Transformation Capital backs CareRev's $50M series A round to scale healthcare staffing platform

The COVID-19 pandemic has exacerbated existing workforce challenges for hospitals and health systems. 

Hospitals are increasingly finding their hands tied on nurse staffing, reporting numerous position vacancies, heavy use of high-cost travel nurses and difficulties onboarding new nurses, Dave Muoio reported.

CareRev, a digital health startup that provides a marketplace to connect hospitals with local healthcare professionals on-demand, scaled its platform significantly last year to meet the demands of hospitals during the pandemic.

The company works with 30 hospitals and health systems, including SSM Health in St. Louis and Froedtert Health in Milwaukee and more than 500 outpatient centers. 

CareRev scored a $50 million series A financing round to scale its technology solution to meet the growing demand for a more flexible healthcare workforce.

Transformation Capital, a growth equity fund solely focused on innovative healthcare IT and services companies, led the round. Industry Ventures and Zach Coelius, Michael Siebel, Gaingels and other investors joined the round.

Los Angeles-based CareRev offers a cloud-based platform in which hospitals and other healthcare facilities post shifts when they need clinical support, and local, vetted healthcare professionals claim the shifts through their mobile app—eliminating the need for a traditional agency.

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Unlike other healthcare labor marketplace platforms, CareRev offers health systems the technology to create their own hybrid marketplaces in which internal employees are given the option to claim shifts before they’re broadcasted to local, external CareRev professionals, according to the company.

Will Patterson, a former trauma nurse, founded CareRev in 2015 with the goal of connecting hospitals and healthcare professionals through a mobile app and upending the traditional healthcare workforce model.

The platform helps hospitals reduce labor costs, particularly offsetting expensive travel contracts, and gives professionals a more intuitive way to pick up shifts: on their phones, according to the company.

Prior to COVID-19, labor had already reached over half of a hospital’s total expenses, according to data collected by the Healthcare Financial Management Association (HFMA). 

Between full-time employees, nurse travel contracts, and agency fees, hospitals use several different recruitment channels to overcome today’s nursing shortage and still meet changing staffing demands. Healthcare professionals have found work through these same channels, but had no easy, quick way to pick up extra shifts at other facilities in their area.

During the COVID-19 pandemic, hospitals were forced to adapt quickly with the help of technology.

“When the pandemic hit, we were ready to help both hospitals and healthcare professionals through the uncertainty. The flexibility of our solution allowed for accelerated adoption when it was most needed,” said Patterson in a statement. “Our vision is to build a more resilient post-COVID workforce in which health systems can tap into a latent supply of local, flexible healthcare professionals when they need them, and professionals are empowered to work where and when they want.”  

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Grandon Brimley, SSM Health’s vice president of transformation said in a statement, "With CareRev’s dedication to streamlining onboarding and getting qualified healthcare professionals in the door faster, we now feel confident about reducing our reliance on costly long-term travel contracts while leveraging our local community of qualified professionals.”

More than 11,000 registered nurses, certified nursing assistants, medical assistants and surgical and radiologic technicians use CareRev to find flexible work, according to the company.

With the new funding, CareRev plans to invest in scaling their product and operations, including incorporating more artificial intelligence and machine learning.

CareRev has seen 20% month-over-month growth since April 2020 and doubled its revenue in the past six months, Patterson said.

In the fourth quarter of 2020, the company doubled the number of healthcare professionals using its mobile app.

"The demand for flexible staffing is through the roof," he said.

"As the country’s nursing shortage becomes more acute and regulatory staffing mandates shift, health systems need innovative staffing solutions—and COVID-19 has only exacerbated the problem,” said Jared Kesselheim, M.D., managing partner at Transformation Capital, in a statement.

“CareRev’s scalable, differentiated approach—including intuitive technology for the two-sided marketplace—has showed us that the traditional, expensive and resource-intensive staffing agencies are a thing of the past. CareRev takes the stress off of the health systems looking to hire and the providers looking for autonomous, flexible work," Kesselheim said.