In today’s healthcare staffing industry, travel nursing has become the dominant segment by revenue. According to research, travel nursing comprised over 31% of the total healthcare staffing market in 2023.
Travel nurse staffing comprises 31.3% of the market, indicating significant sector reliance.
Healthcare Staffing Market
That dominance raises an important question: Why did travel nursing eclipse the traditional per diem market?
Per diem nursing refers to short-term, on-demand nursing assignments typically covering shifts on a day-to-day basis within a nurse’s local area. Unlike travel nurses who accept longer contracts and often relocate temporarily, per diem nurses offer hospitals flexible staffing for last-minute or fluctuating needs without the burden of relocation or extended commitments. Per diem could also refer to physicians and other roles, not just nursing roles.
1. Supply and Demand, Simplified
Hospitals under pressure to meet staffing ratios often face immediate gaps. Their core mission is patient care, not managing contingent labor logistics. When an ICU or med-surg unit suddenly needs additional coverage, the simplest solution is to “rent” a nurse for a defined block of time, typically 8 to 13 weeks.
This approach is easy to implement but expensive to maintain. It allows hospitals to secure qualified clinicians quickly but bypasses the growing pool of local nurses who might prefer short-term, flexible “gig-style” work without committing to staff employment or relocation.
Many local nurses value the autonomy of per diem assignments, which allow them to balance work with personal commitments, avoid contract constraints, and maximize earnings by selecting shifts based on their availability and preferences.
2. The Agency Incentive
For staffing agencies, travel nursing is more profitable. Longer assignments stabilize revenue, simplify recruiting pipelines, and generate higher markups than per diem placements. As a result, agencies naturally prioritize travel contracts, even when local or part-time nurses could fill the same needs at a fraction of the cost.
Longer travel assignments reduce administrative overhead and streamline recruitment pipelines for agencies, creating stable, predictable revenue streams. This focus often leads to under-investment in the more complex, variable scheduling and credentialing processes required for effective per diem workforce management.
This prioritization drives up hospital labor expenses, as travel nurses command higher hourly rates and agencies apply premium markups to cover travel-related costs and logistics.
The per diem segment, though potentially more efficient for hospitals, has suffered from this misaligned incentive structure.
3. The Technology Gap
Historically, per diem management required manual scheduling, inconsistent communication, and complex credential tracking. Few hospitals had the tools to handle dynamic shift-by-shift scheduling across multiple units.
That’s changing. Modern workforce management tools include automated credentialing platforms, mobile scheduling applications, real-time digital timekeeping, and integrated compliance dashboards that significantly enhance operational control.
These technologies reduce scheduling errors, improve communication between staff and management, expedite onboarding processes, and ensure adherence to regulatory requirements, transforming per diem staffing from manual, reactive processes into streamlined, proactive workforce solutions.
The same technologies that power agency operations, automated credentialing, mobile scheduling apps, digital timekeeping, and compliance dashboards, are now being implemented directly within hospital systems. When these platforms are adopted, hospitals can efficiently manage hundreds of local caregivers across departments without relying on third-party agencies.
4. A New Model for Local Workforce Engagement
When travel costs and lodging expenses are eliminated and hospitals implement modern workforce management technology, both efficiency and savings accelerate.
The next evolution of healthcare staffing will likely blend the best of both worlds:
- The flexibility of gig-style per diem work
- The efficiency of travel nurse scheduling tools
- The cost savings of local labor pools
Hospitals seeking sustainable staffing solutions must invest in technology-enabled local workforce management, empowering their teams with flexibility, transparency, and cost control while reducing dependency on high-cost travel nursing contracts.
Hospitals that learn to harness their own community-based, credentialed pools, empowered by automation and transparency, will regain control over costs and reduce dependency on high-markup agency contracts.
