2023 was a tumultuous year for the healthcare staffing industry. There was historic job growth in the healthcare sector, but wages were resetting after the COVID-19 crisis and the physician and nurse shortage continued. As a result of these challenges, 37% of healthcare respondents to the Bullhorn GRID 2024 Industry Trends Report indicated that they had experienced declining revenue this past year — only 29% reported revenue growth.

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Cautious optimism for 2024 against challenging economic backdrop

But there is cautious optimism amongst healthcare staffing firms as they look ahead to the remainder of 2024, with almost two-thirds predicting revenue growth this year.

As firms predict growth in 2024, they are planning for increased investments in infrastructure and staff. 36% say they plan to increase overall operating budgets in 2024, and 41% plan to increase their technology investments.

Top priorities: Attracting clients and candidates are key areas of focus for healthcare staffing firms

With the economy not yet recovered and the talent shortage continuing, firms are equally focused on attracting new clients and engaging skilled candidates. Nearly half of healthcare staffing firms listed gaining new customers as their top goal for 2024. Both these priorities will remain top of mind throughout 2024.

Firms remain focused on both clients and candidates

For most firms, relationships with both clients and candidates topped the list of firms’ business priorities. This included both attracting new clients and strengthening relationships with current ones. For candidates, this meant both attracting new candidates and retaining talent by enhancing the candidate experience.

Biggest challenges: Macroeconomic uncertainty looms large

Firms remain uncertain about the economy and how quickly it will recover, with 65% listing uncertainty over the economy and future growth as the top market challenge facing the industry. Combined with continued concerns around tight talent pools and pricing pressure, healthcare staffing faces some significant headwinds in 2024.

Tight healthcare talent pools remains a top concern

Compared to the rest of the staffing industry, healthcare staffing is facing a more extreme labor shortage — 54% of healthcare firms cite tight talent pools as a top concern compared with 42% across all other industries. Many healthcare staffing firms have been experiencing greater pricing pressure, especially lingering high wage expectations set during the COVID-19 period, and many healthcare facilities are trying to reduce staffing costs to stay afloat.

Temp staffing platforms are an increasing concern

It is not surprising that firms believe the top market challenge to be the overall economic outlook for 2024. What is surprising is that 44% of firms are concerned about increased competition from temporary staffing platforms — up from just 12.5% last year. This signifies a major shift in the market with these platforms holding 22% of the market today. It is increasingly clear that firms need to be offering self-service and other platform tools to remain competitive with candidates.

Automation helps firms win new business even in a tough economy

Gaining new clients was a top priority in 2023 and remains one in 2024, especially with the economy uncertain. In 2023, 60% of firms reported they had excellent or good success at winning new business — while that’s pretty good, it still leaves a lot of healthcare staffing firms treading water. What are some of the obstacles they most need to overcome and what tools can give them a leg up?

Hiring freezes and competition make winning new business an uphill battle

Firms report that hiring freezes were a big roadblock in 2023. As the economy worsened in 2023, many large healthcare organizations pressed pause on hiring as they examined their reliance on contingent workers. Most seem to have stabilized their contingent to permanent ratios and are likely to return to hiring, especially as healthcare utilization is expected to increase in 2024. And many healthcare staffing firms are feeling the pressure of increased competition, particularly as more gig options tempt candidates in the already tight labor pool.

Automating key tasks makes firms more competitive

Firms that rated their success at winning new business as excellent or good were doing a few things differently when compared to those with poor success in this area. They automated some key tasks that allow them to match better candidates and move them through the funnel more quickly. They also used these tools to free recruiters up to focus on new clients while still supporting their existing ones.

The most successful firms are carefully crafting each stage of the recruitment cycle

Overall, healthcare staffing firms tend to place candidates quickly, with nearly a quarter placing candidates in less than 10 days and 61% placing candidates in less than 20 days. But what allows the most successful firms to move candidates quickly and efficiently through the funnel?

