SI Review: November 2010

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Analyst Take, Si Review November 2010

Interview with: Tony Gregoire
Senior Research Analyst, Staffing Industry Analysts

Tony Gregoire covers healthcare staffing, among other topics. We interviewed him regarding recent research on the subject.

Q: Is there any hope for healthcare staffing?
TG: What an uplifting question! I would say there is much more than hope. Healthcare staffing was beaten up in 2009, as was the staffing industry in general, but now it appears to have bottomed. After substantial cuts to their contract labor, hospitals reached a level at which they are no longer willing to cut. So if there’s one encouraging piece of news for staffing firms it is that hospitals have acknowledged that there is a portion of their workforce that should be flexible, and as that portion grows slowly over time, healthcare staffing will slowly recover.

Q: What are the areas of relative strength in healthcare staffing right now?
TG: Overall, healthcare staffing is growing slowly, but there are certain areas that are surging. We just completed a physician staffing survey that shows revenue from staffing of hospitalists was up 16% on a year-over-year basis for the first half of 2010. Also, our allied health benchmarking survey showed a 12% revenue increase in the same time period for staffing in health information technology.

Q: What about nursing?
TG: Well, there have been signs that travel nurse bookings started to recover in June. If that’s the case we should soon start to see month-to-month revenue increases in our monthly pulse survey, given the lag between bookings and revenue. Signs of a recovery in travel nurse are encouraging given that this was the piece of healthcare staffing that took the most punches. Per diem nurse appears to have bottomed as well.

Q: Hospitals seem to think it’s a best practice to use no temp labor at all.  Why are buyer attitudes in the healthcare sector so negative? 
TG: I don’t think many hospitals feel they should use no temp labor at all. I just think, on average, the buyer wants a smaller contingent workforce than staffing firms would like. It’s also notable that while buyers have a lower ideal contingent mix than those in other segments, our surveys show they are relatively satisfied with the service they receive. The case for the value of healthcare staffing might not always get to the right people. At our 2010 Healthcare Staffing Summit, we had a session called “Voice of the Customer” in which a representative from a hospital said that he needs a one-pager that quantifies the value of staffing so that he could get it in front of the C-suite and make a brief, but clear, case that (for example) 10% of employees should be contingents through staffing firms rather than 3%.

Q: Speaking of the Healthcare Staffing Summit, were there any surprises at the conference?
TG: No surprises, really, but what is always interesting is when you try something new, it’s interesting to see how well it is received. One session at the summit that we had not done before was “Acquiring Minds Want to Know,” basically an M&A session in which companies interested in acquiring had an opportunity to make their pitch. The session was certainly unique, but the attendees seemed generally pleased with it.

Q: What types of acquisitions are we seeing in healthcare?
TG: Well, some acquisitions are driven by companies wanting to expand their professional staffing mix. For example, Adecco’s acquisition of MPS makes it a more substantial player in healthcare. Then, there is vertical integration where you have TeamStaff, a company that provides outsourcing services to emergency departments, expanding their locum mix by acquiring Psychiatrists Only. Growth in health information technology creates opportunities for staffing firms in healthcare and IT to get together. Of course, the elephant in the room is AMN and Medfinders. Among other things, Medfinders brings to AMN a home health business and a robust MSP.

Q: Adoption of VMS/MSP has been relatively delayed in the healthcare sector.  What’s the future there?
TG: It depends on the occupation. Because physicians are thought of as revenue generators, and are not often bought in bulk, locum tenens has a bit more armor to shield itself from VMS. In a recent survey of locum tenens firms, nine of thirteen respondents in locum noted that none of their revenue passes through VMS. No respondent noted more than 6%. In our allied health survey, the median pass through was 11%. In nursing, it is probably a bit higher. Overall, the trend is a slow creep, but the success VMS is having varies among occupations.

Q: If you were considering starting a staffing firm today, would you enter the healthcare space?  What do you think are the long-term prospects for healthcare temporary staffing?
TG: Yes. As the economic climate improves, what we are left with are the same drivers of demand that existed before the recession …aging population, aging workforce, increased demand for healthcare, not enough supply. 

If you would like to receive healthcare staffing reports authored by Tony  Gregoire or to speak to him, contact memberservices@staffingindustry.com or call 1-800-950-9496 and ask about corporate membership. If you are already a corporate member, such access is already included in your membership.

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