How to go about becoming an independent contract nurse

NedRN · Dec 28, 2016

I did this back in 2003 and wrote a blog on how to do it. There have been no fundamental business changes since then, however my info is still somewhat dated about such things as faxes and internet access. Changes in the travel industry, primarily a large move to vendor managers, don't change anything about starting up. I consulted no outside parties, no lawyers, no business mentors. I did purchase some books from Nolo about some aspects of business that were murky and controversial online, specifically working as a independent contractor and using independent contractors. I hung out in Borders and skimmed business startup books, specifically about entity types, and read heavily in publications downloaded from IRS.

That was it! Per my usual practice, I perhaps overstudied for startup. The reason why you see so many new agencies every year is that this industry has "low barriers to entry", meaning it is dead easy and cheap to start an agency. It is best to have some travel experience (although I know of at least one travel nurse who has never been an agency employee), and be curious. Certainly I had the idea of cutting out the middleman from my first assignment, but assumed it was impossible. My epiphany came from a chat with a hospital HR person where I was on assignment who told me they would take on a new vendor to get just one needed traveler. My previous assumption was a hospital would only contract with an agency who could provide lots of travelers. Turns out that kind of information is proprietary (try asking any agency how many active travelers they have). So it is all about presentation. Present yourself as an ordinary agency like any other with a traveler profile that is already wanted by a hospital manager and you are in business.

You are a long way from having PM privileges on AllNurses to send you a link, but if you want to read my startup account, searching for my screen name and "independent nurses FAQ" should locate it. There is an Entrepreneurs in Nursing forum on AllNurses that will be a better place for further discussion with like-minded entrepreneurs.

Jeremy419 · Dec 28, 2016

Thank you very much, NedRN. I currently only have about 6 months as an agency travel nurse so my current plan is to work this upcoming 2017 year as an agency nurse in it's entirety as I continue to gather all of my research about going IC. I would certainly love to further discuss some startup details with you (i.e. Cost, contract formats, etc.) that we as agency travelers typically do not have the ability to see between the agencies and hospitals. My permanent residence is in Ohio but I primarily travel in the Carolinas and also want to wonder if there are other necessary steps needed if I am traveling out of state like that as an IC. Is there a way I could directly contact you, if you're comfortable with that?

NedRN · Dec 28, 2016

If you find the blog, you can email me from there as an option in replying to any post. Other than that, there are no direct contact methods I can suggest other than collecting 15 posted comments here. Then you can PM other such qualified members including me. Just as an experiment, I'm going to PM you now as you may have the ability to read PMs now, just not send them.

I'm based on Ohio too. Contracts seem to be the largest stressor of everyone in your position. However, they are perhaps the least important part of a startup and easy to write. As a matter of fact, I haven't had to use my own contract for several years. All the contracts I have done recently have been either vendor manager written, or hospital written. I started out with collecting a couple of contract copies from friendly HR folks. They vary from usually 5 to 30 pages long but most of that is unnecessary. My own contract is only two pages of clear language. The blog goes over the essential elements, as well as the traveler profile that is the most important part of your business.

Costs? minimal. You should have a domain name for email using your business name, and you might as well put up a static page (vendor managers usually ask for my site address). That is about $100 a year for both. Professional and general liability is around $750 from NSO/HPSO ($200 in 2004). A workers comp certificate from Ohio runs $120 a year ($20 a year when I started). I have an 800 number (to look business like) and an internet based fax service (faxes are still needed at times) at around another $250 a year. If you want an LLC or corp, filing costs are around $100 one time expense. No business license required (those are only for collecting sales tax).

Low barrier to entry indeed! $1,100 a year to increase pay at least 33%. I get that number from the industry average gross profit margin of 25%, and going from the perspective of the 75% balance increasing by one third. In reality the difference is higher but difficult to compare. It is not dissimilar to going from an Ohio staff nurse to a traveler. I refer to both transitions as "no comparison". As a new traveler, I saved over 80% of my pay after housing, and virtually nothing as a staff nurse in the South. It was just as dramatic becoming independent.

It might seem like everyone would be wanting to cut out the middleman. But there are risks and stepping out of an employee comfort zone is too much for most. And employers do add real value.

I can't tell you how many independents are out there traveling solo. My guess would be 20 to 50 out of around 30,000 nurse travelers. Some of those might be 1099 employees of regular agencies which doesn't really count. Obviously, the system would be unworkable if there were 30,000 agencies, or if all 3 million nurses became independent. But for just a few, it is simply below the radar screen.

Jeremy419 · Dec 28, 2016

Thanks, again, for all of the info. I have found your FAQ and previous posting. The last three questions I have at this time, with undoubtedly many more to come as I do more research, which entity would you recommend for a start up; do I need to do anything additional as in insurance or otherwise by getting contract work out of state as my 'company' would be Ohio based; and what avenues do you use to find travel positions? I know there is some computer program my recruiter says they use but I am unsure if that is something I should purchase or if there is another, more effective way, of finding out where travel positions are.

