SI Review: September 2011

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Getting Better

Healthcare staffing gets back on its feet

By Craig Johnson

The recent recession was a great leveler. Staffing firms in most segments were struggling to stay afloat. But parts of the healthcare staffing industry bled more severely than others. The healthcare industry was once thought of as recession proof. That is no longer the case. And the numbers bear it out.

Overall, healthcare staffing revenue shrunk by 28 percent in 2009, according to estimates by Staffing Industry Analysts, the publisher of this magazine. Travel nurse revenue plummeted 50 percent in that year. Staffing executives lamented the fact that hospitals were keeping the bare minimum of workers required to keep their facilities running. These institutions went without contingent staff — even if it may have been needed — running the risk of patient dissatisfaction.

Then came 2010, which brought with it some relief for the staffing industry. Many segments returned to growth. Unfortunately, though, healthcare staffing continued to decline. The healthcare staffing segment remained one of the few to see revenue decline in 2010 — falling by an estimated seven percent.

Healthcare staffing did have company. Outplacement was the only other segment to post a decline that year. But that was hardly reassuring. Outplacement is known for its countercyclical nature: it grows during bad economic periods and declines in good ones.

Fast forward to 2011. Healthcare staffing is picking up steam with travel nursing, in particular, appearing to be on the rebound. However, it’s still in the early stages of the recovery. And there are complications to reckon with. For starters, the economy continues to grow slowly and unemployment remains high — a concern for healthcare staffing.

“Things are going a lot better in 2011,” says Cynthia Kinnas, co-founder and president of Clinical One, a Randstad company that provides travel and per diem nurses. “We are not back to 2007 and 2008 yet by any means, but we are coming out of it.”

An index by the National Association of Travel Healthcare Organizations (NATHO) is pointing to growth, says Kinnas, who also serves as secretary-treasurer of the organization. A NATHO index measuring the level of job orders fell to readings in the low 50s in mid-2009 after starting the year at 100, Kinnas says. That level rebounded to around 260 by June 2011.

The index also measures travelers on assignment. That index reading was also at 100 in January 2009 but fell to around 50 by August 2009, Kinnas says. That reading has gone back up to around 60 as of June of this year. The level of travelers on assignment typically lags job orders.

All indications point to growth for the healthcare staffing industry. SIA has forecast revenue growth of 7 percent for travel nursing in 2011. Other segments, including per diem nursing, locum tenens and allied, are also expected to grow this year, but not at as fast as travel nurse staffing. Of course, it helps to remember that revenue fell the furthest in travel nursing among all the segments during the recession. By contrast, locum tenens staffing, the placement of temporary doctors, saw revenue fall only by an estimated 1 percent in 2009 — the year that changed the face of healthcare staffing.

As the industry deals with the aftermath of the crash, there are signs pointing to a recovery. After all, say industry insiders, the population will age, people will still get sick and injured, and babies will continue to be born. Here, we give you a few trends to watch and prepare for.

Recruiting

Healthcare staffing executives are reporting more difficulty in recruiting workers.

“The barrier to more rapid growth is our ability to recruit enough nurses,” says Joseph Boshart, president and CEO of Cross Country Healthcare Inc. “It’s a much happier problem to have than not having enough jobs.”

Typically, even in the best of times, one staffing firm is not able to place people in 100 percent of the job orders it receives, Boshart says.

Travel nurse firms reported the lowest sales-to-recruiting ratio of all segments, according to a Pulse Survey of staffing firms taken in May by Staffing Industry Analysts. Only 10 percent of travel nurse firms reported having more challenges with sales than recruiting, while 90 percent said they had more challenges with recruiting.

The recession brought challenges as work orders fell; however, some have also said the downturn may have prompted some healthcare professionals to seek traditional work arrangements instead of employment through staffing firms.

“When the recession hit, people became nervous,” says Janet Elkin, president and CEO of Supplemental Health Care.

Healthcare workers may have had a spouse whose job was not secure, Elkin says. That may have translated to trepidation when considering a staffing firm because many feared they would have work one week and not the next. It required staffing firms to more thoroughly explain the opportunities they offer healthcare professionals.

That having been said, recruiting will always be difficult, says Elkin. Right now, it’s particularly difficult to recruit for allied healthcare professionals — there are fewer allied professionals entering the workforce each year because more are attending school longer to earn higher level degrees, she says.

To help with recruiting, Supplemental Health Care is developing a mentoring program for students going into healthcare, she says. It is also looking into bringing in professionals from outside the U.S.

But it’s not just about traditional methods of recruiting. One new medium that has picked up steam as a method of recruiting is social media. Social media sites such as LinkedIn and Facebook have exploded in popularity. Recruitment professionals have begun to realize the importance of social media sites as a key part of their strategy. According to a recent Society for Human Resource Management survey, 56 percent of respondents said that they currently use social networking websites to recruit workers — up from 34 percent in 2008.

Little surprise given that the use of social media is proving less expensive than other traditional recruiting tools. “Certainly social media has taken a strong hold in recruiting … It’s an excellent tool for us,” says Katie Hoffman-Abby, president of On Assignment Nurse Travel, and executive vice president of VISTA Physician Search and Consulting and VISTA Physician International. “However, healthcare staffing continues to be a people business, where cultivating long-term relationships is paramount to creating good matches that result in quality patient care delivery,” Hoffman-Abby says, adding there is nothing that will replace a phone call once a company is connected with a worker.

“I don’t see how you can ever walk away completely from the human contact portion,” she says.

