How to start a nursing staffing agency (RN, LPN and CNA)

What kind of nursing agency should you start?

“Nursing agency” covers several different businesses. The model you pick sets your clients, capital needs and regulatory path.

Facility staffing (placing your employees into someone else's building) and home care (delivering care in the patient's home) are regulated differently in most states. Decide which one you are before you register anything. Most new nursing agencies start with per diem RN, LPN and CNA shifts in one metro, where local relationships matter more than scale.

Nurse staffing agency requirements: entity and state licensing

The business setup is the same as any employer:

• Form the entity (often an LLC or corporation; ask your accountant which fits) and get an EIN.
• Register for state withholding and unemployment insurance in every state where you'll employ nurses.
• Set up W-2 payroll. Facility nursing staffing is generally a W-2 business; classifying nurses as 1099 contractors carries real misclassification risk.

The nursing-specific step is state nurse agency licensing or registration. A number of states regulate agencies that supply nurses or nursing assistants to facilities. Examples include:

• Illinois: licensing under the Nurse Agency Licensing Act.
• Minnesota: registration as a supplemental nursing services agency.
• Massachusetts: a temporary nursing service agency license.
• Connecticut: registration of temporary nursing service agencies.
• New Jersey: registration as a health care service firm.

Rules can include application fees, proof of insurance, a designated nurse or manager, record-keeping, periodic reporting and, in some states, limits on contract terms or disclosure of rates. Requirements vary and change, and the responsible agency differs by state. Check with your state health department, nursing board or other regulator in every state you plan to operate in before you place anyone.

Insurance and credentialing for a nursing agency

Facility contracts and MSP programs set insurance minimums. A broker who writes staffing firms can tell you what's typical in your market. Expect to need:

• General liability
• Professional liability covering the nurses you place
• Workers' compensation, required for employees and a major cost line for patient-handling roles
• Employment practices liability (EPLI)
• Crime or fidelity bond, which some clients and states ask for

Credentialing is what facilities are really buying: the assurance that every nurse who arrives is who they say they are and is qualified for the unit. A nursing credential file usually includes:

• License verification for RNs and LPNs through Nursys and the state board; for CNAs, the state nurse aide registry.
• Certifications such as BLS, ACLS or PALS as the unit requires.
• Background checks and an OIG exclusion check against the federal List of Excluded Individuals/Entities, plus any state exclusion lists clients require.
• Health screenings: immunizations, TB testing, drug screens and fit testing where required.
• Competency checks: skills checklists, specialty tests and references.

Track expiration dates from day one. An expired license or TB test discovered by the facility costs you the shift and the client's trust.

Joint Commission certification: is it required, and what does it cost?

The Joint Commission's Health Care Staffing Services (HCSS) certification is voluntary under federal law, but many hospitals and MSP programs require or strongly prefer it from their suppliers. If you want to sell into large health systems, plan for it.

Certification fees depend on the size and scope of the organization, so request a quote from The Joint Commission rather than relying on a figure you find online. The larger cost for a small agency is usually internal: written policies, file audits, competency processes and performance data that can stand up to a survey. Building those from the start is cheaper than retrofitting them later.

Funding a nursing staffing agency: payroll cash flow

You pay nurses weekly. Facilities and MSPs commonly pay on net-30 to net-60 terms, sometimes slower once timecard approval and invoicing are added. Every new shift widens that gap, so growth consumes cash.

Illustrative: 20 CNAs working 36 hours a week at $22.00 an hour is $15,840 of weekly wages. With an illustrative 15% for payroll taxes and workers' comp, loaded payroll is $18,216 a week. If cash arrives 8 weeks after the first payday, you need about $18,216 × 8 = $145,728 funded before the first invoice is paid, and more as you add staff.

Illustrative. Pay rate, burden and collection timing are example assumptions, not market data.

Common sources of funding for healthcare staffing agencies:

• Invoice factoring: a factor advances most of an invoice's value and collects from the client, for a fee.
• Asset-based lending (ABL) lines: a revolving line secured by receivables, usually cheaper than factoring once you have history.
• Payroll funding companies: fund payroll against your invoices, sometimes bundled with back-office services.
• Owner capital and term loans, including SBA-backed loans through participating lenders, for startup costs.

Compare the true annual cost of each, including fees, reserves and minimums, with your accountant.

How to price nurse and CNA shifts

Per diem and local contract nursing is often priced as a markup on pay. The markup has to cover payroll taxes, workers' comp, insurance, credentialing, any MSP fee and your margin.

Illustrative. Pay rates, markup and burden are example assumptions to show the arithmetic, not market rates. Burden varies by state, workers' comp class and benefits.

The margin percentage is the same, but the CNA shift earns less than half the gross profit per hour. That is the core of CNA staffing: lower bill rates, higher volume, and demand concentrated in skilled nursing and long-term care. It works when recruiting is efficient and the bench is deep enough to fill many shifts a week. Fixed costs per placement, such as credentialing, weigh more heavily on lower-rate roles.

Run your own numbers with the staffing markup calculator and the bill rate calculator, build burden properly using the labor burden rate guide, and keep markup and margin straight with markup vs margin in staffing.

How to get your first nursing staffing contracts

• Direct facility contracts. Nursing homes, assisted living, smaller hospitals and surgery centers in your metro. Slower to sell, but you negotiate rates and terms yourself. Bring proof of licensing, insurance and a sample credential file.
• MSP/VMS supplier onboarding. Larger systems route orders through a managed service provider. Expect supplier applications, insurance minimums, often a certification requirement, and an MSP fee taken from your bill rate. Read what an MSP is in healthcare before you apply.
• Subcontracting. Supplying a larger agency that holds the contract can give early volume at a lower margin while you build history.

Whichever route, quote from the market, not from habit. Per diem nurses compare shift rates across agencies and apps, so your pay rate has to be competitive for the role and metro, and your bill rate has to hold up against what the facility pays others. The differences between per diem and PRN arrangements are covered in PRN vs per diem. ClinicalRate for staffing agencies shows live pay and bill rates by role, state and metro for exactly that check.

Nursing agency startup checklist and how agencies are valued

Valuation basics. If you plan to sell or raise capital one day, build toward what buyers pay for. Established staffing agencies are commonly valued on a multiple of EBITDA (earnings before interest, taxes, depreciation and amortization), while very small owner-run firms are often valued on seller's discretionary earnings. The multiple moves with:

• Gross margin and its consistency over time.
• Client concentration: one facility providing most of your revenue lowers value.
• Specialty mix: some specialties and models are seen as more durable than others.
• Growth and how dependent it is on the owner personally.
• Clean compliance and contracts that transfer to a buyer.

Market multiples shift with conditions and deal size. For a current view, talk to an M&A advisor or business valuation professional who works with staffing firms.

Frequently asked questions