After five years of growing frustration with bedside nursing, Nancy Johnson, RN, was pleased when she landed a new job as an administrator of a nurse staffing company. But her eagerness quickly wilted when she became privy to the shadier side of the temporary nursing business. She saw companies tempt nurses with bonuses that seemed attainable-until the nurses read the fine print.

Johnson wanted to treat nurses as clients rather than pawns, so she was thrilled when a new agency recruited her to run its company, Emergency Response Staffing Inc.

"There are a lot of interesting business practices in the industry," she said. "I think it's unfortunate that a small percentage of companies that act unethically put all registries in a bad light."

Johnson's company launched about two years ago, just as the demand for traveler and registry nurses began to climb. More and more hospitals were scrambling to fill nursing shifts in the midst of a shortage. Money spent on temporary nurses has skyrocketed in states such as Washington, where wages for hospital contract nursing were more than $40 million in 1999-a 60 percent increase from 1991, said Troy Hutson, director of legal and clinical policy at the Washington State Hospital Association.

In California, a survey by the California Healthcare Association showed that facilities are spending an average of $9,340 per bed on temporary nurses this year.

Although the demand for agency nurses is higher than ever, many hospitals use these nurses begrudgingly. Travelers and per diem nurses allow hospitals to juggle fluctuating patient loads, but staff nurses sometimes resent the higher-paid agency employees.

Most hospital administrators harbor frustrating stories of registries that delivered poor-quality nurses, or canceled a nurse at the last minute when another hospital offered a better rate-a practice known as "blind booking."

Even if hospital administrators are quick to vent on the negative side of their love-hate relationship with contract nurse companies, most admit that these agencies are invaluable in filling empty RN shifts.

"We feel lucky enough to have someone come help us," said Kristin Flynn, RN, assistant patient care manager at University of California, San Francisco Medical Center. "Usually, there's such a need and people just appreciate the help."

Nurse executives also agree that temporary nurses can help hospitals avoid floating their own staff nurses because agencies often provide RNs for particular units.

"They give us the ability to fill in, and it's a real advantage to be able to supplement the staff," said Jean Palmer, MS, RN, vice president of patient care services at Foothill Presbyterian Hospital in Glendora, Calif. "And they can give you skills by sharing knowledge they've gained from working at other hospitals."

Despite the benefits to using agency nurses, hospital staffing employees such as Randall James face the grim financial reality of this alternative every day. James, who fills the shifts at Alta Bates Summit Medical Center in the San Francisco East Bay area, said the agencies charge his facility about $60 per hour for a travel nurse and $40 per hour for local registry nurses. About one-quarter of the staff at these hospitals is temporary, which is about 50 to 70 nurses a day, James said. The hospital expects to spend about $15 million on temporary RNs this year, said Maggie Gerk, vice president of patient care services.

For the nation's largest nurse agencies, these high rates translate to fat profit margins. Margins for the largest national agency firms are about 30 percent to 35 percent, said Hutson of the Washington State Hospital Association. By comparison, Washington's hospitals are supporting average margins of about 1 percent, the lowest they've ever been, Hutson said.

Although temporary nurses may be expensive, one local registry executive said that hospitals are partly to blame for the high rates that registries charge.

"Registry rates are going up because the client has become the competitor," said Mark Deal, operations manager at Stat Nursing Services in San Francisco. He said hospitals are constantly trying to recruit the nurses who work for his company.

As hospitals offer nurses higher salaries and bigger bonuses, registries are forced to increase their own nurse salaries to keep their employees. These higher salaries mean steeper rates charged to hospitals. In just the last year, Stat has increased its nurse salaries by 30 percent, Deal said.

But this competition for RNs also can play to the advantage of registries, hospital executives pointed out. James worked in the local registry business for two years before he crossed over to hospital staffing, and he saw agencies that would book more nurses than they had available.

The agents would wait to see which hospitals offered the best prices. They then called in a cancellation at the hospitals that offered the lower prices, James said. Practices like these were one reason James left the registry business.

"Some of the business practices made me uncomfortable," he said. Now, as a hospital administrator, the last-minute cancellations leave him with the unenviable job of calling his own staffers at the last minute to fill in.

Karen Fields Flaster, executive vice president and chief operating officer at the temporary nursing agency HRN Services Inc., also is frustrated with these questionable business practices.

"Hospitals have a legitimate complaint with a lot of agencies that provide per diem," she said. "Every time there's an increase in demand, you'll find those agencies who work below a standard."

