Staffing Industry Analysts estimates the healthcare staffing sector reached $64.4 billion in 2022, more than triple the market size in 2019. More than half of the market, 63%, comprises the travel nurse segment, which has experienced a staggering six-fold increase since 2019. Although the growth in travel nursing, per diem, locum tenens and allied has contributed to the Covid-19 pandemic over the last few years, demand for healthcare staffing is now less about Covid-related care and more about staffing shortages and health system structural issues.

This article briefly highlights recent trends in all four segments of the healthcare industry and SIA’s forecasts for 2023 and 2024.

Travel nurse. The travel nurse segment appears to have finally reached its peak in 2022, and SIA forecasts this segment will experience the anticipated contraction of 25% in 2023, continuing to decrease in 2024. This segment has not experienced contraction since the global financial crisis of 2008-2009, also known as the Great Recession. What is important to consider is that the travel nurse market experienced astounding growth in 2021 and 2022, so although contraction may seem concerning, the decrease in market size and revenue is a result of moderation or normalization after such a high peak brought on by unprecedented demand related to the pandemic. Moving forward, we expect health systems will attempt to reduce their contingent spend by decreasing their utilization of travel staff while at the same time continuing to rely on staffing firms as the nursing shortage plays out and facilities require outside assistance to fill open positions due to quits from burnout and retirements as well as high churn rates.

Per diem. SIA forecasts this segment will grow by 5% in both 2023 and 2024. This segment presents unique opportunities for health systems and talent alike. Per diem allows healthcare leaders to fill open positions or shifts on an as-needed basis, which varies week to week, without committing to a 13-week contract. At the same time, per diem offers travel healthcare professionals an opportunity to try out different facilities before committing to a full-time contract, while also offering flexible scheduling to work around holidays, childcare and appointments. Staffing firm executives have taken note, and many have implemented staffing platforms to expedite recruitment, onboarding and scheduling. The preference for per diem is growing and may prove to be a win-win for both workers and buyers.

Locum tenens. SIA forecasts the locum tenens segment will grow by 10% in 2023 with continued growth in 2024. Growth in this segment is mostly attributed to the aging population that will demand more medical services for chronic illnesses. Additionally, a large portion of the physician workforce is approaching retirement age; more than two of every five active physicians in the US will be 65 or older within the next decade, according to the Association for American Medical Colleges, leaving the US with a shortage ranging between 37,800 and 124,000 physicians by 2034. If there is a silver lining, it would be the continued interest in nurse practitioner and physician assistant careers, which will greatly assist in meeting demand that would have otherwise been provided by physicians. Staffing firms will be able to leverage their large talent pools to secure locum tenens from across the US to healthcare facilities in need.

Allied. SIA forecasts continued growth of 5% in both 2023 and 2024. Increased demand is partly attributed to schools who have increased reliance on staffing firms to secure allied positions such as speech language pathologists and school psychologists. Additionally, the aging population continues to drive demand for healthcare services from cath lab technologists, clinical lab technicians and other allied healthcare professionals who operate specialized equipment to diagnose and treat heart disease, coronary artery disease and other conditions associated with aging.

The number of job openings in the healthcare sector will continue to exceed the number of hires in just about every segment, resulting in continued imbalance of demand over supply. With an aging population driving demand for healthcare services and an overstretched workforce, it is likely health systems will continue to rely on staffing firms to fill open positions, although we’ll see some contraction from the peak seen last year.

For more insight into SIA’s market size and growth estimates in the US temporary staffing industry, see SIA’s US Staffing Industry Forecast.