Barry Asin President, Staffing Industry Analysts...Source: SIA 2014 Staffing Company Survey – Preliminary Results September 8 ‐ 10, 2014 | Sheraton Dallas And Most Healthcare Staffing

September 8‐10, 2014 | Sheraton Dallas

Keynote SessionHealthcare Staffing on the Road to the Future

Barry Asin, President, Staffing Industry Analysts

TUE, SEPT 9 8:30 AM DALLAS BALLROOM BC

Sponsored by:


Agenda

Drivers of Demand and SupplyTrends and IssuesForecast and OutlookQuestions


Long Term Demand Drivers Remain Strong

Aging population Obesity epidemic Wealth effect

Tempered by cost control needs


Percent of Americans Uninsured Down Significantly Since 2013

Source: Gallup Healthways Well Being Index – July 2014


Affordable Care Act Driving Profits at Hospital Systems in Q2 2014

“Year‐to‐date, HCA has seen a 32% increase in Medicaid admissions corresponding to a 48% decline in uninsured admissions in states expanding Medicaid.”

‘[Tenet Healthcare]commented that commercial admissions growth was the strongest in 10 years, which we attribute to an improving economy as well as solid exchange enrollments. The strong volumes were supplemented by a reduction in uninsured and charity admissions…”

Source: Goldman Sachs Company Updates – Tenet Healthcare and HCA Holdings July/August 2014


US Healthcare Spending Has Grown at Historically Slow Rates, But Increases Projected

Source: National Health Expenditure Accounts, Center for Medicare and Medicaid Services, January 2014


Physician Shortage Projected to Exceed 90,000 by 2020

Source: Association of American Medical Colleges, 2010


Registered Nurse Unemployment Trending Lower and Again Under 2%

Source: U.S. Bureau of Labor Statistics


Healthcare “Quits” Back to Pre Financial Crisis Levels Indicating Increased Labor Mobility

Source: U.S. Bureau of Labor Statistics and Staffing Industry Analysts


Most Healthcare Jobs With Low Risk of Automation

Source: SIA and Frey and Osborne – How Susceptible are Jobs to Computerization?

Healthcare Jobs Average Risk of 24% vs 71% in Staffing Overall

RN Risk = 0.9%


Summary – Positive Drivers of Long Term Health for the Industry

Demand to continue driving healthcare employment needs long term and short termSupply shortages likely to persist in key healthcare occupations


Agenda



Trends and Issues

Managed Services and Vendor ManagementAffordable Care ActHealth IT ImpactNew SettingsNew Delivery Models/Methods


MSP Spend Under Management in Healthcare is Large and Growing…

Source: SIA 2014 VMS and MSPA Competitive Landscape

Total $1.5 Billion54% Master SupplierGrowing at 19% 2013/2012


…But Healthcare Lagging in Adoption of MSP Models, with Only 5% of MSP Spend

Source: SIA 2014 VMS and MSP Competitive Landscape


Travel Staffing Benchmark Study Shows Median Firm Had 19% of Revenue via MSP and 29% via VMS

Source: SIA 2014 NATHO Benchmarking Analysis


ACA Projected to Deliver Significant Growth in Healthcare Spending in 2014

Source: National Health Expenditure Projections, Health Affairs, October 2013


Healthcare Staffing Firms Expect Modest Revenue Growth and Mixed Profit Impact From ACA in Next Two Years

Source: SIA 2014 Staffing Company Survey – Preliminary Results


And Most Healthcare Staffing Firms Expect to Provide Fully Compliant Insurance

Source: SIA 2014 Staffing Company Survey – Preliminary Results


Health IT Impact a Significant Factor

Health IT a large and fast growing market – 10.2% CAGR to Reach $162 Billion by 2015*Electronic Health Records –Penalties for non use beginning January 2015Stage 1 meaningful use > Stage 2 > …then stage 3 ICD‐10 Conversion Deadline Deferred to October 1, 2015 (unless delayed again)…

Source: *Markets and Markets 2011 World Healthcare IT Market


Hospitals Still the Single Largest Setting For Healthcare Employment

Source: Bureau of Labor Statistics

US Healthcare Employment by Setting 2014 (Millions)


A Challenge: Ambulatory Continues to Outgrow Hospital Employment

Source: Bureau of Labor Statistics


An Explosion of New Delivery Models and Methods


Telemedicine Moving into Reality

Mobile health apps growing rapidly 2/3 of radiology practices use teleradiology 7% of US physicians use online video conferencing to communicate with patients 26% of physicians use e‐prescription Teleconsultations proving cost‐effective for specialists in rural areas Remote online monitoring to reduce costs by 30% and improve quality of care and patients quality of life

Source: Broadband Expanded: Broadband and Telemedicine Stats, Data and Observations Jan 2013