One Touch Service

Another trend appears to be a growing interest in MSP programs, although healthcare staffing buyers have been slower to adopt than buyers in other industries.

Hoffman-Abby says she sees MSPs in the travel nurse segment, but it’s not big in the physician arena where, typically, only one or two positions are placed at a time. There are other limitations too. Some staffing buyers may not see their needs met through such a program, particularly buyers in rural areas or with needs for specialty nurses — positions that can be more difficult to fill, she says.

Limitations notwithstanding, Cross Country’s Boshart sees MSP usage as a trend that will stay as large users of healthcare staffing find efficiencies in working with one point of contact among suppliers. In some cases, healthcare buyers have 20 to 30 suppliers of temporary labor, he says.

Internal Pools

The recession has brought its own set of challenges for hospitals. A 2011 survey from healthcare recruiters at AMN Healthcare Services Inc. found that one-quarter of the 1,002 registered nurses surveyed say they will look for a new place to work as the economy recovers — up sharply from the 15 percent who said they’d look for a new job in a 2010 survey.

As a result, hospitals are challenged to recruit quality workers and retain them. At the same time, budgets are not what they were. It is not always possible to employ healthcare professionals on a permanent basis. So another emerging trend is hospitals working with staffing firms to handle more of their internal pools, where facilities keep lists of people who work for them on an occasionally basis, says Supplemental Health Care’s Elkin.

Hospitals are challenged to keep those pools of occasional workers at the ready, she says. Staffing firms can assist with scheduling and managing the pools to help keep employees interested in remaining as part of the pool. For example, a staffing firm can assign a worker to another location when he or she is not working at a particular hospital.

Supplemental Health Care also has programs in place to keep workers interested, such as a referral program called “Helping Hands” where workers that refer another employee receive a dollar for every hour their recruit works. Employees can also participate in Supplemental Health Care’s “Our Rewards” program, an initiative that allows them to earn points for every hour they work. Through the company’s “Our Rewards” website, these points can be redeemed for a variety of prizes — everything from books to a pontoon boat.

Customer Concerns

It’s not just about the workers. As staffing firms try new ways to recruit and engage healthcare professionals, staffing buyers also appear to be growing in sophistication, demanding more. It’s not surprising. Demand for healthcare staffing is on the rise with job orders going up. Buyers are dealing with the aftermath of the recession and want to balance quality workers with price and flexibility. Contingent workers are definitely the answer, say experts, but there are caveats that come with this new marketplace.

For example, buyers that use travel nurses want both core nursing experience as well as previous experience as a traveler, says Clinical One’s Kinnas. Two to three years of experience as a traveler is good, but five years would be better.

“Demand is not to the point that they are just taking anybody; they are selective,” Kinnas says.

Some buyers are also requesting more flexibility with travel nurses, she says. Somewhat like a per diem/travel hybrid, buyers want a travel nurse who can work a flexible number of hours. Typically, travel nurses work a guaranteed number of hours. Kinnas also says she is seeing opportunities under the push for electronic medical records, which includes the need for specialized nurses with tech backgrounds or personnel to replace staff that have been sent for training on electronic medical record software (which can last several months).

Another area of growing demand is from hospitals, the traditional buyers of healthcare staffing, for types of staffing other than clinical, Kinnas says. This might include information technology or other types of staffing.

Healthcare Reform

To add to the mix is healthcare reform. The legislation has caused concern across the staffing industry with possible penalties that start in 2014 for companies that don’t provide healthcare insurance for workers or whose insurance doesn’t meet specified requirements. See the July 2011 issue of SI Review for more on the impact of healthcare reform.

However, reform would also require Americans to have health insurance. Increased coverage could usher in a greater need for healthcare — and some types of staffing.

Cross Country’s Boshart says healthcare reform could boost the physician business because there will be a need to supplement the existing universe of primary care physicians. There might also be better utilization of nurse practitioners and advanced practice professionals. Nurse practitioners are registered nurses who have received advanced training and education and can provide complete physical exams, interpret laboratory results and prescribe medications among other things, according to the American College of Nurse Practitioners.

With more people covered, there would be less of a need for doctors to write off expenses for uncompensated care.

“On the surface there are a lot of wins for healthcare staffing, but they are a couple of years out,” Boshart says.

Improving in Health

While benefits for healthcare reform may be in the future, things still appear to be looking up for healthcare staffing at this time.

Healthcare is expected to be one of the fastest growing industries both statewide and nationally between 2008 and 2018. The U.S. Bureau of Labor Statistics gives some reasons for anticipated growth in its Career Guide to Industries. Among the contributing factors, the bureau lists: fast growing population in older age groups, a higher incidence of injury and illness among older age groups; improved survival rate of severely ill and injured patients who need extensive therapy and care, early diagnoses increasing ability to treat conditions, and increased demand for dental care as people retain their natural teeth longer.

However, lingering effects of the recession continue to play out, and healthcare staffing firms have to position themselves accordingly. On the plus side, Staffing Industry Analysts’ latest forecast estimated revenue growth in 2011 of 9 percent. Travel nursing is also looking up. The May Pulse Survey of staffing firms found that firms that gathered the majority of their revenue through travel nurses staffing indicated they were more likely to acquire another firm when asked to choose between acquiring another firm or being acquired themselves.

On the whole, things are looking up for the healthcare staffing industry. 2011 appears to have improved over 2010 and to be far better than 2009.

“The economic downturn has been very challenging,” says On Assignment’s Hoffman-Abby. “It’s great to be part of the rebound.”

Craig Johnson is managing editor of SI Review. He can be reached at cjohnson@staffingindustry.com.

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