Healthcare Staffing Report: Dec. 19, 2013

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Consolidation trend hits healthcare staffing firms

Management teams in healthcare staffing have been busy crossing items off of their holiday shopping lists, with a steady stream of acquisitions announced over the fourth quarter. Consolidation in the industry is on an upswing as companies position themselves to capitalize on a predicted increase in demand in 2014 and beyond.

AMN Healthcare Services Inc. (NYSE: AHS), the largest U.S. healthcare staffing firm with $912 million in 2012 U.S. healthcare staffing revenue and 10 percent market share, purchased healthcare vendor management system (VMS) ShiftWise in November. AMN was quick to specify that the newly acquired business would continue to operate independently with no change in its leadership team, and would remain a vendor neutral VMS.

“This strategic acquisition is an investment in addressing the diverse needs of our clients by providing a unique vendor neutral technology option as well as other workforce technology solutions that will instantly expand our capabilities,” AMN President and CEO Susan Salka said in a press release at the time.

Jackson Healthcare, the third-largest U.S. healthcare staffing firm, this month acquired Tyler & Company, a national firm that recruits healthcare executives for organizations including hospitals, health systems, physician group practices and academic medical centers. Jackson posted $467 million in 2012 U.S. healthcare staffing revenue and 5 percent market share, according to our estimates.

Cross Country Healthcare Inc. (NASD: CCRN) earlier this year sold its clinical trial services business to ICON plc (NASD: ICLR) for $52 million plus an earn-out of up to $3.75 million. This month, the firm announced that it will buy On Assignment Inc.’s (NYSE: ASGN) allied healthcare division for $28.7 million.

Cross Country garnered 4 percent market share in 2012 with $400 million in 2012 U.S. healthcare staffing revenue. On Assignment’s allied business is expected to generate revenue of $41 million in 2013.

For its part, On Assignment is beefing up the focus on its core IT staffing business. The company completed the divestiture of its travel nurse division in the first quarter, selling that business to Medical Solutions for $31.0 million, though it has hung on to its physician staffing division and recently acquired another physician staffing firm.

Among the smaller players, keep an eye on Accountable Healthcare Staffing Inc., a two-year-old firm with nine acquisitions already under its belt.

“We’ve been able to move the needle pretty dramatically this year,” said Eddie Albert, Accountable Healthcare Staffing’s director of mergers and acquisitions. “We certainly expect to continue to drive the consolidation in the staffing industry in 2014.”

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