+ years’ experience in the field; you have an idea about the paperwork involved; you have a LOT of tools in your therapy tool box and it is usually very easy to get hired for positions.  Speech therapists are in high demand anyway, and experienced, skilled ones that prefer in-person work are almost “unicorns,” as one recruiter called us.

Negative: It’s not fun to have to learn how THIS district wants paperwork completed or the acronyms they use or even how they interpret IDEA (I grit my teeth every time I question a procedure or requirement and the answer starts with “well, the LAW says..” I KNOW the law; I need to know how YOU guys interpret it). Don’t get me started on the “fun” of learning new computer systems for paperwork and inevitable, unique-to-every-state Medicaid billing. An older brain is a bit less plastic, and it can be hard to start all over every year (or in the case of shorter placements, every few months) in a brand-new district, learn new administrative structures and even names of those you report to and for what.  Additionally, as an older therapist, you know the possible pitfalls in new assignments and are usually very careful and request a LOT of information before signing a contract.

2. You get to spend your free time exploring and learning about an area like a live-in tourist.

Positive: We have landed assignments primarily based on locations chocked full of activities that we couldn’t explore in a week, the usual length of time we had for our annual family vacation.  It’s a completely new experience to learn about history again, as an adult, and with all the context of the life you have already lived.  It’s so exciting to look up local attractions, sights and landmarks, museums and areas of interest and not be afraid of looking too uncool to check it out (we’re not from here!).

Negative: You must push yourself to research, plan and execute activities (oh, and pay for them) every weekend and long weekend.  It can feel like its own job! At our age, we realize we don’t have forever to see or do everything we want to and often feel as though any time not out ‘doing’ is being wasted. You also must “learn” where all the usual daily living stuff is all over again, such as which grocery store carries your favorite brand of natural soft drink or where are the parks with the best walking paths. As an older person, you can get very picky about those items and finding them takes time and energy. Thankfully, coworkers and landlords that are locals are usually very willing to help new folks with a number of those details, including recommending restaurants and hidden attractions.

3. You’re free of the usual commitments you had back home (I felt like I had run away from home!).

Positive: I am an over-committer, I admit it.  And it takes a lot for me to quit something.  That was why I taught classes weekly at the YMCA back home for 25+ years (started in grad school).  Church choir (and weekly practice), family, and community obligations provided lots of structure to our lives; but, after a couple of decades, sometimes it could feel like more of a burden than a blessing.  Living across the country kind of resets all that, particularly if you don’t know if you will be returning to that area or not.  We also had decades of birthday parties, holiday traditions, etc. with our families and friends, several whom are no longer with us. It feels refreshing and maybe even less painful to find new ways to celebrate those milestones with the family you still have, especially when some of them are out of state, as well.

Negative: You have to a) work to make new friendships and connections in your assignment city, and b) you must work at maintaining your relationships back home.  That means phone calls and emails and video chats and FB posts to keep the folks back home connected to what you’re doing instead of just vegging out when you get home from work.  You can feel somewhat unmoored, when the social network you spent decades building is no longer close by and available. And you must be willing to kind of put yourself out there and ask coworkers to possibly hang out with you after hours in order to foster those new friendships.  That can be awkward!

4. You are more financially stable, so you have technically the financial freedom to spend money on adventures. 

Positive: The years of putting kids through school, paying for extracurricular activities and making mortgage payments on our family home are behind us. Living a more portable lifestyle also means spending a lot less on ‘stuff’ and freeing up more income for ‘doing’.   Everyone must make their own choices, but after having to empty two parents’ homes of decades of ‘stuff,’ we feel resolute about choosing adventures over things.  That, along with careful budgeting and the living stipend part of travel pay, has allowed us to be off together a total of almost three months every calendar year.

