Industry Insights in Healthcare

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Contract Workers vs Employees: The Impact on Healthcare Employers

In: Industry Insights

Updated: Wednesday, February 22, 2023 @ 3:55pm

Contract Workers vs Employees: The Impact on Healthcare Employers

The Pros and Cons of Hiring Independent Contractors for Healthcare Roles

One of the current trends in healthcare is the hiring of more contract workers to fill open positions or roles.1 This has several pros and cons for healthcare employers, some of which we will discuss. But first, let’s talk about the difference between contract workers and healthcare employees so we have a clearer image of each.
Contract Workers vs Employees: How Are They Different?

Contract workers are sometimes referred to as independent contractors. Individuals in contract positions are not considered employees of the healthcare organization or facility within which they work. Instead, they provide their services as a self-employed person.

One major difference between contract workers and employees can be their length of service. Whereas contract workers are typically hired to fill vacancies for a defined, often shorter-term period, employees are generally hired with the goal of retaining them for a longer period of time.

Another difference is that contract workers are responsible for paying their own taxes. (If they are working on behalf of a staffing agency, that agency may deduct taxes for them.) Conversely, if a healthcare worker is hired as an employee, the healthcare organization is responsible for withholding the necessary local, state, and federal payroll taxes.

Contract workers also don’t usually receive traditional benefits from the employer, such as those related to health insurance or paid days off. Yet, someone who is hired as a full-time employee may have access to these types of “perks” if they are offered by the healthcare employer as part of their terms of employment.

Pros of Hiring Contract Healthcare Workers

Hiring contract workers to fill open healthcare positions can offer a few benefits. Since they’re not coming on as an employee, the process of bringing them on board may be less lengthy and less stringent. This enables healthcare entities to fill vacancies quickly, which can help relieve some of the pressure on current staff.

If the current staff has been working extra hours or doing two jobs at once in an attempt to help cover unfilled job positions, this relief can go a long way. It may even reduce turnover rates as excessive job demands combined with heavy workloads are one of the top reasons for greater employee turnover within the healthcare space.2

Having open, unfilled healthcare positions may also negatively impact your ability to serve your patients. Contract workers can help fill this gap, making it easier to offer your services with fewer service-related slow-downs or interruptions.

There may be some cost savings when using contract workers as well. Some contract workers do earn a higher hourly rate than healthcare professionals hired as employees but by not receiving the traditional benefits of employment, the total cost of bringing them on board may ultimately be less than that of employees.

Cons of Using Contract Workers Instead of Healthcare Employers

Despite the potential value that contract workers can provide, healthcare entities may also face some disadvantages when taking this route. One is that you have less control over a contract worker than you would someone who is employed. Plus, while a contract worker can help temporarily fill an open role or position, this may be just a short-term band-aid on what are sometimes deeper staffing issues. And it may not totally solve your problem if what you really need is a long-term employee.

Because some contract workers earn more hourly than employees on staff, this can also mean that your short-term budget will take a hit. Again, this may somewhat offset by not having to pay a contract worker any benefits. However, if their hourly pay is high enough, this cost may exceed what you would ordinarily pay an employee in wages and benefits. Having the revenues to cover this increase is important to not setting your healthcare organization or facility back financially.

Another potential con of using contract workers versus hiring employees is company loyalty. Someone who is hired as an employee may have more loyalty to your healthcare business than a contract worker.3 This loyalty can lead to greater longevity with your company, potentially reducing your turnover rates and reoccurring training needs for new workers.

Making the Best Decision for Your Healthcare Business

There are pros and cons to using contract healthcare workers, and there are pros and cons to hiring healthcare employees. That’s why it is important to consider your staffing needs and financial status when deciding which action is right for your healthcare business.

If you decide that you’d like to focus primarily on hiring long-term healthcare staff as employees, Ultimate Medical Academy is here to help. We can connect you with some of our trained and skilled graduates who are interested in allied healthcare positions and may be a good fit.

We’d also love to help you overcome some of your top staffing challenges. Together, we can identify the issues that may be leading to higher turnover or reduced longevity rates, then work to find ways to turn things around.

As partners in the healthcare space, we are committed to helping employers resolve their staffing issues as quickly and efficiently as possible. Contact us today and let’s talk about what we can do for you.

In the meantime, we do have a few articles you may want to read to learn how to effectively deal with some common healthcare staffing issues. Here are a few to check out based on your concerns and/or needs:

  • Strategies to Reduce Healthcare Employee Turnover Rates
  • How to Attract Top Healthcare Talent (Even in a High-Demand Market)
  • Effective Ways to Boost Employee Retention

1 Kaufman Hall. A Special Workforce Edition of the National Hospital Flash Report.

2 HSD Metrics. Top Five Turnover Causes in Healthcare.

3 Indeed. The Pros and Cons of Hiring an Employee vs. a Contractor.

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