Agenda



The Industry Has Been Consolidating Somewhat. The Top 5 Firms Now Over 30% Market ShareLargest healthcare staffing firms in the U.S.Ranked by estimated 2013 U.S. healthcare temporary staffing revenue

Rank Company2013 U.S. Healthcare Staffing Revenue

($million)

Market Share

1 AMN Healthcare Services 969 10%2 CHG Healthcare Services 826 9%3 Jackson Healthcare 485 5%4 Cross Country Healthcare1,2 437 5%5 Maxim Healthcare Services 264 3%6 Medical Staffing Network3 245 3%7 Team Health 235 2%8 Parallon Workforce Management Solutions (HCA) 226 2%9 Supplemental Health Care 205 2%10 Aureus Medical Group (C&A Industries) 194 2%11 Soliant Health (Adecco) 165 2%12 On Assignment4,5,6 130 1%13 Medical Solutions7 126 1%14 Accountable Healthcare Staffing8 110 1%15 Healthcare Staffing Services 104 1%

Total 4,721 49%

Notes1. Includes revenue from acquisition of On Assignment's allied division (4Q13)2. Does not include revenue from Medical Staffing Network, acquired 2Q143. Acquired by Cross Country Healthcare in 2Q144. Does not include revenue from travel nurse division sold to Medical Solutions (1Q13)5. Does not include revenue from allied division sold to Cross Country Healthcare (4Q13)6. Includes revenue from acquisition of Whitaker Medical (4Q13)7. Includes revenue from acquisition of On Assignment's travel nurse division (1Q13)8. Includes revenue from multiple acquisitions in 2013

Source: Staffing Industry Analysts 2014 Market Share Report

Top 5 Market Share2005 = 25%2013 = 31%


11 Healthcare Staffing Firms on SIA’s 2014 Fastest Growing List All $ Million

Rank Company 2013 Revenue CAGR 09‐131 InGenesis 111.7$ 133%10 A‐Line Staffing Solutions 18.8$ 50%17 TekPartners/MedPartners 115.3$ 45%20 Healthcare Support Staffing 49.0$ 44%32 Clinical Resources LLC 11.3$ 37%41 Medical Solutions LLC 126.2$ 32%42 Fortus Healthcare Resources 7.2$ 32%59 Power Personnel Inc. 5.1$ 25%60 Therapy Source 20.0$ 24%90 Ardor Healthcare Solutions 30.0$ 17%95 Nightingale Nurses LLC 43.0$ 16%

Source: SIA 2014 List of Fastest Growing Staffing and Talent Engagement Firms


Public Healthcare Staffing Company Results

Aggregate revenue, public healthcare staffing firms Aggregate y/y change in revenue, public healthcare staffing firms

1. Results impacted by acquisitions of Shiftwise in 4Q132. Cross Country's revenue and income affected by acquisition of On Assignment, Inc.`s Allied Healthcare staffing division in 1Q133. Results impacted by acquisition of Whitaker Medical in 4Q13

Source: company reports and SIA

Revenue - 6 months ending June 30, 2014


% Chg - Revenue

Gross Margin - 6 months ending June 30, 2014

Gross Margin - 6 months ending June 30, 2013

AMN Healthcare Services1 491,794 506,063 ‐2.8% 30.7% 28.7%

Cross Country2 240,747 221,084 8.9% 26.1% 25.7%

On Assignment (Physician segment)3 65,448 52,768 24.0% 29.2% 28.7%


Healthcare Staffing a $10 Billion Industry Today

2013 US Revenue $9.8B

But Still Below $11.4B Peak in 2008

Source: Staffing Industry Analysts September 2014 Preliminary Forecast


Overall Healthcare Staffing Forecast shows Improving Results in 2014 and 2015

Healthcare Temporary Staffing Year‐over‐year Growth

8%

3%4%

7%

2012 2013 2014 (P) 2015 (P)

Source: Staffing Industry Analysts – September 2014 Preliminary Forecast


Per Diem Nursing Forecast Suggests Modest Growth Ahead

Per Diem Nursing Temporary Staffing Year‐over‐year Growth

0%

2%3%

5%

2012 2013 2014 (P) 2015 (P)



Benchmark Survey Shows Travel Nurse Revenue Up Sharply in 2013

NATHO Benchmark Survey y/y revenue growth, 2012‐2013

Source: SIA NATHO Benchmarking Analysis 2014


Travel Nurse Gross Margins Up in 2013

Source: SIA NATHO Benchmarking Analysis 2014


Travel Nursing Forecast

Travel Nursing Temporary Staffing Year‐over‐year Growth

15%

7%5%

8%

2012 2013 2014 (P) 2015 (P)



