By Susanne Mariga, Certified Public Accountant, Certified Profit First Professional – Mastery Level, and Managing Member of Mariga CPA PLLC

Profit and cash flow are critical in any business.  In the Healthcare Staffing Industry failure to maintain profit and cash flow can result in massive debt and out-of-control unpaid IRS payroll taxes issues.  To gleam insights into the maximization of profitability in the Healthcare Staffing Industry, I interviewed 5 Amazing Thought Leaders in the Healthcare Staffing Industry. 

The results are in.

  1. Automate. Automate. Automate. – Mick Angelichio, President of Judge Healthcare

The Judge Group is the 12th largest staffing company in the country and it is the recipient of the Inavero’s 2018 Best of Staffing Client Diamond Award.  What the Judge Group does differently giving it competitive edge is that they have mastered Automation

Angelichio realized that all staffing companies are vying for the same top candidates.  What makes one more successful than another is the ability to deliver top candidates quickly to their customers.  The Judge Group has heavily invested in their own team of in-house IT developers. 

The IT team has developed an internal applicant tracking system that allows the Judge Group to go to market quicker.  When a job request is received the Judge Group can generate 60 top matches within a matter of seconds.  Using the internally developed software, the Judge Group executes Internet Bots that continuously crawl the internet in search of new potential candidate resumes and new job postings. The internet bots serve as resume harvesters, building a qualified candidate pool.  Once the perfect applicant is selected by the bots, the software sends out a friendly note to the candidate.  The Judge recruiter is then able to follow up on a warm lead and the candidate engagement is quickly solidified. 

Not only is the applicant tracking systems used to fill job orders, it is also used as an automated drip campaign allowing the Judge Group to send relevant articles continuously to potential job candidates and customers supplying them with relevant industry information pertaining to their market. By continuously remaining in contact with potential candidates and customers, the Judge Group remains visible to their clients and prospects.   By focusing on reducing human touches and automating the sales and recruitment process, Angelichio and the Judge Group are able to minimize cost associated with hiring additional internal staff while meeting their market demand in record time!

So what does a blooming staffing company need to do in order to implement automation?  Angelichio recommends exploring large off the shelf automation systems currently available on the market.   Angelichio also encourages maintaining a mindset of gradual progression and remaining aware of the changes being implemented by the major companies.  Per Angelichio “it is important to remain ahead of the game”. Healthcare staffing agencies should find ways to leverage technology developments and custom tailor it for their needs.

  1.  Be nimble… Balance Fix and Variable Cost – Alan Buglar, Managing Director of Bow String Advisors

Bow String Advisors specialize in Mergers and Acquisitions, Raising Capital, and providing Financial and Strategic Advisory services to the Health Care Staffing Industry. 

Buglar recommends that Healthcare Staffing Companies focus on having a flexible cost structure to MAXIMIZE profitability.  The truth is economies change, revenues change, and sometimes things just happen.  Staffing Companies need to be able to adjust to these changes quickly in order to maintain their profits.  Buglar shares that he has seen Healthcare Staffing Agencies get trapped in fixed contracts, leases with multiple location, and expensive executive staff. When staffing companies are locked into fixed contracts it is very difficult for them to be able to adapt quickly to adverse economic conditions. 

Buglar recommends that Healthcare Staffing Agencies focus on controlling fixed cost and balancing fixed and variable cost. Buglar encourages Healthcare Staffing agencies to focus not just on revenue, but also on the bottom line – PROFIT.    Buglar encourages staffing agencies to evaluate if it is best to sign up for the long term lease for offices and copiers.  For starting companies flexible work environments such as WeWork may be adequate.

Buglar discourages Healthcare Staffing Agencies from following the “HERO” model, where they focus on hiring many Senior Managers with exorbitant remuneration packages.  Buglar encourages Healthcare Staffing agencies to be flexible and recognize trends and be willing to move quickly.  Moving quickly may also include ripping the cord on people not doing a “great” job.  He recommends that Staffing entrepreneurs be honest with themselves and with the people they hire. 

  1. Implement the Use of Creative Compensation Structures – Tim Teague, President of BlueSky Synergy, LLC

BlueSky Synergy, LLC provides medical staffing software to Healthcare Staffing Agencies which allows them to manage staffing workflow from candidate sourcing through client billing.

Teague encourages Healthcare Staffing Agencies to maximize the markup rates of client billing and candidate compensation through the use of taxable and nontaxable compensation.  According to Teague there is a “Sweet Spot” in compensation using taxable versus nontaxable compensation especially in the travel nurse industry.  The Internal Revenue Service (IRS) allows a daily per diem rate for travel nurses and payment for travel expenses and this computes into an hourly component of the burden.  By balancing the taxable versus nontaxable compensation, a Healthcare Staffing agency can lower expected wages while pushing up the non-taxable reimbursement.  In addition, by maximizing the allowable daily per diem rate and travel expenses, the Healthcare Staffing Agency is able to fairly compensate it’s travel nurses while reducing it’s own employer tax burden.  Teague warns that this balance between taxable and non-taxable compensation must be carefully weighed between normal expected wages and nontaxable items. 

Teague offers an Integrated Margin Calculator built within the Bluesky Healthcare Staffing Software and VMS.  The Integrated Margin Calculator will assist Healthcare Staffing Agencies in calculating an accurate rate for the burden.  The Integrated Margin Calculator considers factors such as worker’s compensation, health insurance, non-taxable compensation, employer taxes, etc. 

  1. Focus on Redeployment of Candidates – David Searns, CEO of Haley Marketing

Haley Marketing specializes in providing marketing services to the staffing and recruiting industry.

