The Changing Landscape of Healthcare Staffing: Mergers & Acquisitions in the US
Last time updated: June 11, 2024
In recent years, the healthcare industry in the United States has experienced significant transformation, with one of the most notable changes being the surge in mergers and acquisitions (M&A) within the healthcare staffing sector.
Various transactions have played a key role in reshaping the way healthcare professionals are recruited, employed, and placed within healthcare facilities across the country.
A Growing Trend
Healthcare staffing M&A in the US has been on the rise, reflecting the industry’s response to several key drivers. The first and foremost driver is the ever-increasing demand for healthcare services, driven by an aging population and an increasing shortage of nurses in the United States. As the demand for healthcare services grows, so does the need for qualified healthcare professionals, including nurses, doctors, and allied health workers.
To meet this demand, healthcare staffing companies are expanding their reach through mergers and acquisitions. These strategic moves allow staffing firms to pool resources, expand their client bases, diversify key MSP / direct relationships, increase geographical footprint, and access a wider talent pool, all of which are critical in the highly competitive healthcare and medical staffing market.
Top Acquiring Companies
Several companies in the healthcare staffing industry have been particularly acquisitive in recent years, each with its own strategic reasons for pursuing mergers and acquisitions. Here are some of the most acquisitive companies and the motivations behind their M&A activities:
1. AMN Healthcare
Diversification: AMN Healthcare has been one of the most active acquirers in the industry. Their strategy includes diversifying their service offerings to cover various aspects of healthcare staffing. By acquiring companies specializing in travel nursing, allied health staffing, and workforce solutions and technology, AMN Healthcare can cater to a broader spectrum of healthcare staffing needs.
Market Leadership: AMN Healthcare’s aggressive M&A strategy has helped solidify its position as one of the largest healthcare staffing companies in the US. Their acquisitions have enabled them to capture a significant share of the market.
2. Cross Country Healthcare:
Portfolio Expansion: Cross Country Healthcare has pursued acquisitions to expand its portfolio of staffing services. By acquiring companies like Mint Medical Physician Staffing and Lotus Medical Staffing, they continue to diversify their service offerings into locum tenens staffing among other specialties.
Strategic Partnerships: Cross Country Healthcare also values strategic partnerships and acquisitions as a means of enhancing their competitive position and offering more comprehensive staffing solutions.
3. CHG Healthcare
Innovation and Technology: CHG Healthcare has been known for its focus on innovation and technology in the staffing industry. They acquired Modio Health, a credentialing software company, to streamline the onboarding process for healthcare providers. This strategic move reflects CHG Healthcare’s commitment to leveraging technology to improve efficiency.
Market Expansion: CHG Healthcare’s acquisitions have been driven by a desire to expand their footprint and gain access to new regions and markets.
4. Aya Healthcare
Innovation: Aya Healthcare has pursued acquisitions with a focus on technology. Their acquisitions of Flexwise and Polaris AI continue to show a trend toward this acquisition strategy. Like Cross Country, Aya sees the acquisition of technology capabilities to be important for future growth.
Specialization: Aya Healthcare has also invested in expanding service offerings to adjacent markets to their travel nursing division.
5. Medical Solutions
Niche Expertise: Medical Solutions has made acquisitions to strengthen its position in specific niches within the healthcare staffing industry, such as allied health among others. By acquiring companies like Host Healthcare, they gain expertise and market share in these specialized areas.
The motivations behind these companies’ acquisition strategies vary, but some common themes emerge. Diversification and specialization are prevalent, as companies seek to broaden their service offerings or deepen their expertise in specific niches. Market leadership and competitive advantage are also key drivers, as larger companies aim to consolidate their positions and gain a stronger foothold in the industry.
Additionally, technology and innovation play a significant role in many of these acquisitions. Companies are keen on acquiring technology-driven solutions to improve efficiency, enhance the user experience, and stay competitive in a rapidly evolving healthcare staffing landscape.
Market Forces Driving M&A
Several market forces are driving the surge in healthcare staffing M&A:
- Fragmented Market: The healthcare staffing industry is highly fragmented, with numerous small and mid-sized firms operating independently. M&A activities allow larger players to consolidate their market share and create economies of scale, which can lead to cost savings and improved service quality.
- Technology and Innovation: Technology has played a significant role in shaping healthcare staffing, with innovations like telemedicine and AI-driven matching platforms. M&A can help companies access new technologies and integrate them into their services more rapidly.
- Regulatory Changes: The healthcare industry is subject to evolving regulations, such as changes in licensing requirements for healthcare professionals. M&A can provide staffing firms with the resources needed to navigate complex regulatory landscapes effectively.
- Demand for Specialization: As the healthcare sector becomes more specialized, staffing companies are increasingly looking to acquire niche firms with expertise in specific healthcare fields, such as travel nursing or locum tenens.
- Increasing Nurse Shortages: An increasing shortage of nurses in the United States coupled with an aging population has driven increased demand for quality healthcare professionals in many areas across the country.
Implications of Healthcare Staffing M&A
The growing trend of M&A in healthcare staffing has several implications for various stakeholders:
- Increased Access to Talent: M&A activities allow staffing firms to access a wider pool of healthcare professionals. This is particularly crucial in addressing shortages in certain specialties and regions.
- Efficiency and Cost Savings: Consolidation often leads to improved operational efficiency and cost savings, which can benefit healthcare facilities and, ultimately, patients.
- Streamlined Credentialing: Acquisitions of technology-focused firms can result in streamlined credentialing processes, reducing the time it takes to onboard healthcare providers.
- Market Competition: While consolidation can improve the competitive position of larger staffing firms, it may limit options for smaller healthcare facilities that rely on staffing agencies. These facilities may face increased pricing pressure and reduced negotiating power.
- Quality of Care: Maintaining high-quality patient care remains a primary concern during M&A. Healthcare staffing companies must ensure that their mergers do not negatively impact the quality of care provided.
Healthcare staffing M&A in the US is a dynamic and evolving landscape, driven by the need to meet the growing demand for healthcare services efficiently. As larger staffing firms continue to acquire smaller players, the industry is likely to witness further consolidation and technological advancements. While this trend offers benefits such as increased access to talent and cost savings, it also poses challenges that need to be carefully managed to ensure the continued delivery of high-quality healthcare services to patients across the nation.
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Chad Gardiner
Chad Gardiner, Director of Investment Banking, leads Bridgepoint’s efforts in the Staffing and Business Services sectors. During his 21 years of prior experience, Chad was responsible for successfully moving more than $8 billion in capital for investment banking firms. A graduate of Brigham Young University, Chad earned a B.S. in accounting, was a Golden Key National Honor Society member and is FINRA series 7, 79, 63, 24 and 28 licensed.
