Healthcare Staffing Market Update – April 2023

Continued Clinician Turnover Drives Demand in the Healthcare Staffing Market

Capstone Partners released its April 2023 Healthcare Staffing Market Update, reporting that an acute shortage of qualified healthcare professionals and the emergence of technology-enabled service models elevated 2022 merger and acquisition (M&A) activity above the record level set in 2021. To date in 2023, deal volume is marginally trailing year-to-date (YTD) 2022.

Severe supply and demand imbalances, including continued clinician turnover and a heightened need for healthcare services, have created substantial demand for healthcare staffing providers. Hospitals have had difficulty recruiting workers due to exhaustion and burnout from an overtaxed healthcare system and the inherent trauma of providing healthcare during a deadly pandemic. However, the rise of technology-enabled service models that optimize recruitment and placement processes have elevated staffing firms’ ability to bolster the capacity of healthcare organizations. Staffing firms can now advertise incentives through online staffing platforms, which increase market visibility and self-service for healthcare workers. This helped facilitate steady transaction volume in 2022, with 40 deals announced or completed, as buyers have recognized the need for healthcare delivery organizations to bolster their workforce solutions.

The Healthcare Staffing market is poised to see moderating growth in the Travel Nursing segment, a traditionally high revenue segment for sector players. Average bill rates for the Travel Nursing segment have seen a 20% quarter-over-quarter (QoQ) decline since its peak in Q1 2022. However, AMN Healthcare Services (NYSE:AMN) and Cross Country Healthcare (Nasdaq:CCRN), two public companies active in the sector, are still reporting double-digit year-over-year (YOY) revenue growth in the Travel Nursing segment, despite quarterly declining bill rates. Additionally, the Behavioral Health Staffing segment in particular is positioned for growth due to overwhelming demand for qualified professionals to provide care, coupled with the increasing use of telehealth and convenient care provider solutions.

Also included in this report:

• Why deal activity in the Healthcare Staffing sector has been resilient compared to the broader M&A market.
• A breakdown of notable acquisitions in the Locum Tenens segment.
• Public company data on valuations and growth.