Nurse staffing declining, while demand for surgeons (human and robots) grows
Healthcare Staffing Earnings: Nurses out, Doctors In. Also, robots.
The latest earnings reports provide insight into dramatic changes in the healthcare labor market, particularly around nurses and surgical robots.
The Great Nurse Staffing Windfall Ends
The Federal Government inflated the already hot healthcare market with hundreds of billions of dollars in subsidies. This tidal wave of dollars accelerated many startups and brought public company, healthcare stocks to all time highs
Federal Emergency Public Outlays and Expenses by Year (yes, 2019 to 2020 is real)
source: https://www.usaspending.gov/federal_account/075-0140
Healthcare and nursing wages benefitted from this influx of federal dollars. During the height of covid, hourly rates doubled. (Note: this is a boon for staffing firms that typically take a percentage of hourly rates).1
With the declared health emergency however, government funds are declining and the covid demand decreases, wages are normalizing. Staffing agencies are now seeing declining revenues and the party is ending.
AMN Healthcare and Cross Country Healthcare revenue
Source: https://www.macrotrends.net/stocks/stock-comparison?s=revenue&axis=single&comp=AMN:CCRN
This was always inevitable as pandemic conditions receded. The overearning was a temporary aberration, not a permanent state. But, it was easy to think things might continue because of persistent healthcare shortages.
Nurse shortages are caused by retention issues and restricted supply
Training new nurses takes significant time given education requirements and clinical training bottlenecks. Meanwhile, nurse retention is a significant issue.2
Staffing firms and startups were setting records based on rising wages, not any increase in supply.
Healthcare demand is shifting to procedures — enter the robots
As nurse staffing softens, demand has expanded for other healthcare staffing categories. In particular, placements for locum tenens and traveling surgeons are growing quickly. This indicates continued shortages among physicians available to perform surgery. AMN reported its locum tenens business at all time highs, up 15% YoY. 3
Rise of the robots
At the same time, robotics is transforming the surgery market. Intuitive's da Vinci robot placed over 300 systems last quarter and reported 22% procedure growth.4
ISRG worldwide procedure trend to 2022
source: https://isrg.intuitive.com/static-files/7cb161c9-d8cc-40ff-89ab-74b148704728
These robots' ability to facilitate minimally invasive surgery is driving rapid adoption globally. In addition to faster recovery times, robots allow for telesurgery. Surgeons in one place, robot surgery in another. This could help address concerns about limited surgeon capacity.
Implications
In aggregate, this data on healthcare staffing and robotics points to shifts in labor demand and business models:
Nurse staffing is reverting to more normal pre-COVID economics, but nurse supply constraints remain, providing incentives to solve the problems
New pockets of healthcare staffing demand are emerging (e.g. surgery)
Robots are a game changer in augmenting clinician capacity and care delivery
Companies must adapt to these changes and realign around areas of more sustainable demand. The pandemic was a temporary shock, but it also accelerated secular trends in healthcare automation.
https://www.nbcnews.com/health/health-care/travel-nurses-took-high-paying-jobs-covid-pay-slashed-rcna59604
https://www.nursingworld.org/practice-policy/nurse-staffing/nurse-retention-strategies/
https://ir.amnhealthcare.com/news-releases/news-release-details/amn-healthcare-announces-second-quarter-2023-results
https://isrg.intuitive.com/static-files/7cb161c9-d8cc-40ff-89ab-74b148704728