Healthcare Staffing Report: Nov. 5, 2015

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Report finds lucrative environment for healthcare staffing market

According to Staffing Industry Analysts’ recently released 2015 Healthcare Staffing Growth Assessment, the current environment for the healthcare staffing market is arguably the most lucrative it has been in more than a decade, due to a confluence of favorable drivers. Products of the Affordable Care Act (ACA) such as health insurance exchanges and Medicaid expansion are now manifesting in higher patient volumes, while an improving economy is also helping to raise hospital volumes (as even the healthcare industry has an element of cyclicality). Most importantly for healthcare staffing firms, demand for workers has not only grown, but it has grown at a faster pace than most of their customers anticipated, making the need to raise staff levels more pressing, a development particularly conducive for contingent labor.

In a 3Q15 earnings preview, hospital group HCA noted that its labor costs as a percent of revenue increased during the period, primarily driven by “greater use of contract labor to fill staffing needs”. While the context of the comment is less than ideal from the perspective of staffing firms, it does highlight hospitals’ reliance on staffing firms to meet rising demand. In the same earnings preview, HCA noted that its same-facility admissions were up by 2.9% in the third quarter, and hospitals need staff to meet rising demand.

It is also a transformative time for the healthcare industry. The Affordable Care Act could speed an existing shift from volume-based payments to value-based payments. In particular, the act gives the US Health and Human Services Secretary the power to expand without congressional approval (including implementation on a nationwide basis) the scope and duration of an alternative model (such as bundled payments) that is being tested, provided the model reduces spending without reducing quality of care.

In our Healthcare Staffing Growth Assessment, we take a closer look at both the bullish short-term trends and the transformative long-term trends. 

The full report can be accessed here.