But HRN, which has offices in Washington and California, specifically states in its contracts that the company will not participate in practices such as blind booking, Flaster said.

Even when hospitals successfully find a temporary nurse to fill a shift, they face yet another unknown: the quality of the nurse.

While most nurse executives said the majority of travelers and per diem RNs are competent, most have encountered agency nurses who weren't what they expected.

"You're always dealing with an unknown quantity and quality," said Jane Hirsch, MS, RN, director of nursing and patient care services at UCSF Medical Center. "We do an interview over the phone and a skills competency checklist, but it's different than seeing someone in person. Sometimes when they arrive, they aren't what they were billed to be."

James' experience in the registry field suggests that some companies lack proper screening methods. A nurse who received a bad review at one hospital would simply be moved to another, he said. When applicants didn't pass the screening test, they were allowed to take it again the same day, knowing which answers they had just missed.

But Johnson said practices like this are under more scrutiny than ever. Now, more hospitals perform audits of the agencies they use, she said.

Palmer of Foothill Presbyterian recently led a project to improve the screening process in local registries in Southern California.

Her team developed standardized evaluations for registry nurses. In the past, the registries relied on a nurse's self-assessment as the evaluation, Palmer said.

Now, a hospital employee fills out the evaluation, then the registry summarizes the evaluations from different hospitals. The quality of the registry nurses has improved since agencies started using the new evaluation system, Palmer said.

Even if the screening systems continue to improve, most nurse executives said the agency system isn't the ideal solution to the problem of vacant shifts.

Some facilities such as Harrison Memorial Hospital in Bremerton, Wash., are working desperately to avoid using temporary nurses at all. The facility just started to use travelers in the past year, but they represent less than 1 percent of the staff. Kathleen Sanford, RN, vice president of nursing administration, said that the hospital has been holding out as long as possible to avoid creating resentment among staff nurses.

"When hospitals use money on agencies, then they don't have money to spend on their own nurses," Sanford said. "It's a horrible morale issue. There's a fair amount of resentment when staff nurses are working next to people of questionable quality who often have less rigorous assignments because they don't know the system. And the agency nurses are earning more money."

Sanford said that her hospital has worked hard to direct money to staff nurses, and the facility recently gave raises to all staff nurses to keep its employees satisfied, she said.

Susan Scott, RN, is one of the few travelers who regularly works at Harrison, and she said she noticed some signs of resentment when she started nursing there. She earns $35 an hour, which is at least $7 per hour more than a staff nurse with her level of experience. But once the staffers had worked with her for a while, the tensions faded, she said.

Even though hospital administrators at Harrison have reservations about using too many temporary RNs, nurses such as Scott would like to see hospitals continue to rely on them. For her, travel nursing is far more attractive than staff nursing.

Scott was working in Montana and commuting a grueling 60 miles one way to get to work when she finally called it quits and switched to travel nursing. She was tired of the long commute and the low salary of $15 an hour. Now, she works for California Nurses Bureau, based in Vallejo, Calif.

She prefers putting in long hours for several weeks at a time and then returning home for a couple of weeks to spend time with her husband. With this schedule, she works about 90 hours a week for several weeks and sleeps in a room at the hospital. Harrison pays the agency between $50 and $60 per hour for Scott, said Cathy Druce, a nurse recruiter at Harrison.

Shannon Harred, RN, a nurse at Northwest Texas Healthcare System in Amarillo, was drawn to temporary nursing for a different reason. She was working as an LVN and needed a more flexible schedule when she decided to go back to school for her RN license. She became an RN about six months ago, but she's hooked on the high pay and flexible schedule of agency nursing and has no plans to return to a permanent staff position.

Nurses By Prescription Inc. pays her $24 per hour, which is several dollars per hour more than she would earn as a staff nurse. She also works weekends so she can be at home with her two sons during the week.

The only drawbacks are that she's often one of the first to be sent home early when the patient census drops. Harred said she also has noticed that sometimes she's assigned to the more difficult patients.

"But the flexibility and money tend to compensate for it," she said. She also doesn't miss the employee tensions that plagued her permanent LVN job. "Now, I go in and do the work and don't have to worry about office politics," she said.

Johnson agreed with Scott and Harred about the benefits of temporary nursing. From her standpoint, the booming traveler and registry industry is a boon for RNs. "Nurses have options now," Johnson said.

"One of those options is working in registry. They need to think of their careers more as businesses, as doctors have. No one criticizes physicians for making a significant profit in their medical practices. No one should fault nurses for making good business decisions as well."