The immediate future of the healthcare staffing industry will be rewarded with several demographic trends that will have to compete with the risk of new healthcare legislation.
What's the Up Side?
On the positive ledger, the Staffing Industry Analysts: Staffing Industry Insight (dated September 2011), an independent staffing industry publication, estimates total staffing industry revenues were $114 billion in 2011 and forecasted to be $122 billion in 2012 - in each case, up from $103 billion in 2010. The biggest industry segment, contract labor, is forecasted to grow at an annual rate of 7 percent in 2012 with revenues of $94 billion, while permanent placement is forecasted to grow by 12% in 2012 with revenues of $6 billion. Within the contract help segment, professional staffing is expected to grow at an annual rate of 10 percent in 2012 to revenues of $51 billion. The temporary staffing (a.k.a. contract labor) industry is historically cyclical and typically has a strong correlation to employment and GDP growth. Within the healthcare staffing segment, approximately 77.6 million Baby Boomers will be a driving force in hospital census and healthcare delivery for the next 20 years. The delivery of healthcare will continue to expand in the U.S. but the nature of its payment may change.
Healthcare Reform
In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, The Acts) was signed into law for the U.S. The Acts represents comprehensive healthcare reform legislation that, in addition to other provisions, it requires employers provide healthcare coverage to temporary employees in the United States or incur penalties. Although this cost may be passed on to clients, there can be no assurance that firms will be able to increase client bill rates in a sufficient amount to cover the increased costs. This could reduce margins and negatively impact the industry. The jury for this legislation is figuratively and literally still out, as the Supreme Court is currently wrestling with the constitutionality of the law and may strike down part or all of the law in its entirety.
Stay tuned for a clearer picture of this situation as it unfolds. What do you think the future has in store?