In today’s litigious environment, healthcare staffing agencies, now more than ever before, need to do their due diligence with clients before they contract for services.  Hospitals, ambulatory surgery centers, nursing facilities, home healthcare companies, correctional settings ….  Many, if not all, of the standard healthcare staffing firm’s clients are under pressure to decrease costs while controlling risk.

Some of these potential clients have a very high self-insured retention (SIR).  Others require the staffing firm to carry higher limits on their own professional liability policies.  In many cases, they will attempt non-insurance risk transfer by contractually transferring risk to service partners by way of Indemnification and/or Hold Harmless Agreements.   The result is that the healthcare staffing agency bears more of the risk, and perhaps finds itself entering into less favorable risk arrangements in order to land accounts their sales force perceives to be lucrative.

Though there are no known studies addressing this issue directly, the Nurse Service Organization’s  partnered insurance carrier, C.N.A., recently completed a claims study analyzing claims against nurses between 1997 and 2007. The study focused on individual nurse policies, but it’s well understood that the individual nurse is not the deep pockets and so he/she is one of multiple defendants, which may include the employer, other providers, and the medical care setting.  When the nurse’s employer is a staffing agency, the co-defendants would include the agency, the client setting, and perhaps other providers.

In summary, this study found that 20% of all nurse claims involved agency nurses.  Most frequently these claims occurred in the patient’s home, hospital, prison, an aging or residential care facility, or in the emergency department.   Again, this study focused on claims against individual nurse policies.  However, nurses are almost always co-defendants in suits that involve the agency and the setting where the care was provided.  Intuitively speaking, if the average facility uses 10% agency staff or less, and 20% of claims are against agency nurses, what does that say about the distribution of claims?  Are staffing agencies prepared to take on 20% of their clients’ claims?

A healthcare staffing agency’s liability is often complicated by unique operational dynamics.  Contracts may transfer risk or responsibility to the agency even though the staffing company ultimately lacks control over the day to day operations of the setting, including the setting’s standards, policies, other contractors, coordination of services, records, quality of the other workers, or compliance.  Add to that the likelihood that the nature of the relationship with the contracted client setting can often deter or undermine the staffing agency’s ability to report or address areas of concern.  These same factors also affect the staffing agency’s timely notification or awareness of an adverse event involving an agency employee, their ability to investigate, and ultimately defend itself.  Often, this leads to poorly coordinated defense when there are multiple defendants, with a tendency toward finger pointing.

The best risk management for staffing agencies includes (1) a “seller beware” approach to client selection and due diligence, (2) excellent staff credentialing, (3) careful review of contracts, and (4) management of the ongoing relationship.

First:  Due Diligence

To the extent possible, check the ratings:  Home Health , Hospitals , Skilled Nursing Facilities , and  Assisted Living

Is the setting accredited by the Community Health Accreditation Program , Joint Commission, National Council for Correctional Healthcare ?  If it’s not accredited, does it follow the standards set by an established accrediting agency?

Is there a way to check the setting’s claims history, recent litigation, or changes to licensing or accreditation status?  Discuss any trends with the client and strategies for ongoing and future management of significant issues.

Stay tuned for more on:


Contract Review

Relationship Management