NedRN · Dec 28, 2016

Sole proprietor is the easiest and zero cost. Other than that, it is simply a preference, perhaps informed by research on which one will benefit your particular situation the best. Most small businesses choose the LLC form versus corp these days (usually pass through but you can elect regular taxation). I chose the very rare regular corp, more in the blog about that.

General and professional insurance is all you need. 1/3 is traditional, however I have seen as much as 4/8 recently. There may not be a cost difference.

There are no computer programs to find jobs. Your recruiter is probably referring to looking up vendor manager's open orders, or perhaps an intra-agency database in the case of an agency like American Mobile that owns many brands with a shared database (not available to other agencies). You will find assignments just as you do now, legwork. It is unlikely you will be able to sign up with a vendor manager until you have some business references.

Jeremy419 · Dec 29, 2016

Thank you very much, NedRN. The information you've given here combined with what I have seen on your blogs and other places has helped tremendously. However, there are a couple bits of information that I have not seen discussed pertaining to hospital billing.

My first question being, what all does that bill rate cover? To clarify what I'm asking, upon contractual signing by myself, "the agency," and the hospital I have read in numerous places that it takes roughly 4-6 weeks to collect payment from hospitals. I am unsure, though, what all that covers and truly how it works. Do they send one lumpsome payment that is supposed to cover all that was agreed upon per contract? For example, say the contract 'X' was a 13 week contract, $20/hr, $5/hr beeper pay, $50/hr call back pay with min. two hours was agreed to be $40,000. Do they send that $40,000 to my "agency" after that 6 weeks and my company is responsible for paying out the housing and incidentals, hourly wage, pager pay (due to being a cath lab nurse and often being on call), OT and call back pay with that and keeping the remainder, say $10k, for the agency? Or after six weeks of sending hours worked invoices does the hospital pay a certain price for contract 'X' as agreed upon per contract, PLUS start paying out the hourly wage and call pay owed to my traveler? If that is the case, the question then leads me to ask if they solely pay the price, $20/hr, for non-OT/call hourly work as agreed upon per contract or do they pay an inflated price for the agency to keep a portion of and is that hourly pay solely agreed upon per agency and traveler without the hospital knowing what that contractually agreed upon pay is between them?

I hope that was slightly more clear than mud. If not, I'd love to try to further clarify what I am questioning.

NedRN · Dec 29, 2016

All inclusive hourly bill rate. Generally there is an overtime bill rate as well, traditionally time and a half of the base rate (those are great contracts for us), or plus $10 or 1.1, 1.2 etc (up to 2.0 for CA double-time). How the agency (you) pays the traveler (probably you) is up to you (and the law if you have W-4 employees versus 1099).

The only wrinkles in all inclusive are strikes that are cost plus (you will never contract to do one directly), and the increasingly rare cases where the hospital is the direct employer paying the agency a fee. I did one of the latter as a regular traveler and vowed to never do it again. The opportunity has not even arisen since.

I have always billed weekly (almost always delivered by email), and standard business practices are net 30. Your contract should reflect interest on late payments. The rate used to be 1.5% per month, but I've seen 1% more recently with the extended downturn in the cost of money. I've never charged it, and most every client I've had has averaged 30 days overall on the money so I don't bother with a week late. Dealing with a vendor manager, or a government owned facility, it can be more like 6 weeks plus. All the way to over 6 months to a year reported for USVI. Running a business, you have to be much more careful than an employee in picking what jobs you do. I've turned down jobs that I really wanted because the hospital was in bankruptcy. I'd never take a contract at a VA for example.

Jeremy419 · Dec 29, 2016

Perfect, that makes more sense. Thank you so much, NedRN!

NedRN · Dec 29, 2016

You have probably noticed I tend to err on the side of overly comprehensive replies. On that note, and in part because you are a new traveler, I should note another exception to the all inclusive bill rate: pass through completion bonuses (intended to be "passed through" by the agency from the hospital). Lately I've been seeing a number of $5,000 offers similar the the golden age of travel (pre-2009).

Such bonuses are rife with risks for regular travelers and independents as well. At the very least, one should try to negotiate such bonuses to monthly versus quarterly. That reduces your risk of not collecting due to non completion of the contract for any reason.

Jeremy419 · Dec 30, 2016

That makes a lot of sense. The information has been a great help and after talking to a CPA I feel I should be at a comfortable point to become an IC by late summer of this year. I will definitely keep you updated and contribute with any information and questions that arise.

whitneyct · Nov 5, 2022

Hi there NedRN and Jeremy!

My name is Whitney and I am interested in becoming an IC Nurse. Would love to find the post that NedRN wrote in 2003. Is there a way to het the link to this information? I have already learned so much from reading this theard and I am so thankful for you taking the time to educate the community on becoming an IC Nurse.