Hospital staffing and scheduling is unglamorous, complex and tedious work, and Veeraj Shah, co-founder and CEO of startup Vitalize, believes it's the most valuable healthcare task to tackle.
Vitalize aims to supercharge health system capacity and operations with an artificial intelligence platform that unifies staffing, scheduling, flow and capacity.
The startup raised $31 million in a series A funding round led by Oak HC/FT, with participation from Norwest Ventures, .406 Ventures, Constellation Ventures, Y Combinator, and MemorialCare Innovation Fund.
At health systems, labor and capacity management are highly manual, inefficient processes that take up hours of administrative work each day.
Shah observed this firsthand as a medical school student and during a stint working inside health system staffing offices, command centers and clinical units, where he saw nurses and managers spend hours each day managing schedules and staffing with spreadsheets, group texts and phone calls. That creates inefficiencies that ripple across admissions, throughput and operations, Shah told Fierce Healthcare.
Labor is the largest expense in healthcare systems, accounting for 50% to 60% of hospital operating costs and approaching $1 trillion in annual spend nationwide.
"If you look at it from an individual clinical unit, you see individual clinical managers of a nursing unit spending two to four hours a day just trying to figure out both tomorrow and six weeks from now who's going to work and how they can get the right amount of people at the right place at the right time. These leaders are probably the best resource every one of these health systems has for length of stay, for quality improvement, for patient satisfaction and they spend their time doing such a low-value task," he said.
"Then you look at it from the hospital level or an enterprise level, and health systems are managing this problem that's 100,000 times more mathematically complicated than air traffic control at a major airport on disconnected nodes of paper and spreadsheets. The goalpost for them isn't making the optimal decision out of the 1,000 decisions they're making every day; it's making a decision and then moving thousands of staff and hundreds of patients every four hours on paper and Excel spreadsheets," he noted.
Without a way to forecast demand or automate the response, a single large health system can spend more than $100 million a year on premium overtime and agency labor.
Labor optimization is the key constraint behind patient flow, operational efficiency and financial performance across health systems, Shah asserts.
Capacity planning is the other half of the equation. Hospital revenue depends on matching patient demand to available beds and staff, yet most systems still manage beds and staffing in separate silos. This can inadvertently drive up length of stay, leave beds unused and lengthen the wait for patients.
Vitalize founders view hospital staffing and capacity management as a complex logistics problem that directly affects finances, patient outcomes and clinician experience.
Shah and Sanketh Andhavarapu, co-founder and chief product officer, founded Vitalize to build the operating system for hospital operations, optimizing clinician and nurse staffing, scheduling and labor efficiency to reduce healthcare system costs. The company participated in the Y Combinator Winter 2023 batch. Initially started as a healthcare worker wellness app, the startup pivoted to focus on hospital operations, starting with workforce and capacity management.
Vitalize positions its software as an "air traffic control" system for healthcare operations, helping health systems automate staffing, forecast demand, manage capacity and reduce reliance on overtime and agency labor, executives said. Vitalize’s AI automates the most manual scheduling tasks for clinical leaders, while forecasting demand and orchestrating staff across thousands of beds in real time.
With every shift it manages, the platform learns a system’s specific rules and sharpens its recommendations. The platform integrates natively with electronic medical record and time-and-payroll systems, replacing a patchwork of scheduling, staffing and capacity management tools, executives said.
The company's platform uses machine learning, optimization models and AI agents to forecast staffing needs, fill schedule gaps, automate staffing workflows and recommend patient placement decisions, Shah noted. He argues that labor management is the foundational constraint behind broader patient flow and capacity challenges, making it the logical starting point for solving operational inefficiencies across hospitals.
"We use agents to do things like automatically reach out to staff, automatically update downstream time attendance and payroll systems, reach out to clinical managers and update schedules. You can then use that data to be able to actually recommend intelligently where patients should be moving. So you can be able to say, based on the staffing capacity of these units and these 15 patients sitting and boarding in the emergency room, these are where you should actually think about moving patients to be able to reduce length of stay and get them discharged faster," Shah said.
Vitalize works with more than 15 health systems under enterprise-wide, multi-year contracts. Its customers include MemorialCare, LifeBridge Health, Allina Health, Northwestern Medicine, Rochester Regional Health and St. Luke's Health, among others.
“With financial pressure mounting, operations still running on paper and Excel, and frontline leaders burning out, addressing labor and capacity challenges isn’t a nice-to-have—it’s essential to keeping our healthcare systems running,” said Brant Heise, managing partner of the MemorialCare Innovation Fund, in a statement.
Vitalize's platform manages millions of shifts each week across dozens of health systems, saving clinical leaders more than 2,000 hours per day collectively. The company said it delivers measurable ROI by quickly cutting premium labor spend.
Rochester Regional Health reported a 50% reduction in time spent on manual staffing and scheduling tasks within weeks of deploying Vitalize. St. Luke's Health said it cut premium labor spending by mroe than 50% within 12 weeks.
“Vitalize’s ROI exceeded our expectations,” David Pereles, St. Luke’s Health chief information officer, said in a statement. “In just 12 weeks, we saw a 54% reduction in premium labor spend across overtime and agency costs, and we’re moving quickly to roll it out across the system.”
Dan Ireland, EVP and Chief Nurse Executive at Rochester Regional Health, said the partnership with Vitalize will build a stronger workforce, drive improved finances and better outcomes for patients.
"From a hard dollars perspective, one of the most concrete ways we reduce spend is through premium labor reduction and that's a combination of overtime spend, shift incentive spend and agency spending. We've seen health systems saving over 50% on those three buckets within three to four months of deploying our product," Shah said.
The company's value lies in improving both hospital finances and the day-to-day experience of frontline staff by reducing administrative burdens and allowing nurses and clinical leaders to spend more time focused on patient care, Shah adds.
The new funding will support the company's growth, deployment and product development as Vitalize expands from labor management into broader patient throughput and capacity optimization.
"We're solving a very large and complex problem. We're not just building a point solution for scheduling. We're not building a solution for incremental improvement in staffing. We're building an orchestration layer that takes every one of these really complex clinical operations problems and gives them a single OS to manage all of them. It's an incredibly technically complex problem that we're solving," Shah noted.
“The pandemic is the best example of that. You could not treat a patient if there wasn't an ICU-trained nurse, a bed available in critical care and a ventilator. I see Vitalize as the operating system that connects all three. If you think about where we are in our journey of a three-legged stool, we're really only concretely solving the first but expanding to the second. There is an incredible amount of products still ahead of us to be able to expand further into patient capacity optimization workflows, supply chain opportunity, and then being able to actually go down market and not just work with health systems, because this problem pretty much exists in every instance of care delivery,” he said.
Shah sees opportunities for Vitalize to work with ambulatory care providers as well as skilled nursing facilities and long-term care hospitals.
Labor is a nearly trillion-dollar line item for U.S. health systems, making it one of the largest and most underpenetrated software markets in healthcare, noted Vig Chandramouli, partner at Oak HC/FT.
In an increasingly crowded healthcare AI market, Vitalize stood out because it is tackling the full workforce and capacity management workflow rather than a narrow use case, Chandraouli told Fierce Healthcare.
By integrating data from EHRs, HR systems and payroll platforms, the company can coordinate staffing decisions in real time based on patient demand, staffing availability and changing clinical conditions, he noted.
Vitalize doesn’t just surface insight; it also drives action, and the ROI shows up fast, Chandraouli noted.
"It's simply just having a very smart, intelligent system that's giving you the best recommendations or taking actions on your behalf and allowing you to focus on delivering optimal care," he noted.