A staffing agency charges a facility a bill rate for your time and pays you a lower pay rate. The spread between the two is the agency's revenue, and it funds their recruiting, credentialing support, and profit.
Agencies are neither villains nor charities. They are middlemen who get paid for solving a matching problem. Understanding their economics tells you when to use them and when to go around them.
Key points
- The agency keeps the spread between bill rate and your pay rate.
- There is usually room above the first rate offered.
- Agency 1099 status must survive IRS control tests.
- Direct contracts win once the facility relationship exists.
Bill rate vs pay rate
The facility never pays you. It pays the agency an hourly bill rate under a staffing agreement. The agency then pays you the pay rate you negotiated, keeping the difference.
Out of that spread the agency covers its recruiters, credentialing staff, malpractice coverage if provided, any travel and housing stipends, employer payroll taxes on W2 placements, and margin. Agencies rarely disclose the bill rate, and the spread varies by agency, specialty, and desperation of the facility. We will not quote typical percentages because no reliable public source exists; assume the spread is meaningful and negotiate accordingly.
Two practical consequences. First, there is usually room above the first rate an agency offers you, especially for hard-to-fill assignments. Second, the facility's cost for you is much higher than your rate, which matters later if you want a direct deal.
W2 vs 1099 through an agency
Agencies place CRNAs under two tax structures.
Agency W2. The agency is your employer. It withholds taxes, pays the employer half of Social Security and Medicare, and may offer benefits. Hourly rates run lower than 1099 because the agency absorbs employer taxes.
Agency 1099. You contract as an independent business. Nothing is withheld, you pay self-employment tax and quarterly estimates, and you buy your own benefits. Rates run higher. Worker classification is a legal test based on control and independence, so an agency controlling your schedule and methods while paying 1099 can raise IRS classification questions.
Model both versions of an offer before choosing; the /crna-1099-vs-w2-calculator/ does the math, and /1099-crna/ covers running yourself as a business. For how these structures compare to regular employment, see /how-crnas-get-paid/.
Questions to ask an agency
- Is this placement W2 or 1099, and what is the rate for each?
- Who provides malpractice coverage, at what limits, and is it occurrence or claims-made? If claims-made, who pays the tail? See /crna-malpractice-insurance/.
- What exactly is reimbursed: travel, housing, licensing fees, credentialing costs?
- What are the guaranteed hours, and what happens when the facility cancels shifts?
- What is the overtime and call-back structure?
- What does your contract say about converting to a direct hire, and is there a buyout fee?
- How long does your non-solicitation of facilities bind me after the assignment?
Get every answer in the written contract, because the recruiter's phone promises are not terms. Rate expectations vary by market; calibrate with /crna-salary-by-state/ and /locum-crna/.
When direct contracts beat agencies
Agencies earn their spread when they deliver things you cannot easily get yourself: access to facilities you do not know, fast credentialing, housing logistics, and a pipeline of assignments. For a CRNA trying locums for the first time, or covering short stints across several states, that service is often worth it.
Direct contracts win when the relationship already exists. If a facility knows you, going direct lets the two of you split the agency's spread: the facility pays less than the bill rate, you earn more than the pay rate. Direct also wins for long, stable arrangements where the agency adds no ongoing value.
Watch the contract before you try it. Most agency agreements bar facilities from hiring you directly for a period, or charge a conversion fee, so going direct usually means waiting out the clause or having the facility pay the fee. Negotiating your own facility agreement takes more work; /crna-contract-negotiation/ covers the terms, and /how-to-start-a-crna-group/ covers the bigger step of holding contracts as an entity. Facilities post direct roles too; see /best-crna-jobs/.
How much do agencies take?
The spread between the bill and pay rate varies widely and is rarely disclosed. There is no reliable public benchmark, so negotiate your pay rate on market comparisons rather than guessing the agency's margin.
Is agency 1099 work really independent contracting?
Only if the working relationship meets IRS classification tests on behavioral and financial control. If you are weighing it, the IRS guidance explains the factors, and a CPA can read your specific contract.
Can a hospital hire me after an agency assignment?
Usually yes, after the agency agreement's non-solicitation period, or sooner if the facility pays a conversion fee. The exact terms are in the agency contracts, so read yours before planning on it.
This page is general information, not legal, tax, or financial advice. Have contracts reviewed by a professional before signing.