There’s no getting around it: Staffing is a major challenge for many provider types, including home health agencies. For a variety of reasons, agencies of all sizes in all corners of the country are finding it harder and harder to attract qualified full-time employees, and retain them over time.

Not surprisingly, clinical, accounting and financial implications of this are profound. One of the most significant is the reality of utilizing contract staff for nursing and related roles. Contract staff can present problems for many small and midsize home health agencies in several ways:

• Contract staff generally are more expensive on a per-hour basis than full-time staff.
• Fewer full-time staff means more contract staff—and more cash needed to pay them. It’s difficult to plan and budget for contract staff since needs are variable over time.
• Even when agencies budget for contract staff, actual costs often exceed budgeted amounts.
• Some contract employees don’t invoice in a timely manner, which can cause additional accruals and more work for your accounting staff.
• Even when contract employees do invoice promptly, they expect prompt payment, which could compromise your cash flow position in tough times like the COVID-19 pandemic.

RELATED RESOURCE: 5 Strategies to Position Your Home Health Agency for Growth in 2021 and Beyond

If using contract employees to some extent is a reality for your home health agency, make sure you have the proper financial and operating structures, processes and controls in place to guide and protect your facility, patients/ clients, staff—and even the contract employees. In this regard, we recommend establishing the following:

 Internal Controls

• Implement clear processes and procedures, and ensure that IT support is available to provide access to systems and software when contract staff require access. It’s also important to spend the necessary time up front training them to maximize their efficiency and minimize opportunities for error.
• Maintain vigilant oversight. When you must use contract labor, make sure someone is overseeing their work, evaluating the quality of their service and carefully monitoring their time.

Financial/Accounting Controls

• Contract staffing represents a potentially sizable cash disbursement, so if contract employees are needed, be prepared to manage cash flow very carefully.