Nurse Agency Legal Entity

Executive Summary - The service I have selected is that of a nurse staffing agency. The nurse staffing market is competitive in nature ranging from small local operations to that of a national or international operation. Despite a large number of nurses, roughly 1.7 million nurses, entering the job market since 2001 there are nurse staffing issues in many facilities and an overall shortage of nurses in most states. For example if current trends continue, by the year 2020 there will be a 57% shortage of nurses in New Mexico and a 35% shortage in Colorado. One factor affecting demand is that the overall population is getting older thus increasing the demand health care services and especially those services provided by professional nurses. Still another factor is that even though the numbers of nurses increased during recent years a large number of nurses are retiring or will retire in the near future affecting the overall supply of nurses in a negative way. One other drawback to the supply of nurses is that other professions such as computer programmers and lawyers that require the same type of skills such as critical thinking and observation skills also are draining the resources needed to increase the supply of nurses. The cost of providing health care services continues to increase at a faster rate than inflation. The demand for nurses has steadily increased over the last several years. Nurse salaries have gone up considerably in recent years. Many facilities and institutions are more that willing to pay a staffing agency to provide the qualified nurses they need. The more rural the location the more money is spent on nursing staff. Current trends indicate an increased demand for nurses and the services they provide. Staffing agencies typically charge double the wages the nurses receive. For example if the nurse receives $50.00 and hour the facility is charge $100/hr for providing the nurse staffing. If the price or fees for services such as those of a nursing staffing agency are higher then facilities may look to other alternatives in staffing such as forming their own internal staffing agency or searching for other staffing agencies that are more competitive in pricing of services. If contracted fees are to low then the agency may have trouble finding qualified staff to fill positions for facilities they contract with to providing qualified staffing. Current trends indicate an increased demand for nurses and the services they provide.

Product Pricing Component

Service Chosen - The service chose was that of a Nurse Staffing Agency. There is a shortage of nurses, sometimes a critical shortage of nurses in almost every part of the country. Hospitals and other healthcare organizations are hard pressed at times to provide healthcare services because of the lack of qualified professional nurses. A nurse staffing agency provides a much needed service by helping hospitals and other healthcare organizations with their unique staffing needs. When nurse staffing needs are met then quality patient care can be provided and the hospitals or other healthcare organizations will generate more revenues.

Utility - In this case the utility is how many hours a facility or healthcare organization will require the nurse staffing agency to provide. The more hours the staffing agency provides the more satisfied the facility or organization is. As staffing issues ease the less demand or satisfaction the healthcare organization has from the nurse staffing agency providing nurses for the organization.

Substitute or Complementary Products - Hospitals and other healthcare organizations are always trying to find efficient cost effective ways to lessen nurse staffing shortages one such alternative is called an internal nurse staffing agency. Some facilities especially those that are large in size sometimes develop internal nurse agencies. Like agency nurses, the nurses part of an internal staffing agency tend to not have traditional benefits and are paid a higher wage than the full time staff. They do not work a set schedule instead; the nurses set their own schedules. Impact on pricing typically nurse staffing agencies charge a fee double that of the wages the agency nurse earns.

Nurse staffing agencies trying to compete with the facilities own internal staffing agency would be hard pressed to get any business. Another substitute to a nurse staffing agency is bringing back hospital sponsored nursing school. In the past many nurses got his or her training from nursing schools that were part of a working hospital. These nursing students would work in the hospital during and after completing nurses training for a set contracted period of time. In turn for the nursing training and coverage of tuition, books and other costs the facilities mostly hospitals would get the staffing they need. The impact on pricing would be that the nurse agency would again be heard pressed to deliver any nursing staff to the facility because the hospital would for the most part be able to meet the demand of their own staffing needs.

Hospitals are hiring nurses from other countries and moving to work in the United States to staff hospitals at a less expensive rate than that of a nurse staffing agency. Nurses from Mexico, Canada and the Philippines are working in ever increasing numbers. The impact on pricing would be that the nurse staffing agency would have to lower prices or leave that particular market all together.

Other options that are being developed include the use of aides specifically trained to perform certain nursing tasks such as administration of medications and application of different dressings or other treatments. This would help the healthcare facility meet staffing needs and give them the ability to direct the professional nursing staff to other areas where specific types of nursing care are needed. The impact on pricing would be such that the nursing agency would not need to provide as many nurses to the facility. The demand for agency nurses would still be there but not as great.

Price Elasticity of Demand - Pricing for this product is relatively price elastic. There are several reasons for this. First, there are other nurse staffing agencies, these staffing agencies can be either a locally operated entity or a national/international organization. Pricing is very competitive and therefore elastic. If pricing is too high then healthcare facilities will look at other options including other nurse staffing agencies. Second, some healthcare facilities would rather maintain lower staffing levels and decrease the number of patients they are able to treat than pay the added expense of staffing services through a nurse staffing agency. In order for nurse staffing agencies to remain an attractive option pricing will need to be