Alex Nazem, cofounder and CEO, Nomad Health.
When Alexi Nazem was a hospital doctor, he faced a mountain of paperwork and bureaucratic hurdles anytime he wanted to moonlight outside his hospital. For healthcare professionals side gigs like these are common, so why should the process be so burdensome? Inspired by the possibility of applying the concept of other online marketplaces like AirBnB to healthcare temping, he and four cofounders (including AlleyCorp founder Kevin Ryan) launched Nomad Health in 2015.
During the Covid-19 pandemic, Nomad saw explosive growth as hospitals, already facing nursing shortages, raced to fill roles in overburdened ICUs around the country. While the pandemic has (hopefully) peaked and travel nursing pay rates are receding from all-time highs, the underlying shift of much more of the healthcare workforce engaged in temporary rather than full-time roles is expected to continue.
“One of the most important lessons that we’ve learned from this pandemic is that the clinical workforce wants to work that way,” says CEO Nazem, 40. “They don’t want to be bound by these very rigid and sort of limited opportunities – just the same way that all the rest of the workforce and all the rest of the economy is changing.”
Looking to capitalize on this transformation, Nomad announced Monday it has raised $105 million in equity and debt financing led by Adams Street Partners and Icon Ventures, as the company expands beyond nurses to serve a much broader group of workers, including lab techs, ultrasound techs and physical therapists. HealthQuest Capital joined as a new equity investor, alongside existing investors Polaris Partners, .406 Ventures, AlleyCorp, and RRE Ventures. J.P. Morgan and Trinity Capital provided the debt financing. Nomad has raised more than $200 million in equity and debt to date.
Before the pandemic began, traveling roles used to primarily appeal to healthcare workers in the beginning or end of their careers. Now, this type of work appeals to a much broader segment of the market, says Nazem. First, there was the sense of moral obligation and urgency to go to where help was needed when the pandemic began. Second, given the risk and demand, the pay rates also tended to be much higher than permanent roles. Temporary roles have also turned out to be an antidote to the burnout that plagues many staff positions. “A lot of people sought refuge in this kind of choose your own adventure practice of medicine that allowed them to continue utilizing their skills and serving people,” says Nazem.
Staffing Industry Analysts estimates the temporary healthcare staffing market, which includes nurses, doctors and the group of technicians and other roles known as allied health professionals, grew from $18.7 billion in 2019 to $39.8 billion in 2021. The fastest growing segment was travel nursing, which saw a nearly 250% increase – from $6.5 billion to $22.6 billion in the same period. “It’s very much a spot labor market for how valuable talent is at any particular time and right now nurses are extremely valuable,” says Barry Asin, president of Staffing Industry Analysts.
“The key thing in healthcare staffing is whoever can get the candidate over the long term tends to win.”
Barry Asin, Staffing Industry Analysts
After peaking in 2021, the expectation is there will be some contraction, which Staffing Industry Analysts estimates at a 14% decrease year-over-year. It’s hard to say exactly how things will shake out but what’s clear is the baseline has changed. “We still believe the market is going to be substantially larger than it was pre-pandemic for the foreseeable future,” says Asin. The rise of technology platforms are also fueling the traditional legacy staffing companies to try and compete and become more tech-savvy, he adds: “But the key thing in healthcare staffing is whoever can get the candidate over the long term tends to win.”
This is where Nomad’s investors think the company’s software is key. It’s “being nurse-centric as opposed to health-system-centric,” says HealthQuest founder and managing partner Garheng Kong, who is joining Nomad’s board. On the front end, the user-friendly interface makes it easy for nurses and other healthcare workers to quickly sign up to start searching for jobs, with job descriptions that offer comparative salary information and ratings from people who’ve worked in the roles. “As opposed to the staffing agency saying, ‘Here’s a job for you. You qualify, you fit, take it.’ What you get is a list of all the open requisitions and you as a nurse can pick and choose and decide which one you want,” says Kong, adding this had led to a repeat use rate among users above 70%.
There are around 250,000 clinicians using Nomad’s marketplace for free. While Nomad uses marketing and acquisition campaigns, Nazem says around half of new users are coming via word-of-mouth. The company has hired Maquel Shaw, previously interim chief marketing officer at Overstock.com, in the role of CMO.
When a healthcare worker accepts a role, the person becomes a Nomad employee with health benefits, malpractice insurance, and a 401(k) for the duration of the gig. Most roles tend to last around 13 weeks. “In contrast to all these other gig economy companies that you come across that are fighting so hard to be able to classify people as independent contractors, we say no, we want them to be our employees,” says Nazem.
Nomad’s paying customers are around 4,000 healthcare organizations looking to fill roles. On the backend, Nomad’s software takes care of sourcing candidates, filtering qualifications, credentialing and other tasks. There is no upfront subscription fee. Nomad bills the hospital, takes a commission, and pays out the wages and benefits to the healthcare worker. Nazem says the company, which is profitable, is on track to bring in around $700 million in revenue this year.
Right now, Nomad’s sights are still set on expanding the types of offerings it has for temporary roles, but Nazem doesn’t rule out helping to fill permanent positions in the future. Nazem and Asin agree there is going to be consolidation in the temporary healthcare staffing industry as the legacy players battle it out with the newer tech-focused upstarts. “Staffing, labor, headcounts are the number one issue in every boardroom of every healthcare system across the country,” says Nazem. “That is going to cause a lot of motion in the next couple of years and we’re really excited to have a front-row seat and a solution.”