Internal Travel Agency

Work flexibility is the new currency of the nursing workforce — as important as competitive pay and benefits in attracting and retaining staff. One innovative approach: the internal travel agency.

An internal travel agency is owned and operated by the health organization, staffed by its own employed clinicians — nurses, allied health professionals, or technicians — traveling within a single hospital or across a health system.

Types of Agencies

An internal travel agency can be system or local based on the amount of travel involved.

Key Definition

System Travel Agency

The employee's assignment is 50 miles or more from their primary residence. Employees receive a housing stipend and meal allowances along with their hourly wages, and are on contracted assignment (4–26 weeks).

Key Definition

Local Travel Agency

The employee lives within 50 miles of the assignment. They don't need a housing stipend or meal allowance. They may be on a 4- to 8-week contract or assigned to a unit on a daily basis.

In both approaches, employees need to be licensed in the state where they practice. System travel agency employees are the highest paid, followed by local agency employees.

Step 1: Set the Stage

Build an interdisciplinary team with representatives from nursing, human resources, talent acquisition, finance, and information technology.

Conduct an environmental scan including:

Use of external agency staff for the past 6 to 18 months
Current flexible workforce programs
Job descriptions, compensation models, and operational policies

Key strategic questions:

Will the agency operate at the system or local level?
Will it be for-profit or not-for-profit?
What tools and technology will be needed?
What roles will be eligible?

Best Practice

Start simple — launch as a not-for-profit entity focusing on a single discipline (usually nursing) at a couple of hospitals before launching system wide.

Step 2: Build the Operating Framework

Establish Job Parameters

Create a job description specifying experience requirements, employee type, and flexibility requirements. Minimum 1 year of experience for local agencies, 1–2 years for system agencies.

Determine Compensation

Partner with your compensation team to develop a travel compensation model. Employees traveling more than 50 miles need housing stipends, meal allowances, and incidentals. Those under 50 miles need mileage reimbursement.

Best Practice

A resource for establishing per diem rates is the U.S. General Services Administration website (gsa.gov), where you can search by city, state, or ZIP code.

Additional compensation to consider: paid time off, licensure reimbursement, incentive shifts, tuition reimbursement, and clinical ladder opportunities.

Develop Operational Principles

Develop criteria for requesting and deploying travel employees. Contract lengths for system programs range from 4 to 26 weeks.

Best Practice

Local travel employees should be assigned to shifts based on daily staffing needs to best meet market demand related to changes in census and patient acuity.

Provide Manager Education

Develop plans for educating managers on the internal travel agency — benefits, how to make requests through the VMS, timelines, and support structures.

Establish Program Metrics

Key performance indicators should include:

Time to fill a request (goal: 2–4 weeks)
External vs. internal traveler spending comparison
Hiring targets per quarter
Turnover and retention trends
Operating costs

Best Practice

Measure metrics monthly and review quarterly and annual reports.

Step 3: Establish the ROI Model and Hiring Plan

Calculate cost savings by comparing external agency data (annual expense, average hourly rate, FTEs by specialty) against your internal agency model.

Converting FTEs

Example conversion: 18 external FTEs at $115/hr ($4.31M annually) converted to 18 internal FTEs at $82/hr ($3.07M) yields $1.24 million in savings. Your internal rate should be at least 8–10% cheaper than the external rate.

Best Practice

Ensure the plan includes strategies for sustaining operations while building supply. For example, if hiring internal candidates, set an expectation of 8 weeks for transfer, allowing the department manager time for backfill.

Step 4: Operationalize the Plan

Recruit Staff

Work with marketing and talent acquisition to market the agency internally and externally. Consider converting existing external travelers to the internal program.

Implement Technology

Ensure VMS technology is in place and training is completed. An effective VMS allows one manager to manage 150–200 internal travelers.

Monitor Progress

Solicit input from employees and department managers at the end of every assignment. Evaluate cost savings at 6 months and 1 year post-implementation.

Best Practice

Offer a "try before you buy" experience for your internal workforce. Help those who decide after one to two assignments that the internal travel agency is not a good fit return to their original unit.

Achieving Success

Launching takes a minimum of 2–3 months, though 6 months is more realistic for establishing all critical components.

AI-Powered Internal Travel Matching

AI can significantly improve internal travel agency operations by automating the matching of travelers to open assignments. Instead of manually reviewing credentials and availability for each request, an AI engine can:

Match travelers to assignments based on skills, certifications, specialty experience, location preferences, and historical performance ratings
Predict demand by unit and specialty weeks in advance, allowing recruiters to proactively position travelers where they'll be needed
Optimize assignment sequencing to minimize gaps between contracts and reduce idle time for internal travelers
Balance cost and quality by scoring assignment options against both budget targets and patient care requirements