Top-performing firms can rely on their databases and know they have the right jobs for those candidates

Looking across the recruitment cycle, it is clear that all stages matter when it comes to revenue performance. But a few items do stand out: firms that gained revenue in spite of the tough economy in 2023 were highly efficient and really focused on being as productive as possible when it came to taking advantage of their databases. These firms were 34% more likely to say they could rely on their databases and 18% more likely to say they had the right jobs for their talent. They were also 19% more likely to have a clear redeployment strategy.

Accelerating credentialing and onboarding can improve efficiency

One of the biggest pain points for contingent healthcare workers is credentialing and other onboarding paperwork. When asked what tools would be the most helpful in smoothing out this part of the process, firms focused on tools to allow candidates to easily upload their credentials and keep recruiters up to date on their onboarding progress.

Healthcare staffing firms continue to invest in the talent experience

With the healthcare labor shortage showing no signs of abating, firms are examining a number of creative ways to attract and retain the talent that remains. This is especially important since the GRID 2023 Talent Report found that 86% of healthcare contingent workers are considering leaving the temporary workforce for full-time employment.

Firms are laser-focused on curating the talent experience and speeding up placement

Firms are investing in technology that improves the accuracy and speed with which candidates are matched to jobs as well as investing in tools to keep candidates actively engaged with recruiters. They are banking on these talent experience improvements to differentiate them from other firms and keep the best candidates active in their database.

And firms are communicating with candidates frequently — but there is room for improvement

When asked how often they reach out to candidates on assignment, just over half indicated they communicate with candidates once a week or more. This is an important benchmark since the GRID 2023 Talent Report found that ¾ of candidates will continue working with a firm if they get weekly communication from recruiters.

Wasted time and rote tasks cause the most friction for candidates

When asked about the biggest pain points in the talent experience, 30% of firms said waiting — presumably waiting for paperwork, waiting for responses, waiting for interviews to be scheduled, and more. Waiting takes a huge toll on productivity and can be greatly improved by deploying automation tools. Additionally, firms cite rote tasks like onboarding and applications as bottlenecks. These are perfect candidates for emerging AI technology tools.

Healthcare staffing firms are leaning on automation, but there is still room for improvement

With so many points of friction addressable with technology, it is worth examining where firms are in their digital transformation journey. This year, only 24% of respondents indicated they are in the advanced stages of digital transformation — about where they were last year. So, progress seems to have stalled a bit, likely reflecting the difficult economic environment in 2023. Looking at specific tools and solutions firms are using, it is clear that there are still a lot of opportunities to deploy automation and many possibilities for emerging AI technologies.

A lot of potential use cases for automation remain

Top automation tools currently used by firms include job search, onboarding tasks, candidate screening, and payroll/billing. But only one of these was being consistently used by more than half of the healthcare staffing firms surveyed. That represents a significant opportunity for savvy firms to lean into automation to differentiate themselves, especially when the analysis above shows how much of an impact automation can have on financial performance, winning new business, and improving the talent experience.

Early adopters of AI see significant revenue advantage

Although AI technology is new and healthcare staffing firms are not as far along in their adoption as some other verticals, the top-performing ones are making bold, early bets on the emerging technology. Firms that say they are using AI for gathering client requirements were 3 times as likely to report revenue growth in 2023. These revenue winners were almost 3 times as likely to be using AI for reporting, and more than 75% more likely to be exploring AI for candidate screening, redeployment, and time collection.

What does this mean for healthcare staffing firms in 2024?

Given the challenges, firms that want to remain competitive will need to thoughtfully leverage automation and other technology tools to increase productivity and efficiency, carefully curate the talent experience to attract and retain the best candidates, continuing to provide differentiated value to both sides to avoid having to compete solely on price. But those that do this will thrive in spite of the talent shortage and can see significant gains in revenue and winning new business. These strategies also have the advantage of nurturing client relationships, building true partnerships that last.