Report: Revenue for staffing firms up as demand soars for staff to help fight COVID-19

Staffing firms are charging higher rates and increasing revenue as hospitals race to staff up to combat the COVID-19 pandemic, a new report finds.

The report, released Wednesday (PDF) from financial advisory firm Capstone Headwaters, gave an update on the financial health of major staffing firms. The report also found that deals in the healthcare staffing sector have fallen substantially during the pandemic.

The report found that the cancellation of elective procedures by states at the onset of the pandemic softened demand for surgeons, anesthesiologists, nurse anesthetists and clinicians from staffing firms.

“While staffing has been negatively impacted by the curtailment of elective procedures, demand has surged for nurses in areas combating acute COVID outbreaks,” the report said.

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This has led to higher rates for staffing firms. Over the past three months, 60% of travel nurse firms got higher billing rates, the report said.

Hospitals in COVID-19 hot spots have had to staff up quickly not just to combat rising novel coronavirus cases but also to replace front-line healthcare workers who have gotten sick. At the same time, lower revenue from the lack of elective procedures and low patient volume overall has led some systems to furlough and lay off workers.

Some staffing firms are showing double-digit revenue gains, but the long-term impact of the pandemic is yet to be known.

AMN Healthcare, for one, has seen its revenue from nurse and allied staffing solutions increase 14% year over year and hit record-high revenue in the first quarter by generating $602 million, the report said. But the firm has also coupled with a decline in other specialties.

“With COVID-19 patient census, elective surgeries and other health care services reduced across the country, many of our businesses experienced cancellations and a decline in demand,” said AMN President and CEO Susan Salka in the report.

The firm Cross Country Healthcare also experienced a whipsaw approach with hospital staffing. Demand for travel nurses increased 60% as of March 31, but the duration of those assignments is murky.

“Given the uncertainty each health system faces, we do not know how long assignments will run or what percentage may renew,” said William Burns, executive vice president and chief financial officer of Cross Country.

At the same time, merger and acquisition activity in the healthcare staffing sector has slowed substantially. There have been seven transactions this year compared with 25 at the same time period in 2019.

There have been some deals as staffing firms boost their technical capabilities, such as AMN’s acquisition of Stratus Video which provides remote language interpretation services for healthcare companies.

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“While transaction volume has been severely hampered, healthcare staffing providers have continued to invest in digitization and robust tech-enabled services as a means of differentiation through 2020,” the report said.

Staffing firms are also launching public-private partnerships to help shore up any shortage of professionals.

AMN and the firm Randstad introduced Integrated Talent Solutions intended to help state coalitions, federal agencies and hospital systems get faster access to needed talent.

“While transaction volume has been severely hampered, healthcare staffing providers have continued to invest in digitization and robust tech-enabled services as a means of differentiation through 2020,” the report said.