Rosy Picture Ahead for Healthcare Staffing Industry

Rosy Picture Ahead for Healthcare Staffing Industry

Harris Nesbitt, an investment and corporate banking firm headquartered in New York City, hosted its first Healthcare Staffing Day recently and the mood among attendees and investors was decidedly optimistic. Executives from the major healthcare staffing firms, as well as their major institutional investors, predicted strong performance in the healthcare staffing industry over the coming years.

Revenue growth in 2005, which followed two consecutive years of declining revenues in 2003 and 2004, is expected to be followed by a strong 2006 and beyond. Jeff Silber, Harris Nesbitt managing director, noted that I think we are being overly conservative here, but we are looking for about a 6/5% compound annual growth rate through the end of the decade. Silber went on to say that Earnings should be growing much faster. We are roughly looking on a long-term basis for earning growth in the low-to-mid-teens, but obviously it will be a lot higher than that in the early years after the sector continues its recovery.

Though hospital admissions continue at reduced rates, Silber still believes that strong demand, coupled with a limited supply of qualified medical personnel, will dictate strong performance in the industry as a whole. Much of the attention in the Staffing Day event focused on travel nursing, an ever popular segment in the medical staffing industry, though that sector accounted for $2.1 billion in 2005, just 21% of the industry’s total revenue.

Locum tenens, also known as temporary physician staffing, received quite a bit of attention as well, as investors not familiar with the sector were introduced despite the existence of the segment since 1979.