Dr. Jason Meyer

The shortage of nurses and other health-care professionals in the United States has created a huge demand in the marketplace--one that staffing firms throughout the country are stepping in to fill. The shortage is projected to be 450,000 nurses by 2008 according to the Bureau of labor Statistics (BLS). The Nurse vacancy rate according to the National Association of Health Care Recruitment is 11%.Nurse patient ratios are so high in some facilities around the country; one nurse to 20+ patients in some nursing homes that patient safety is a major concern. The shortage has reached a crisis situation in some facilities. As a result of patient deaths resulting from inadequate staffing in California, that state has passed legislation requiring facilities to have a 1/6  nurse / patient ratio. Similar legislation is pending in other states. This trend is a positive factor for nurse staffing companies

Contributing to this shortage, the population of existing nurses is aging. The age of the average nurse is 45 years , increased from 36 [since the 1980s according to the US Department of Health and Human Services. Nursing school enrollments are down or flat, and retiring nurses are not being replaced in sufficient numbers.

For many nurses, working as a full-time salaried employee of a health-care facility has become an unattractive career choice. Employee shortages in these facilities are often so severe that the nurses are forced to care for way too many patients. They're required to work overtime and on weekends, and shifts can be changed at will by the health-care facility. Burnout is rampant.

Staffing firms offer an attractive alternative, and nurses and other health-care professionals are increasingly choosing to work for them. Per diem (hourly contract/temporary) nurses earn more money per hour than staff nurses and have the freedom to choose the facilities they want to work in, as well as the shifts and days they want to work.

Many staffing companies also provide a variety of benefits to nurses, usually based on the number of hours they work. These packages nearly rival the benefits that health-care facilities offer to their employees. Vacation pay, health insurance, sign-on bonuses, and retirement plans are just some of these perks.

Sector Snapshot

In addition to nurses, health-care staffing companies provide X-ray technicians, pharmacists, medical billers and collectors, physical therapists, and 50 other clinical, financial, and administrative staff to a variety of health-care facilities. Clients include hospitals, nursing homes, assisted living centers, physicians' offices, schools, social service agencies, insurance companies, and businesses with health centers.

Staffing Industry Analysts estimate that health-care staffing was an $8.5 billion market in 2002 and that it will grow at a 16.5 percent compound rate through 2006, reaching roughly $18 billion in sales. According to projections by the U.S. Department of Labor, the severe shortages of professional health-care personnel will escalate, creating a market demand that is expected to grow for at least the next 15 to 20 years.

According to the Staffing Indicator, Gerald, Klauson, Mattison, Nov 2001, Nurse staffing represents 81 percent of the health-care staffing market; allied health (X-ray technicians and pharmacists, for example) represents 13 percent; and administrative positions (medical secretaries and billers, for example) account for 6 percent of the market .

Some health-care staffing companies provide only per diem nurses, while others concentrate on allied health or administrative staffing. Still others concentrate on the highly profitable niche area of travel nursing. In this market nurses cross state lines to work 6, 13 week or longer contracted assignments.  Another area is international nursing, where nurses from other countries are placed in client facilities in the United States.

High Revenue, Respectable Margins and Long Term Growth

Even during economic downturns, health-care facilities must have essential staff--nurses, pharmacists ,  laboratory  technicians . Although the medical staffing industry is influenced by economic downturns, it is not as negatively influenced as other areas of personnel.

Health-care staffing can also generate high revenue and excellent profits in a short time. Although pay and bill rates vary across the country, in the per diem market, it is not unheard of for a specialty nurse (one who works in intensive care or an operating room, for example) to bill out at $70 to $80 per hour. One nurse working a full-time schedule would yield $3,000 a week and $150,000 a year in revenue. With only eight nurses, a health-care staffing company could quickly achieve annual sales of $1.2 million. 

The length of assignments vary from an average of 13 weeks with multiple renewals to one shift to replace a nurse out sick to long term contract assignments which can sometimes last years.

Gross profit margins in health-care staffing ranged from 25 percent to 35 percent, and operating profit margins range from 10 percent to 20 percent; The Staffing Indicator, Gerard, Klauer, Mattison, Nov,2001. According to the ASA Fiscal Year 2002 Staffing Company Operations Survey, the health-care sector yielded the highest gross margin of the six sectors covered in the survey: 36 percent. Some margins have slipped during the recession from the 36 %  high  however anecdotal evidence derived from some owners of medical staffing companies indicate that these margins may be rising again as the economy does better. The recession has made the medical staffing industry a little more difficult, however all the Wall Street Analysts seem to be bullish about a better 2004. And ,because of the fundamental factors of the aging of America, the aging of the medical workforce and the indicators that retiring medical professionals are not being replaced bodes well for continued strong growth in this market for the next 20 plus years according to the pundits.

Certainly, many experts believe that the medical area has more potential then any other area of personnel.

Overwhelming Demand, Ample Opportunity

The severe shortage of nurses and other health-care professionals has created an unprecedented opportunity for staffing firms to capitalize by offering services to meet the overwhelming demand for health-care staff in the marketplace.

If you're thinking about joining this unique staffing sector, there are a number of things to consider.

§ To get the business off to a good start, think about hiring a consultant or a senior person proficient in strategic planning and day-to-day operations. Using proven systems and procedures for starting and running a health-care staffing business can help avoid costly mistakes and also help build a large, thriving business quickly and efficiently.

§ To have credibility with potential candidates and clients, you must understand and abide by specific state and federal regulations, as well as guidelines from the Joint Commission on Accreditation of Healthcare Organizations.

§ With talent in short supply, recruiting is a challenge. As with any candidate driven market you must be proactive and aggressive in reaching out to candidates instead of waiting for them to come to you. Traditional techniques used for recruiting often are not as effective in the medical staffing market. But there are unique methods for recruiting large numbers of nurses in a short time. Some of these techniques involve using new technologies.

§ Health-care staffing is paperwork-intensive, especially when it comes to screening nurses. Competency testing, license verification, malpractice insurance, and physical exams are just some of the steps that require documentation. In addition, some states require a license or registration in order to operate a health-care staffing businesses.

§ Be prepared to cover your nurse payroll, which can get quite large in a short time. Funding your own payroll is ideal, but most companies require assistance in the financial aspect of the business. Be sure to work with a bank, factor, or other financial provider that understands the health-care staffing business.

§ Malpractice and general liability insurance are a must. Insurance companies will not write these policies for start-up companies unless you can prove that you know how to run the business. And the premiums can be huge unless you know which insurance carrier to go with.

Like any other sector, there is competition in health-care staffing.  However there still is room  for  knowledgeable  operators  to take advantage of the projected increases in need for health-care services over the next 20 years .

Dr. Jason Meyer is president of Medical Staffing  Consultants, Inc  which specializes in helping staffing firms start operations in health care. Initially trained as a psychologist, Meyer has owned two successful health-care staffing businesses. For  more  information on Medical Staffing Consultants, Inc call 800 764-2966 or e-mail jmeyermsc@aol.com.The web site is www.medicalstaffingconsultants.com