Healthcare recruitment: Death or rebirth?
The "jobs inbox": A golden era
When I came to Australia permanently in late 2009, I bagged an interview with a recruitment company that had just set up a medical division. They started out in hospital doctors and “locums” (I had zero idea what this was), but had plans to start a “General Practice desk”.
The glass-walled interview room faced Sydney’s Harbour Bridge and Opera House. With zero experience of the Australian healthcare system, I was sold the dream. In more ways than one.
It soon transpired there were zero candidates or clients on their database in general practice, but they were growing fast in the hospital locum doctor space.
Undeterred, quickly I turned my non-healthcare UK recruitment skills (aka military boot camp) into some wins and realised after months of calling medical centres in the Yellow Pages, that this was a candidate-led market. Have a locum GP available? At least three offers landed on your desk the next day.
Most of the time, paperwork was literally that, paper, with a dedicated manilla folder for each doctor. Although we did scan to PDF and have cute folders on our PC drive for all our registered doctors.
Despite being meticulous, the overwhelm I felt when I made a GP VMO placement in a NSW Health hospital, versus a GP into a private medical centre, was intense. Eighty pages of physical forms to help a doctor complete, and if they went to the neighbouring local health district a couple of weeks later, those same forms had to be completed again on different letterhead, no exceptions.
Even though the private GP sector barely required to view any paperwork, we kept a base-level standard of compliance for each and every doctor. And although it was a minefield of vastly different requirements and process for each and every local region, let alone state, times were good. Agency fees were 20%+ largely across the board (private and public), there were very few comparable competitors, insurance was cheap, tenders were not always mandatory, the laws were grey on “employees” and what they constituted, and the cost of doing business was far less. Anyone could quit their job and set up in their bedroom the next day.
Jobs were distributed by email on mass by most of the public health services to anything from five to seventy agencies at a time. First in, best dressed. The quicker you could watch that jobs inbox like a hawk and reply back with a CV and two references, the greater chance you had of a placement. Nine times out of ten, if you had a doctor available, they were placeable. It was that simple. If they were qualified and had a pulse, they were in.
When it felt like it couldn’t get better, a health service medical administrator would call on a Friday afternoon upon our return from a few well-earned lunchtime shandies in The Rocks and exclaim, “A doctor has contacted us directly to work for the next few months, but we need an agency to payroll them through and they mentioned you have their CV.” Jackpot. We were the Wolves of George St.
Sometimes a locum ended up accepting a permanent position, and there was a nice chunky introduction fee on top. Regularly we were lauded as “life-savers”, not in the literal sense, but for our ability to conjure up magic at short notice. No-one questioned the value, or their budgets.
I exaggerate a little, but if you had a strong work ethic, and good disciplined processes, paper-based or otherwise, you were set. There were perhaps a couple of “big” healthcare recruitment agencies, a sizeable amount of mid-sized firms with a few growing fast, and a handful of startups. As the big agencies got bigger, there was still a big meaty pie to go around, and the middle-players lapped it up. Everyone got fed handsomely.
The mid 2010’s came and “big-billers” in the successful agencies felt they could do it alone. But their tech didn’t get any better. Nor did it need to. Legacy CRMs and the trusty old spreadsheet still reigned supreme. As did paper timesheets. And of course, the fabled “jobs inbox”. For hospital locum doctor jobs, you didn’t want to leave your seat in case you missed that mass-email sent through with the latest shifts. In a parallel universe in general practice recruitment, organisation was key, as they didn’t tend to send you jobs, and you had to approach the clinic with your candidate’s availability and “sell them in”.
Campervans, Spiderman memes, and the locum legend
Locums held all the cards. Hundreds of shifts flooded their inboxes daily. Most could work when they wanted, as much or a little as they pleased. UK and Irish doctors came for the adventure of a lifetime, buying campervans and picking up work countrywide on a whim in between a visit to The Big Banana and “finding themselves” in Byron Bay.
Loyalty in the locum market was a big thing. Doctors valued agencies that took away all the searching and promptly received a call when a role matched their needs. They tied themselves to the person, the agent, not necessarily the agency itself. They didn’t care about what happened in the messy in-between. Everyone moaned about manual systems but no-one was doing anything meaningful about it. We all just pointed at each other like that Spiderman meme.
In the late 2010’s the market crept forward. Agencies still didn’t always have to submit paperwork for a doctor to secure a job, but, they were occasionally asked to start using hospital credentialing platforms. Once a doctor was locked in, the agency (and sometimes the doctor) received a link to a platform login to upload the same documents they already provided to the agency.