Allied Health Dominated by PT/OT, Benchmark Survey Revenue Down in 1H 2014

LegendPT Physical therapists OTA/COTA OT assistants/certified OTAOT Occupational therapists RT Respiratory therapistsMT Medical technologists / MLT Pha PharmacistsPTA PT assistants Son SonographersST Speech therapists/speech pathologists Cath Cath Lab Tech

Aggregate Change in Revenue Drivers – 1H14/1H13

Aggregate % of 1H14 Revenue

Source: 2014 SIA Allied Health Benchmark Survey


Public Company Allied Results Mixed

AMN: “AMN: “Now, turning to allied staffing, where trends are also improving. Second quarter allied revenue was down 7% year‐over‐year, but up 7% sequentially…Allied orders have been trending upward since the beginning of the year, and are currently significantly above prior‐year levels.”

Cross Country: “Early in the quarter demand was driven by travel nursing, but as the quarter progressed we began to see year‐over‐year increases in per diem nursing in May, and then in allied towards the end of June. And I'm pleased to say that those trends have continued through July.”

Source: Company Filings and Q2 2014 Conference Call


Allied Health Forecasts Slight Growth in 2014

Allied/other Temporary Staffing Year‐over‐year Growth

10%

‐3%

3%

7%

2012 2013 2014 (P) 2015 (P)



Locum Tenens Public Company ResultsAMN: “Our Locum Tenens business experienced strong sequential growth in the second quarter with revenue up 11% sequentially and 2% year‐over‐year.”Cross Country: “Revenue for [the physician] segment was $30.8 million in the second quarter, down 11% from the prior year and up 6% sequentially.”

Source: Company Filings and Q2 2014 Conference Calls

Locum tenens staffing revenue


(000's)


(000's)

% change

AMN (locum tenens staffing) 141,180 138,164 2.2%Cross Country (locum tenens staffing)

59,985 64,580 ‐7.1%

On Assignment (physician segment)

65,488 52,768 24.1%

TOTAL $266,653 $255,512 4.4%


Advanced Practice Staffing Market Revenue Up 4% in 1st Half of 2014

Aggregate Change in Revenue Drivers – 1H14/1H13Aggregate % of 1H14 Revenue

Source: SIA Allied Health Benchmarking Survey 2014


Locum Tenens Forecasts Project Continued Growth

Locum Tenens Temporary Staffing Year‐over‐year Growth

11% 10%

7%8%

2012 2013 2014 (P) 2015 (P)Source: Staffing Industry Analysts – September 2014 Preliminary Forecast


Physician Search Had Strongest Growth in Nurse Practitioners and Emergency Medicine

TotalNum

Family Medicine 714

Internal Medicine 235

Hospitalist 231

Psychiatry 206

Nurse Practitioner 128

Pediatrics 92

Emergency Medicine 89

OB/GYN 70

Physician Assistant 61

Source: Merritt Hawkins2014 Review of Physician and Advanced Practitioner Recruiting Incentives


SIA Projects Healthcare Staffing to Outperform Other Staffing Segments Through 2022

Skill segmentsMarket size2012 ($B)

ProjectedMarket size2014 ($B)

ProjectedMarket size2022 ($B)

Projected CAGR2012‐2022 (%)

Projected CAGR2014‐2022 (%)

Temporary Help 99.0 108.9 155.8 4.6% 4.6% Commercial 45.8 49.5 67.9 4.0% 4.0% Office/Clerical 18.0 19.1 24.7 3.2% 3.3% Industrial 27.8 30.4 43.2 4.5% 4.5% Professional/Specialty 53.2 59.4 87.9 5.1% 5.0% Information Technology 22.7 25.9 39.0 5.6% 5.3% Healthcare 9.5 10.5 16.4 5.6% 5.8% Finance & Accounting 6.2 6.6 9.4 4.2% 4.5% Engineering/Design 7.5 8.3 11.8 4.6% 4.5% Legal 0.9 0.9 1.1 2.4% 3.0% Clinical/Scientific 2.0 2.1 2.8 3.3% 3.5% Marketing/Creative 0.9 1.0 1.4 4.9% 4.8% Education/Library 1.5 1.7 2.5 5.3% 5.0% Other Professional 2.0 2.3 3.4 5.4% 5.0%

Long‐term forecast for U.S. temporary Staffing

Source: SIA 2022 Employment Projections and Long Term Staffing Industry Forecast Through 2022 – Feb 2014


Agenda



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DIGITAL SURVEYS

Healthcare Staffing on the Road to the Future

Documents

Barry Asin President, Staffing Industry Analysts...Source: SIA 2014 Staffing Company Survey – Preliminary Results September 8 ‐ 10, 2014 | Sheraton Dallas And Most Healthcare Staffing