5 Common Mistakes Healthcare Workers Make When Choosing Contracts

Monica Pineider
4 hours ago
5 min read

There are a number of common errors that healthcare workers can make when selecting contracts.There are a few common pitfalls that health care workers can fall into when picking a contract.

On the surface, healthcare staffing contracts might appear to be simple. In reality, however, other factors in the compensation system, coverage terms, and language in the scheduling can make a huge difference in your earnings, workload, and legal coverage.

Contracting models differ greatly among healthcare agencies and facilities, and are particularly different in the travel, per diem and allied health short-term contracting markets.

While two papers that seem identical might appear similar on the surface, they could be quite different when it comes to stipulations, cancelation periods, insurance coverage and eligibility requirements.

The guide outlines the five most common contract review errors that healthcare professionals make in staffing contracts, following observed trends in healthcare staffing contracts.

two people shaking hands over a contract

1. Overlooking Total Compensation Beyond Base Pay

The biggest common mistake in contracting is to only consider the hourly rate.

Many workers see a strong hourly rate and stop reading. Platforms like PRN Healthcare place clinicians in travel, local, and per diem roles, and one pattern stands out: professionals who routinely compare base pay leave money on the table.

Total compensation in healthcare staffing, particularly in the case of travel and contract positions, can sometimes be broken down into various components:

Base hourly rate
Housing stipends
Meals and incidentals
Travel reimbursements
Completion or extension bonuses

These can differ greatly from agency to agency and assignment to assignment.

For instance, a contract that pays $42 per hour and no stipends could lead to less total pay per week than a contract that pays $36 per hour and provides a significant $0 taxable housing allowance. This is particularly relevant for travel clinicians since stipends comprise a considerable share of income.

In reality, most professionals consider weekly net income, rather than hourly rate when assessing offers.

Stipends should always be itemized and not be taxable. If they are confusing or vague, make sure you ask for a breakdown in writing before accepting an assignment. When the compensation structure of a job is not transparent, it's a red flag.

2. Not considering the conditions of termination and contract length

The duration of the contract has a significant impact on the financial stability of the clinic and the quality of life for both staff and clients.

The majority of healthcare staffing contracts are set up in blocks, typically 8, 13 or 26 weeks, but this can vary significantly based on the facility requirement and agency policy.

Some factors that are frequently forgotten are:

Early termination clauses
Guaranteed hours provisions
Extension eligibility
Notice periods for cancellation

There are facilities that can cancel a contract without giving a lot of notice, such as two weeks. Most importantly, this type of clauses may not contain any financial penalties for the facility, thus causing income instability for the clinician.

Guaranteed hours clauses have particular significance in the travel/contract sector from an industry viewpoint. They generate income during the low population years when they are available. If not then pay can be variable due to staffing requirements.

Before signing, confirm:

If hours are guaranteed, then what are they guaranteed for?
When the assignment may be terminated in advance
Extensions will be either pre-approved or renegotiated, depending on the situation.

Always the terms should be specifically listed in the contract or offer letter.

3. Malpractice Insurance Structure in Healthcare Contracts

Malpractice insurance is frequently included as a benefit and the type of coverage actually determines coverage.

There are two main types of malpractice coverage in healthcare staffing:

Occurrence-based coverage

Covers incidents that occur during the policy period, whether or not a claim is made during or after the policy period.

Claims-made coverage

Only valid during the policy's term; may not be in effect after the policy term if not extended with coverage which is available.

This is a very important distinction. Many staffing agencies offer claims-made coverage for the assignment period, but this is not always combined into a staffing agency's tail coverage.

If they do not have tail coverage, then clinicians could be liable for incidents that happened on their assignment but were reported at a later time.

Best practice in the process of contract review is to confirm:

Type of malpractice policy provided
Coverage limits

The agency or clinician must have the policy, or a copy of it, if one exists.
Whether tail coverage is included or available

Any cost that needs to be borne by the claimant for which they are not covered by insurance.

This is a one of the biggest misconceptions made by new travelers and contract clinicians in clinical risk management. It's very important to read the policy itself and not just the summary.

4. Not negotiating on schedule and on call expectations

Work schedules are typically included in healthcare contract offers as set, but in many instances they can be negotiated—especially for roles such as an emergency nurse, where shift intensity and staffing demands can vary significantly between facilities.

A default schedule is often provided at healthcare facilities, but isn't always fixed in:

Shift assignments
Floating requirements
Weekend rotations
On-call frequency

On call is essential - it has a direct impact on rest cycles, personal time and clinical performance.

Too general a statement like “on call as needed” can lead to fluctuating expectations of workload. If not well-specified, this language may work to the detriment of the facility in practice.

Experienced clinicians usually request:

A maximum number of on call shifts per week/month
Determined resting periods between shifts
State clearly what is expected of Float Assignments.

These terms are typical in the healthcare staffing industry and shouldn't be seen as unprofessional. Actively staffing shortages can offer flexibility to adjust scheduling to obtain qualified clinicians.

Schedule clarity is a key contract requirement, not a nice-to-have.

5. Noting Benefits, Eligibility Rules and Loan Forgiveness Criteria

Healthcare staffing contracts can have widely differing benefits, and payment can be delayed or prorated based on the length of the assignment.

Typical areas that need attention:

When to buy health insurance plans
Taxation rate (e.g., tax rates for retirement plans)
Pastoral Support Services (PSS) and/or Respite Care (RC) eligibility for staff and volunteers
Any paid time off accrual rules for the employee (if applicable)

Benefits in short-term contracts might not kick in right away, and in some instances, benefits may not be offered until some weeks into the assignment.

This is especially relevant for those with ongoing health care, or chronic healthcare needs.

Student loan forgiveness considerations

PSLF does not require a particular job title or clinical role; eligibility requires that the clinician be an employer and is based on the structure of the clinician's payments.

Even within a staffing network, some healthcare facilities are eligible for healthcare staffing, and others are not. Before taking the assignment, not at the time of engagement in work.

Under the financial planning side of the equation, establishing the time limits for PSLF eligibility and for benefit activation is crucial when evaluating a contract.

Conclusion

There are a number of common pitfalls with which healthcare professionals engage when selecting contracts, but the fundamental one is not reading the contracts in detail before

signing.

This can have a major effect on the financial security, work load objectives, and long term

benefits for healthcare staff, particularly those in short term and travel contracts.

When considering any offer, do the following things:

Compensation scheme, not only the hourly pay rate
Contract length and termination provisions
Gap in malpractice coverage and type of malpractice insurance.
Set up a schedule and expectations when things are on call.
Explains benefits eligibility and implications for financial aid

With a careful review, a good contract is more than just an offer, it is a comprehensive agreement that safeguards clinical performance and financial stability.

Passing a few extra minutes reading the details can save you months of unnecessary stress later.