Searns shares that Healthcare Staffing agencies in general have a 16% clinician redeployment rate.  This means that there is only a 16% chance that a Healthcare Staffing Agency will reuse or redeploy a candidate that has been previously placed by it’s firm.  This means that 84% of the candidates that are placed never receive a second assignment from the same Healthcare Staffing Agency.  The financial impact is that all the cost and all of the effort to recruit a hard-earned candidate is LOST on the redeployment 84% of the time.  Seans believes that if a Healthcare Staffing Agency can improve upon it’s candidate relationships and managing it’s candidates next assignment, a Healthcare Staffing Agency can drastically increase it’s profit while reducing the recruitment cost associated with obtaining it’s next placement. 

Searns believes that the high rate of loss in redeployment is due to the fact that in the Healthcare Staffing Industry assignment end dates are not well defined.  Recruiters are focused on filling today’s orders and there is a disincentive to find out when an assignment is going to end.  After all, who wants to remind a client that they have an expensive temporary staff member on their team, especially since things are going so well.  Searns encourages recruiters to be proactive and monitor the status of their current placements.  He also encourages maintaining continuous contact with their employees in the field to monitor how the project is going and when it may be coming to an end. 

Searns encourages Healthcare Staffing Agencies build loyalty not only in the relationship between their recruiters and the candidates, but also with the Healthcare Staffing Agency and the candidate.  Searns believes this loyalty is built by creating an overall positive candidate “experience”.  Throughout the candidate employer relationship there should be multiple touchpoints between the candidate and the organization, building a reputation of high service that goes along with higher pay rates. 

Searns encourages Healthcare Staffing Agencies to employ the use of marketing automation which increase the frequency and creates continuous streams of communication. He recommends using e-mail and texting applications to maintain frequent communications with current field employees.  Some applications that Stearns recommends include and Herefish .  These applications can integrate with applicant tracking system and provides the contact manager and candidate with notifications to determine when an assignment is going to end. 

  1. Make Culture Your “Secret Sauce” – Amy Chang, Strategist and Analyst for Staffing Industry Analysts (SIA)

SIA is the global advisor on staffing and workforce solutions providing insights into the services and suppliers operating in the workforce solutions ecosystem including staffing firms, managed service providers, recruitment process outsourcers, payroll/compliance firms and talent and talent acquisition technology specialist.

Chang advises Healthcare Staffing Firms to be intentional and deliberate about creating a great culture.  Chang advises Healthcare Staffing Firms to focus on hiring their employees based upon cultural fit to create an environment of cultural cohesiveness.  A cohesive culture will have a competitive advantage when it comes to ensuring that team members are moving in the same direction and focused on the same goals.  By focusing on hiring for fit, Healthcare Staffing Firms are able to increase efficiency and create an environment where people enjoy their work.  By maintaining an environment of employee satisfaction, Healthcare Staffing Firms will be able to attract talent and reduce excessive turnover.  By maintaining long term employees, the Healthcare Staffing firm will be more productive. 

For Healthcare Staffing Firms embracing the challenge of building a great culture, Chang recommends that the companies start with defining core values and understanding what they stand for. Once these core values are defined, the company should make significant efforts to make sure that this culture is communicated to it’s teams and emphasis is placed on hiring for fit and building a strong and consistent culture.  Chang also encourages firms to adopt a culture of investing in its people.  Chang believes that when a firm hires a new employee the firm should focus on a long-term approach that builds that employee into a future expert within their field. 

In the healthcare staffing industry, the product is the people and the supply of clinicians is constrained.  In a world that is quickly becoming automated and digital it is important for people to work in an organization that cares about them.  To attract ideal customers and team members, Chang urges that Healthcare Staffing Firms provide meaningful work where the team knows that the firm cares about them as people.  Chang believes that growth and profit are an outcome of a great culture where people are part of the team and are working towards a common goal. 

  1. BONUS … Honor the Value You Provide and Price Accordingly – Susanne Mariga, Certified Public Accountant (CPA), Certified Profit First Professional – Mastery Level, and Managing Member of Mariga CPA PLLC

There is a direct correlation between price and the esteem you place on the service that you provide and value you place on the people that provide these services. As a practicing CPA, I have seen many entrepreneurs so eager about getting a sale that they are willing to undercut their prices to a point that there is very little to show for it.  The impact of a decrease in price is a reduction in profit.  I have had staffing industry entrepreneurs sit with me and swear that this is a “volume based” business, only to find several years later that the loss has been financed by insurmountable debt and unpaid payroll taxes.

In a study conducted by the American Staffing Association (ASA) called Understanding Staffing Profits it was noted that a 55% markup only yields a net profit rate of 4.11%.  The markup is quickly eaten up by the burden which consist of payroll taxes, workers compensation, and general and administrative overhead.  When Healthcare Staffing Firms reduce their markup, they reduce their profit.

An appropriate bill rate is simply a reflection of the value you place on the services that you provide and the respect you place on your team.  When margins are so tight due to a low markup, a Healthcare Staffing Firm is unable to invest in it’s company, hire and retain the best internal team, and attract qualified placements for it’s customers.  My recommendation… markup in a manner that is respectful of the value you place on your services and your employees. In closing, to maximize profitability in a Healthcare Staffing Firm one should automate processes, remain nimble to flex with changing economic times, be creative in compensation structures, focus on the reuse of talent resources, invest in their people, and price their services fairly.

Susanne Mariga is a Certified Public Accountant, a Chartered Global Management Accountant, a Certified Tax Coach, a Certified Profit First Professional – Mastery Level, the Managing Member of Mariga CPA PLLC, and a John Maxwell Team Certified Coach. Please contact Susanne at or
(713) 937-1737.

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