Investing in Healthcare Recruiting – Risks and Opportunities

December 6, 2016

Hospitals and healthcare are definitely on the reliable growth pace. Current industry trend is really reverse to what you would expect, being new to this sector – this is shortage of nurses and medical professionals, meaning that it is rather challenge to find certified applicants, and not really to get new contracts from healthcare organizations. This trends requires the investors to look at healthcare staffing agency from the perspective of its popularity among nurses community – getting nurses opinions on which company is “better” – in the senses of being more friendly, offering better conditions, including faster paychecks issuance. As medical staffing companies actually sells services in the form of recruiting fees, plus W2 services to their medical temps – you should feel the nature of the risks and the opportunities: they are at the management experience, passion and competence side, not in real material assets, such as plants, production tools or even buildings. Let’s try to see the pro and contra arguments:

1. Economy Cycles: Booms and Recessions – healthcare is always in demand, so it should be considered stable and not really exposed to economy cycling. This statement might be considered as a trend, however some companies will suffer from bad economy, but in our opinion mostly due to the recession “atmosphere”.

2. US population “aging” – this is similar to what was long times seen in Europe and Japan, where immigration offset (or even new young immigrants inflow reversed the aging process) was not as active as in United States. Senior population requires more medicine attention and potentially will increase the workload for healthcare staffing organizations, who supply hospitals, nursing homes and retirement communities with nurses and medical doctors.

3. Baby Boomers “contribution”. It is believed to be a factor and it should begin its population aging contribution, in the sense that baby boomers will approach retirement age in five-ten years from now. Maybe it is over estimated, however as new population is growing due to current high rate of immigration into US.

4. Healthcare placement competition is rising. Still, we see large number of privately owned recruiting firms, who are strong on the local and sub-regional markets, so the best way to grow is merges and acquisitions, it is not a good time for new operations launching in the regions. Obviously it is too optimistic to predict that all of these healthcare staffing firms will be absorbed by public healthcare placement providers, however the trends are out there.

5. Sun belt states syndrome. Retiring population has a trend to sell their mortgage paid single family houses in New England, New York, Illinois, California and other mid-west or northern states and move down to Florida, Texas, Georgia, Arizona, and others sun belts states, where they surge new medical nurse inflow.

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