In 2015 and 2016, the healthcare staffing market grew by double digits as an influx of newly insured resulting from implementation of the Affordable Care Act spurred patient volumes, driving demand for healthcare labor against a limited supply. When that influx of newly insured leveled off, however, the trend of declining hospital admissions (that had been in place before ACA implementation) moved back to the fore. This trend of declining admissions is primarily due to greater pressure from payers to limit costs as well as price sensitivity on the part of individuals as they take on more cost sharing.

Not only did the largest publicly traded hospital companies report softer patient volumes in the first half of this year (for reasons noted above), they seemed a bit surprised by the level of softness, and softer-than-expected business can be more problematic for staffing suppliers than merely soft business when it causes a client to suddenly adjust labor downwards. On several Q2 earnings calls, cost management in response to softer volume was a major topic among hospitals, and this was no doubt felt by their staffing suppliers.

Despite such headwinds, in our latest US Staffing Industry Forecast Report we project healthcare staffing revenue growth to only decelerate to a (still solid) rate of 6% next year, as there are several silver linings. First, hospitals have suggested an inflection point in these weaker trends, and consequently some healthcare staffing firms have noted a recent pickup in orders. Second, there is still a labor shortage. Third, the outlook for a repeal of the Affordable Care Act looks less likely. Finally, continued employment growth will yield more patients with (higher paying) commercial coverage.

Projections for various categories of healthcare staffing, such as travel nursing and locum tenens, can also be found in the full report.