AMN Healthcare
A partial solution to the worldwide nursing shortage
KEY TAKEWAY: AMN Healthcare Solutions of Dallas has built a $2 billion market cap company by offering a partial solution to the nursing shortage in the USA. It has built a network of nurses, physicians and hospital systems, via a set of software platforms, creating a competitive moat based on switching costs and network effects.
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Estimates of the US nursing shortage range from 300,000 to 1.1 million nurses. It is the result of an aging patient population with more health care requirements, retirements in an aging nursing population, burnout among working age nurses, restrictions on nursing immigration, and a limited supply of American nursing schools.
AMN has adopted a full service approach, including
1) Technology platforms:
- For nurses - job search, credential management, etc.
- For hospitals & clinics - vendor management, predictive analytics, recruiting
2) Travel nurses and physicians ("locum temens")
3) Recruitment of permanent nurses and physicians
This combination has resulted in 13% to 15% annual revenue and net income growth over the past 10-12 years, while shielding AMN from the most precipitous declines after the COVID crisis subsided.
CHG Healthcare of Florida, which specializes in locum temens has not grown nearly as rapidly as AMN. Aya Healthcare, which specializes in travel nurses has grown faster than AMN, but seems to have experienced a higher revenue decline from 2022 to 2023 using figures supplied by Aya and Growjo, a data intelligence platform.
AMN's income resilience has come in the face of lower ratings from Glassdoor - 3.5 for AMN, vs. 4.1 for Aya and 4.5 for CHG respectively.
AMN offers nurses tuition discounts and other educational assistance in addition to the job search platform, keeping their supply of nurses high enough to create network effects with the hospital systems.
The more nurses on their platform, the more valuable AMN becomes for employers, and vice versa. It is costly for hospitals to switch software platforms.
Aya has recently begun to ramp up its technology capabilities, which combined with its higher employee satisfaction, could present AMN with more formidable competition.
WHO predicts a shortage of 15 million health care workers worldwide by 2030, including 6 million in Africa. Nursing schools are hamstrung by a shortage of faculty and clinical learning opportunities. It is hoped that AI will ameliorate these problems via interactive teaching and clinical simulations.
These trends be more beneficial to global healthcare staffing solutions companies like Worldwide Healthcare Staffing, Gypsy Nurse and Conexus which work with nurses and employers in Europe, India, Saudi Arabia and Philippines. Those privately owned firms are addressing a shortage as much as 15 times as large as in the USA.
Next up the largest listed company in Europe by market cap, and it is not in the S&P 500.