According to the recently released, “December 2016 Healthcare Staffing Growth Assessment” — Staffing Industry Analysts’ annual comprehensive assessment of the healthcare staffing market — the current environment for healthcare staffing continues to reflect a confluence of favorable drivers, though long-term trends appear more mixed. After 13% revenue growth in 2016, we project the US temporary healthcare staffing market will decelerate to still-robust growth of 6% in 2017, reaching a size of $15.5 billion.
There are currently several factors driving healthcare staffing utilization. First, products of the Affordable Care Act, such as health insurance exchanges and Medicaid expansion, have manifested in higher patient volumes, causing a spike in healthcare hiring (though we believe we may be in the final innings of this trend). An improving economy has also helped raise hospital volumes, as individuals with employer-sponsored health insurance are more likely to purchase healthcare than the unemployed (even post-ACA).
Lower unemployment and greater voluntary staff turnover are also making the supply of workers more scarce. This worker scarcity, along with the demand trends just noted, have created an especially favorable environment for healthcare staffing firms, which are generally better at recruiting than their clients, and helps explain the impressive results many healthcare staffing firms have experienced. That said, difficulty in finding workers to fill assignments has also become a headwind for healthcare staffing firms, with recruiting challenges as the main bottleneck on additional growth.
Long-term trends for the industry are more mixed. The share of the population made up by the elderly will continue to increase, and, while not an otherwise welcome development, the current rapidly increasing levels of obesity will continue to have chronic effects, all of which raises demand for healthcare in the long term. On the other hand, the federal government has projected an overall surplus of 340,000 registered nurses nationwide by 2025, reversing its prior projection of a shortage, as nursing schools have addressed concerns over a future shortage by increasing enrollment.
The healthcare system has also been taking dramatic strides in moving from a volume-based system to one based on value, and, while an otherwise welcome development in our opinion, it stands to reason that a shift away from volume-based payment models should result in less volume, and likely less demand for staffing. Finally, the results of the latest election bring a great deal of uncertainty to the drivers of healthcare staffing resulting from ACA. Should the new administration make fundamental changes to our healthcare system, that could certainly throw a wrench into current trends.
All four sub-segments of healthcare staffing — travel nurse, per diem nurse, locum tenens and allied health — are projected to continue growing through 2018, though the landscape has shifted dramatically in favor of travel over per diem assignments during the past few years. Corporate members can read the full 2016 Healthcare Staffing Growth Assessment here.
