Healthcare staffing companies move on in pink of health
Healthcare staffing companies, which have had a strong run over the past few quarters, will continue to benefit from the persisting shortage of travel nurses and physicians, positioning them to outpace the growth of the entire staffing industry in 2008 and 2009.
With current staff aging and replacements hard to come by, the healthcare staffing industry is facing a shortage of travel nurses and physicians. Analysts predict the shortage will get more acute in the coming years.
“An aging population and advances in medical technology should drive demand, while supply may be constrained as caregivers age with few replacements coming through the pipeline. This should bode well for healthcare staffing supplier stocks,” BMO Capital Markets analyst Jeffrey Silber said.
According to a report by the U.S. Bureau of Labor Statistics, the median age of physicians and surgeons was 45.8 years in 2007 and that of a registered nurse was 45 years.
Shares of companies like Cross Country Healthcare Inc (CCRN.O: Quote, Profile, Research, Stock Buzz) and AMN Healthcare (AHS.N: Quote, Profile, Research, Stock Buzz) that provide travel-nurse and temporary-physician staffing fell to their lows earlier this year as investors feared that growth in the sector would slow due to the ailing economy but have bounced back sharply since then.
Cross Country and AMN Healthcare have been consistently posting strong results over the past year as the shortage of travel nurses, employed by hospitals for a period ranging from four to 13 weeks, has led to a rise in billed rates, boosting profit margins.
Growth in travel nursing, forecast to be the slowest-growing healthcare segment, is being further hampered by the weak economy as most nurses prefer the security of a full-time job to the temporary assignments that might not be regular.
The travel-nursing segment is expected to grow about 3.5 percent in 2008 and 2009, flat with the 2007 levels, according to analyst Silber get a free credit report. It grew 8 percent in 2006.
Filed under: finance by Wolf