The physician staffing industry is facing significant turmoil, with three major firms either shutting down or filing for bankruptcy in the past two years.
Financial challenges, shifting workforce dynamics and evolving hospital needs have contributed to the decline in these companies’ viability.
Most recently, NES Health announced plans to shutter operations following financial challenges. The firm's recent financial difficulties have left emergency department physicians at multiple hospitals unpaid.
"As you are aware, in recent months, NES America has experienced financial difficulties," the company said in a Nov. 22 email to physicians posted on Reddit. "NES does not have any funding or available cash. Consequently, NES will not be able to provide malpractice tail coverage…NES has made the difficult decision to wind down its operations and cease doing business. We deeply regret this situation"
In September 2023, American Physician Partners voluntarily filed for Chapter 11 protection under the U.S. Bankruptcy Code. In July, the company transitioned all of its clients to other companies or insourced with the respective hospitals or health systems.
In May 2023, Envision announced its plans to file for Chapter 11 bankruptcy. In October, Envision announced that its former ASC arm AmSurg will split from the company. AmSurg has since purchased all surgery centers held by Envision.
The decline of these firms is not an isolated event but rather part of a broader trend. In 2020, ProPublica reported that large staffing companies like TeamHealth and Envision began reducing emergency room physicians' hours as financial pressures mounted.
Traditionally, emergency physicians operated within independent practice groups that contracted with hospitals. However, private equity firms started acquiring and consolidating these groups, creating larger staffing entities.
During the COVID-19 pandemic, emergency department volumes plummeted as patients avoided hospitals and elective procedures were postponed. This decline in ED visits placed additional strain on staffing firms, which saw their revenue models crumble.
Since then, hospitals and healthcare facilities have adopted more cost-effective staffing strategies, reducing their reliance on staffing firms. Many are opting to directly hire physicians or leverage gig-style models with travel nurses and contract workers.
According to Kaufman Hall's Physician Flash Report, labor costs now account for 84% of total expenses in healthcare organizations. The average subsidy per employed physician recently exceeded $300,000, reaching $304,312, a figure that underscores the unsustainability of current staffing models.
"Investment/subsidy per physician rose above $300,000 for the first time — a sign that current models of physician employment are not sustainable," said Matthew Bates, managing director and Physician Enterprise service line leader with Kaufman Hall. "Revenue is increasing but physicians and providers are working more while generating less revenue. Health systems need to rethink operations to align the costs of provider employment with the current healthcare environment."
Another major factor driving the decline of traditional staffing firms is a growing demand for flexibility among physicians. Many clinicians now prioritize control over their schedules and work-life balance, seeking positions that offer autonomy and less burnout.
Employed physicians report feeling higher levels of burnout, anger and anxiety compared to their independent counterparts, according to a recent Physician Foundation survey. This is sometimes linked to a lack of physician autonomy, as 61% of employed physicians said they have moderate or no autonomy to make referrals outside of their practice or ownership system, and 47% say that they adjust patient treatment options to reduce costs based on practice policies or incentives, according to a survey from NORC at the University of Chicago.
Flexible staffing models allow physicians to regain some control and avoid the rigidity of traditional employment arrangements.
Technology is also reshaping the staffing landscape. AI-driven platforms are increasingly being used to match clinicians with open positions, streamlining recruitment and reducing the need for traditional intermediaries. According to a September blog post The Healthcare Guys, these platforms offer efficiency gains that staffing firms struggle to compete with.
"Currently, healthcare staffing firms are on the edge of either creating or destroying themself," according to the blog post. "Because, after the pandemic the landscape for healthcare staffing has totally changed. The demand for skilled professionals is high and supply is very low."