Bill rate vs pay rate: how healthcare staffing rates are built
Every staffed shift has two prices. The bill rate is what the hospital or facility pays the staffing agency per hour. The pay rate is what the agency pays the clinician per hour. The difference, the spread, has to cover a lot more than profit.
This guide breaks down what lives in that spread, how bill rates actually get set in healthcare, and why market data is now part of how agencies and facilities price.
Definitions
- Pay rate
- The clinician's hourly wage. In travel contracts this usually means only the taxable hourly base, with stipends paid separately.
- Bill rate
- The hourly price the client pays the agency. It is often set by specialty, shift and region on an MSP rate card, or negotiated directly.
- Spread
- Bill rate minus pay rate, before any other costs.
- Burden
- Employer costs on top of wages: payroll taxes, workers' compensation, unemployment insurance and benefits.
- Gross margin
- What's left of the bill rate after pay, burden, stipends and direct costs. This is what pays recruiters, overhead and profit.
What sits between the bill rate and the pay rate
Here is an illustrative 13-week travel ICU RN contract at 36 hours a week. The numbers show the structure, not current market rates.
| Line item | $/hr | What it is |
|---|---|---|
| Bill rate | $120.00 | Paid by the facility |
| MSP / VMS fee (3%) | −$3.60 | Program fee, often deducted from the bill rate |
| Net bill rate | $116.40 | Revenue the agency keeps |
| Taxable base pay | $32.00 | The “pay rate” |
| Burden on base (≈15%) | $4.80 | FICA, FUTA/SUTA, workers' comp |
| Housing + M&IE stipends | $48.61 | $1,750/week ÷ 36 hours |
| Other direct costs | $6.00 | Travel reimbursement, liability insurance, credentialing, benefits |
| Total cost | $91.41 | |
| Gross profit | $24.99 | 21.5% of net bill rate |
Note what the “spread” hides. Bill minus pay is $88/hr, but about $63 of it goes to stipends, burden, the program fee and direct costs. Comparing a travel bill rate to its taxable pay rate tells you very little on its own.
How bill rates actually get set
In healthcare, bill rates usually come from one of three places:
- MSP or VMS rate cards. A health system's managed service program publishes rates by specialty, shift and sometimes region. Agencies accept the card or pass. See MSP vs VMS.
- Direct contracts. The agency negotiates with the facility, often with a rate schedule plus exceptions for hard-to-fill roles.
- Premium or crisis rates. Short-notice or high-acuity needs where the facility pays above its standard card to get coverage.
In all three cases, agencies increasingly work backwards. They start from the bill rate the market will bear, subtract fees and burden, and see what pay package is left to recruit with. That's the opposite of cost-plus pricing, and it's why current market data matters.
How to calculate a bill rate
There are two common formulas. Use the second if you manage to a margin target.
Example: a loaded cost of $59/hr and a 20% target gross margin gives $59 ÷ 0.80 = $73.75/hr. If the program takes a 3% fee from the bill rate, divide again by 0.97 to protect the margin: about $76.03/hr. If this switching between markup and margin is new, start with markup vs margin in staffing.
To run your own numbers, including burden, travel stipends and MSP fees, use the staffing bill rate calculator.
What drives staffing agency markup rates
- Segment. Local per diem, travel, allied, locum tenens and home care each carry different cost structures and risk.
- Specialty and acuity. ICU, OR and L&D clinicians are harder to source, so they carry more pricing power and higher recruiting cost.
- Shift and notice. Nights, weekends and short-notice fills command premiums.
- Contract length. Longer contracts spread credentialing and onboarding costs over more hours.
- Geography. State payroll costs, workers' comp rates and local wage levels all move the floor.
- Program fees. Who pays the MSP or VMS fee changes the effective markup.
- Competition on the requisition. Ten agencies submitting to one rate card leaves less room than an exclusive direct contract.
How much do staffing agencies actually make?
Less than the spread suggests. Gross margin is not profit. Recruiter and account manager commissions, sales, credentialing and compliance staff, technology, insurance, and the cost of carrying payroll while waiting 30 to 60+ days for client payment all come out of it. Net margins are a fraction of the gross spread. That's why a point or two of mispricing on a large contract decides whether it was worth taking.
Using market data on both sides of the rate
Agencies need to know whether a requisition's bill rate is under-market before they spend recruiter time on it. Facilities and MSPs need to know whether their rate card has drifted below the market, which shows up as unfilled shifts. Both are questions about where a rate sits in the current distribution for that role and metro.
ClinicalRate tracks pay and bill rates across 400+ clinical roles daily, with p10–p90 percentiles by state and metro. Alert Stream flags when a market moves. Public benchmarks for common roles are on our salary pages, such as ER nurse pay rates and telemetry nurse pay rates.
Frequently asked questions
What is the difference between bill rate and pay rate?
The bill rate is the hourly price a facility pays the staffing agency. The pay rate is the hourly wage the agency pays the clinician. The difference covers employer burden, stipends, program fees, other direct costs, and the agency’s gross margin.
How do you calculate a bill rate?
Either multiply the pay rate by (1 + markup), or divide the fully loaded cost by (1 − target margin). If an MSP or VMS fee is deducted from the bill rate, divide again by (1 − fee) to protect the margin.
What is a spread in staffing?
The spread is the bill rate minus the pay rate. It is not profit, because burden, stipends, insurance, program fees and other costs all come out of it.
Who sets bill rates in an MSP program?
Usually the health system and its managed service provider set them through a rate card by specialty, shift and region. Agencies decide whether to submit candidates at those rates, sometimes with negotiated exceptions for hard-to-fill roles.