Healthcare Staffing Report: Apr. 17, 2014

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Vital signs for healthcare staffing strengthening in 2014, 2015

The long-term outlook for healthcare employment based on the U.S. Bureau of Labor Statistics’ projections through 2022 was the focus of our last story. This month, we swap our telescope for a magnifying glass, and peer into the details of what we can expect for our industry this year and next. Such is the focus of the recent U.S. Staffing Industry Forecast update, published by Timothy Landhuis.

On the whole, Staffing Industry Analysts anticipates that the U.S. temporary staffing market will grow 6 percent year-over-year in 2014 and 7 percent in 2015, reaching total revenue of more than $118 billion. This would be a new record for the industry, exceeding the former peak of $112.3 billion (inflation adjusted to 2013 dollars) seen in 2006.

The near-term outlook for healthcare staffing has deteriorated somewhat, as it was the only industry segment for which our 2014 growth projection was ratcheted down from our prior forecast issued in September 2013. However, it should be noted that the industry ended last year at just 71 percent of the peak market size it reached in 2002, according to our estimates, indicating significant room for expansion. We now anticipate that the temporary healthcare staffing market in the U.S. will grow 6 percent in 2014 before accelerating moderately to 8 percent growth in 2015 to a market size of $11.1 billion.

On a sub-segment basis, we see travel nurse market growth stable at 6 percent in 2014, picking up to 9 percent in 2015. A mild flu season relative to the previous year has acted as a demand constraint throughout the winter, compounding the impact of technical glitches with a new automated licensing system in California, the largest travel nurse market of any state. However, we anticipate an uptick in need for travelers to provide staffing coverage during electronic medical record implementations throughout the rest of the year.

Per diem nurse demand is closely tied to hospital census, which was weak in 2013 and has not shown signs of appreciable recovery thus far in 2014. Combined with a generally cautious outlook for hiring on the part of hospital systems due to uncertainty regarding the implementation of the Affordable Care Act, we expect the per diem market to expand by 5 percent in 2013 and 7 percent in 2014.

Locum tenens has been the recent growth leader among healthcare staffing sub-segments as the industry continues to shift away from private practice and toward the employed physician model, a trend that will continue. Projected year-over-year growth in locum is 8 percent for both 2014 and 2015; we anticipate that Medicare payments to physicians will come under increasing pressure in the latter year.

On the other side of the coin is allied health, which we estimate will lag the other sub-segments at 4 percent growth in 2014 due to continued pressure on therapy reimbursement from Medicare. Longer term, we will see the emergence of the demographic trends that will underpin demand for therapy, in particular the aging of the U.S. population. We predict that this will begin to materialize in 2015, and estimate that allied health staffing growth will be 8 percent for that year.