Mar 01, 2014

ACA: Paving the Path of Opportunity

Due to the Affordable Care Act (ACA), the U.S. Congressional Budget Office forecasts that 30 million non-elderly Americans will gain insurance over 2013 to 2017. Additionally, according to the U.S. Census Bureau, elderly Americans, who consume more health care, are expected to comprise 21 percent of the U.S. population by 2035.

Long-term trends point to a growing shortage of nurses, regardless of recent increases in nursing school graduates. Furthermore, the Association of American Medical Colleges forecasts a shortage of 130,600 physicians, accounting for 14 percent of demand, by 2025.

Healthcare occupies 17 percent of the U.S. GDP and the surge in demand is expected to result in an increase to 18.4 percent of GDP in the next three years.

Prospects for Healthcare Staffing

As of 2012, healthcare staffing had a 10 percent share of total temporary staffing. According to Staffing Industry Analysts, the U.S. healthcare staffing market will grow by 6.5 percent in 2014 to $10.5 billion, showing an increase from the 4 percent growth in 2013.

The largest sub-segments for growth in 2014 will be travel nursing at 8 percent, per diem nursing at 7 percent, and locum tenens at 8 percent. Allied health staffing is projected to grow by 5 percent.

Many view the U.S. healthcare delivery system as fragmented, where multiple people provide health care independently without coordination or communication, and no single entity or set of policies is there to guide. Numerous experts attribute this fragmentation and resulting inefficiency of the healthcare system to the fee-for-service model, which is the current dominant payment model, as it promotes quantity over quality. There is a drive to transform from this volume-based payment model to a value-based model. Temporary staffing agencies have traditionally benefited from models that reward volume.

Healthcare Staffing versus Total Employment Growth, Year-over-Year

Results from the 2012 Contingent Buyer Survey for North America indicate that 63 percent of contingent workers in the healthcare industry are hired because permanent workers were not available, compared to 28 percent in other industries. A shortage-driven labor market benefits staffing firms for multiple reasons. Hiring organizations are willing to innovate as they are forced to engage talent on more varied terms, including part-time, contract, and temporary workers. Also to fulfill their talent needs, employers turn to experts such as staffing firms to supplement sourcing methods by providing workers, thus outsourcing their recruitment process in whole or in part. Finally, in large, unionized professions, such as nursing, hiring temporary workers, even at a higher compensation, avoids pressure to increase compensation for existing employees.

Healthcare Temporary Staffing Market Size & Growth Rate

Market Status

While total employment in the U.S. increased by 4 percent over the past decade, employment in ambulatory (outpatient) health services grew 36.6 percent, employment in hospital settings increased by 13.6 percent, and nursing and residential care facilities employments increased by 15.4 percent.

In 2012, a total of 14 million people were employed in the healthcare industry in the U.S. Hospitals employed 35 percent of the total, nursing and residential facilities employed 23 percent, and various ambulatory settings employed the remaining 42 percent.

Employment in the Healthcare Industry

"Some recent analyses also have suggested that the ACA will lead to higher productivity in the health care sector - in particular, by avoiding costs for low-value health care services - and thus to slower growth in health care costs under employment-based health plans. Slower growth in those costs would effectively increase workers' compensation, making work more attractive." ~CBO