The Surprising Risks to Healthcare Facilities That Utilize 1099 Independent Contractors

Jul 25, 2023

Healthcare facilities sometimes rely on staffing agencies to provide qualified professionals to meet patient needs. The choice of employment model utilized by these agencies can significantly impact patient safety, quality of care, and legal liabilities for healthcare facilities. In this blog post, we will explore the surprising risks that healthcare facilities may unknowingly face when utilizing 1099 independent contractors through marketplace apps. By highlighting these risks, we will emphasize the importance of considering alternative employment models, such as leveraging W2 employees via healthcare staffing agencies, to mitigate potential pitfalls and safeguard the interests of both the facilities and the patients they serve.

The Dangers of Healthcare Facilities Using 1099 Independent Contractors:

  1. Limited Control and Oversight: One of the primary risks for healthcare facilities utilizing 1099 independent contractors through marketplace apps is the limited control and oversight over the contracted professionals. Independent contractors, by definition, operate autonomously, which can result in inconsistent adherence to facility policies, protocols, and quality standards. The lack of direct control and supervision by healthcare facilities may compromise patient safety, undermine the standardization of care, and hinder the implementation of essential practices.
  2. Compliance and Legal Liabilities: Healthcare facilities face significant compliance and legal risks when working with 1099 independent contractors. Misclassification of workers can lead to audits, penalties, and potential litigation, as regulatory bodies closely scrutinize the proper classification of workers. Moreover, healthcare facilities may be held vicariously liable for the actions or omissions of the independent contractors, especially if it is determined that the facility exercised sufficient control over them. These legal liabilities can result in reputational damage, financial burden, and potential patient harm. “The risks associated with employee reclassification, wage and hour violations and workplace injuries resulting in worker’s compensation disputes are very real, and could be financially devastating for a typical facility. There is also the issue of liable parties as the result of sentinel events, misconduct, medication errors and so forth. These liabilities are shouldered 100% by the facilities when using 1099 contractors sourced through marketplace apps,” said Cascade Health Services Chief Operating Officer, Kellen Weissenbach.
  3. Fragmented Communication and Coordination: Effective communication and coordination among healthcare professionals are critical for providing comprehensive and patient-centered care. However, when working with 1099 independent contractors through marketplace apps, healthcare facilities may face challenges in achieving seamless integration and collaboration. Independent contractors may not be fully up to date on facility policies, leading to fragmented communication, inadequate information sharing, and potential gaps in care delivery.
  4. Inconsistent Quality of Care: The utilization of 1099 independent contractors through marketplace apps can contribute to inconsistencies in the quality of care provided by healthcare facilities. Without a standardized approach to training, oversight, and performance evaluation, independent contractors may not adhere to the facility’s care protocols and best practices consistently. Staffing agencies using the W2 employment model can reliably hold employees accountable to completing education, training, and paperwork prior to a healthcare workers first shift at a facility. This inconsistency compromises patient outcomes, increases the risk of errors, and hampers the facility’s ability to deliver high-quality care consistently.
CNA, CMA. RN, LPN, Nursing Home, Hospital, Long Term Care Facility, Healthcare Staffing Agency, 1099 Independent Contractor, W2 Employee

The Better Employment Model for Healthcare Facilities-W2 Employees:

  1. Enhanced Accountability and Quality Assurance: Engaging W2 employees provides healthcare facilities with greater accountability and quality assurance. W2 employees via healthcare staffing agencies can be directly aligned with the facility’s mission, policies, and procedures, ensuring consistent adherence to established standards of care. This fosters a culture of accountability, promotes quality assurance measures, and strengthens the facility’s commitment to patient safety.
  2. Improved Control and Oversight: By utilizing W2 employees through healthcare staffing agencies like Cascade Health Services, healthcare facilities can have better control and oversight over the professionals providing care. W2 employees can be closely supervised, mentored, and trained by agencies to adhere to facility protocols and standards. This level of control enables agencies to monitor and address any performance issues promptly, leading to improved patient outcomes, reduced errors, and increased overall efficiency on the facility level. “I believe if healthcare management truly understood the risks they are exposing their facilities to by using 1099 contractors through marketplace apps, they would consider them entirely untenable and cease using them outright. Cascade Health Services’ healthcare professionals are and have always been W2 employees. This protects our employees and our clients. It’s the right and responsible thing to do,” added Weissenbach.
  3. Compliance with Regulations: Utilizing W2 employees ensures that compliance with labor laws, tax regulations, and industry standards are being met by the agency. W2 employees are subject to applicable employment regulations, including wage and hour laws, tax withholdings, and workers’ compensation coverage. This mitigates the risk of audits, penalties, and legal action, safeguarding the facility’s reputation and financial stability.
  4. Seamless Integration and Communication: A cohesive healthcare team is vital for effective care delivery. By utilizing W2 employees, healthcare facilities can promote seamless integration and communication among team members. W2 employees become fully integrated into the facility’s team structure, facilitating effective collaboration, information sharing, and coordinated care. This reduces errors, enhances patient safety, and improves overall care delivery.

While the utilization of 1099 independent contractors through a marketplace app may appear advantageous at first glance, healthcare facilities must carefully consider the risks involved. Limited control and oversight, compliance and legal liabilities, fragmented communication, and inconsistent quality of care pose significant dangers to the facilities and the patients they serve. There’s no doubt employment models in healthcare staffing are a hot topic right The Department of Labor is investigating worker misclassification, lawsuits are being filed, and congressional action is being explored to address the problem.

Said Weissenbach, “It is vitally important for healthcare leaders, decision makers and ownership groups to understand the inherent risks associated with utilizing front line healthcare providers via the 1099 IC model through marketplace apps. Unlike traditional W2 based staffing agencies, the marketplace app companies utilizing the 1099 IC model share no liability and have zero responsibility for mutual defense during litigation, and are in no way responsible for the actions of independent RNs, LPNs, CNAs and others working shifts in those facilities. All of the liability and labor risks fall on the facilities alone, and I believe the majority don’t actually realize this.”

Prioritizing alternative employment models, such as engaging W2 employees, offers healthcare facilities enhanced accountability, improved control, compliance with regulations, and seamless integration. By embracing these models, healthcare facilities can prioritize patient safety, deliver high-quality care consistently, and mitigate potential pitfalls that may arise from utilizing 1099 independent contractors via marketplace applications.

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Allied Healthcare & Nurse Staffing Services

Founded in 1988, Cascade Health Services is a leading healthcare and nurse staffing agency in the United States. More than 2,500 nurses, nurse aides and allied health professionals work with Cascade across the nation. We are hiring RN, LPN, LVN, CNA, CMA, CMT and other healthcare professionals for immediate Travel, Contract and PRN jobs in Nursing Homes, Long Term Care Centers, Skilled Nursing Facilities, Assisted Living, Rehabilitation Centers and Hospitals.