Negative: You never get to stop watching your pennies.  I am the household CFO and must watch our payroll deposits very closely, as there is not a lot of room for mistakes.  Our pay is a bit complicated, as well, with unpaid holidays, taxes paid in three different states in one year and, of course, no workdays for the summer.  And, as linguists by trade, numbers aren’t our thing.  So, I have to use a combination of software and budgeting app and a go-to guy back at our bank to help us troubleshoot issues that come up.  We also find that we are often unwilling to give up or compromise on some amenities in our living situation(s), which can cost more.  We have hand-washed dishes and used a laundromat for our clothes; we just don’t want to do it anymore.

5. You are old enough to appreciate the uniqueness of your situation

Positive: While we joke about being “weird,” we realize we are living most people’s fantasy: to run away to a new city or area you have always heard of/dreamed about going to visit, and then LIVE there for 10 months!  Checking out museums and wineries, beaches and waterfalls, driving by national monuments every day (ok, that just happened in Northern VA).  Essentially, getting the opportunity to be a tourist for 9-10 months.  Well, a tourist with a 40-hour work week. But having spent 20+ years in the same city, we really do realize how unique and interesting a way this is to spend your work life and really experience so much beauty in this country.

Negative: We had a fellow therapist we met remind us that we are indeed in the sweet spot of life: old enough to not have people depending on us, but not so old that we have grandkids to hold us in place.  We realize that this lifestyle will need to come to end once our sons hopefully bless us with grandkids, or, less hopefully, a family member needs our daily assistance. We were so fortunate to have our parents available to be involved in our sons’ lives, not only helping us but interweaving themselves with our sons’ earliest memories.  We are committed to being there to fulfill those roles for our own grown children, wherever that may be.  So, there is something of a clock ticking loudly in the back of our minds, pushing us to try new assignments in new locations so we can see and do as much as possible before the buzzer goes off!

Our Unique Situation

A little asterisk for all the “weird” or unique things about our situation, in particular:

  1. We are a married couple in the same discipline
  2. We do school-based therapy contracts for the full 10 month school year (at least for now)
  3. We are completely debt free, including our house/condo/home base (thank you Financial Peace University)
  4. We are in very good health, in part to good genes, good luck and a lot of hard work
  5. We were friends before we dated so we genuinely enjoy spending time together and have a lot of similar interests. 

These may not seem important, but I feel like they all come together to help us make this traveling therapy life a successful one. Again, these are just my thoughts after being at this travel therapy gig for almost three years now and doing it as a part of the over-50 set!

Is Traveling Right For You?

While we certainly don’t think we have the whole traveling therapy thing “nailed down,” we really do enjoy the life it has afforded us. We also hope that our experiences open the eyes of other therapists considering the travel therapy life, particularly those with more “experience” that thought it was only for young people. Everyone must look closely at their own life, their long-term (and short-term) goals and decide what will work for them. But we hope our experience(s) may give others some food for thought as they contemplate the next phase of their careers.


Guest post written by Courtney Richardson-Young, MS. CCC-SLP & Tim Young, MS. CCC-SLP

Courtney Richardson-Young is a pediatric speech-language pathologist from Louisville, KY with 25 years of experience in settings from in-home early intervention, private practice to school-based services. When not working, she likes to complete half and full marathons around the country, as well as participate in yoga, aqua fitness and any activity that gets the heart rate up!

Tim Young, also from Louisville, KY spent most of his 26 years of practicing speech-language pathology in medical settings, including home health, rehab centers, hospitals and nursing home settings. He currently provides school-based services to students from ages 5 to 21 yrs. He enjoys classic cars, outdoor activities and reading every placard in every museum he can!

Tim and Courtney, also known as the Dynamic_Speech_ Duo, are traveling SLPs who met in grad school, fell in love, got married, raised a family and are now traveling the country. They have two grown sons, both with disabilities, that taught them a lot about advocacy, ableism and what life is like outside of the therapy room. They are enjoying “flying” their empty nest, since both sons graduated in 2019, and exploring as many wineries, cideries, museums, parks, festivals and historic sites as possible!

Courtney & Tim can be followed on Instagram @dynamic_speech_duo and reached at dynamic_speech_duo@hotmail.com.