Fewer temporary physicians needed

Recently released third-quarter results from a handful of publicly traded companies that provide physicians, nurses and other staff for hospitals and other medical facilities indicate that business is down.

"The unprecedented market contraction experienced by the health care staffing industry over the past year is a direct reflection of the rapid rise to historically high levels of general unemployment," said Susan R. Nowakowski, president and chief executive officer of AMN Healthcare Services Inc., in a statement announcing the financials for that company.

AMN experienced a 47% drop in revenue in the third quarter of 2009 compared with the third quarter of 2008, down to $167 million from $315 million. This translated to a net loss of $2 million, compared with a $9.5 million gain during the same quarter of 2008.

In the first nine months of 2009, the company had total losses of $119 million.

Revenue from providing nurses and other health care professionals was down 62%, and revenue from locum tenens physicians was down 12%. Money earned from placing physicians decreased by 31%.

AMN is the largest health care staffing agency. Merritt Hawkins & Associates is the company owned by AMN that handles permanent physician placement. Staff Care manages locum tenens assignments.

The company said reduced demand for its services was behind the losses.

Numbers released by other publicly traded companies also were low.

On Assignment Inc., which provides nurses and physicians as well as engineers and scientists, announced a 39% revenue drop to $98.1 million. Health care staffing revenues fell 9.6% from the second quarter of 2009 to the third quarter. This was primarily a result of a 23.6% drop in demand for traveling nurses, because cash-strapped hospitals put a hold on bringing in temporary staff.

Revenues from placing temporary and permanent physicians declined 3.1% from the second to the third quarters. This was blamed on the uncertainty surrounding health system reform.

Physician temporary and permanent placement is handled by its Vista Staffing Solutions division.

The revenue of Cross Country Healthcare dropped 84%in the recent quarter compared with the same period last year. Money earned from placing nurses dropped 50%, and that from putting physicians in jobs declined by 3%.

Cejka Search and Medical Doctor Associates are the divisions of this company that handle physician placement.

A statement issued by Cross Country Nov. 2 said: "The recession, the stock market decline and the weakened housing market appear to have delayed the retirement plans of many older physicians. This dynamic, in conjunction with fewer elective surgeries, has resulted in a decrease in demand for temporary physicians, particularly in such specialties as anesthesiology and surgery."

The companies said there are some signs that business is starting to pick up along with the economy. These firms also experienced recent increases in demand, albeit not at the levels of a year ago.

But recent surveys have highlighted why search firms are struggling. One survey, released Sept. 1 by the Assn. of Staff Physician Recruiters, found that only 49% of hospital and physician group recruiters used search firms regularly in 2009, down from 55.1% in 2008.(See correction)

Also, a Medical Group Management Assn. survey found that in 2008, the number of patients seen dropped by 11.3%, and another decline is expected for 2009.