In essence, this meant there were multiple records of the same documentation for one doctor in different places. A duplication and communication frenzy ensued. Different health services used different platforms, to varying degrees, that they themselves chastised and only used if they were forced to, or at the very end of a process. Agencies were safe to milk this jersey cow for some time longer.
COVID came and did what it did to many industries. It provided an abundance of chaos, some which was highly profitable. Danger rates were introduced for locums willing to work in critical situations, and largely in the private space, telehealth platforms emerged to offer “work from home” doctor gigs, a fantasy just a few months prior. And guess what, these tech platforms didn’t ask for much paperwork either, the irony being their compliance process involved little to zero tech.
What did emerge out of the backend of COVID was a reset of sorts. Once the music stopped, the lights turned on and the bar was empty. Health services realised their spending was astronomical, and had been for well over a decade. A perfect storm of tight budgets and poor cultures, which further pushed doctors away from permanent roles, meant locums were still needed.
Many introduced new, stricter tender requirements. Many freaked out at the greyness of employee liability and sought legal advice, changing their terms with agencies to heap all the responsibility back on them. This increased workers compensation premiums, insurance costs, and increased administration spend to make sure this was legit and they met these obligations.
Health services cut agency fees dramatically, and took a non-partisan view of agencies. Small, medium, large, all had to follow the dictated process. Medical administration staff were not going to be charmed by a cockney wide-boy from Medical Recruitment Inc., no matter how many cookies, chocolate and wine they bestowed upon them.
The "tech-ification" trap
During this COVID haze, I lost my patience with the still heavily-relied upon “jobs inbox”. I searched high and low for job parsing software that could handle the hundreds of variations of email data and formats we received daily. Calls and emails with obscure international SAAS products followed and after a lot of tinkering, I conceded defeat.
That six-month deep dive into building a web app taught me one thing, tech alone wasn't the silver bullet. It was just one part of a messy, multi-faceted workflow. This realisation shifted my focus to deeply mapping the entire ANZ healthtech scene, because while everyone was talking about telehealth, the real “workforce” problem remained unsolved. Except for a few plucky startups and platforms that were born to solve some specific pain points such as rostering and compliance, but whose TAM (total addressable market) was not that attractive to investors.
No tech was replacing agencies, as I gleefully heard from many startups. Recruitment agents may have a bad rap, but they knew their market and customer-base, and tech bros weren’t going to change the slow-moving monolith of healthcare recruitment as fast as they could with telehealth. But the pain points were becoming clearer.
Healthcare recruitment is not just compliance, or job-matching, or credentialing, or rostering, or logistics, or payroll. It’s all of them. Fragmented as ever, many were myopic, looking at these points in isolation. Some started at the beginning, some at the end, some smack-bang in the middle.
The math ain’t mathing: The "psychiatrist unicorn" problem
My time building the Digital Health Festival was a front-row seat to the “tech-ification” of healthcare. I saw the hype, but I also saw the gaps. While startups were busy promising to “disrupt” agencies, my friends running those agencies were starting to feel the squeeze. The optimism was fading. The math wasn't mathing anymore. Fifty agencies promote they have a mental health locum team to place Psychiatrists, but the total workforce of these unicorns is just a few thousand.
The reality on the ground was souring. Inside hospital medical admin offices, resentment replaced the old Friday-afternoon camaraderie. Bureaucrats demanded cost-cutting, yet the deep-seated cultural and operational failures driving the need for locums remained untouched. Agency bashing became the norm, but let’s face it, the fact hundreds of agencies could exist and make money meant the health services weren’t doing a particularly great job at workforce recruitment and retention. A symptom of a poorly-run health system is more agencies, who fill a vital need. The real problem was upstream. It was, and is, a stalemate.
The state of play: Low multiples and legacy cabinets
AI and access to cheap software has seen an explosion of healthtech (my daily additions to the ANZ Healthtech Directory are testament to this). In turn, a couple of progressive agencies have created in-house tech to underpin their traditional service.
There has been less than a handful of acquisitions and sales of healthcare recruitment agencies in the last decade. These businesses don’t make as much profit as you think they do. Their multiple is relatively small. There’s next to no guaranteed revenue, given even once you are on a tender in the public health space, you are competing against ten, fifty or one hundred other agencies for the same jobs and candidates. If you have superstar consultants with a great reputation and following, they can leave tomorrow and their loyal doctor disciples follow.
Based on a private healthcare recruitment agency data map I created and maintain (and anecdotes from contacts), some agencies are attempting to diversify to focus on providing doctors (and nurses) in the private sector. Some are doubling-down on the specialties they are particularly deep and strong in. Some are spreading their bets even broader, to cover off multiple layers of management and tens of different specialties. Some match the old school vales of their clients, hoping that relationships and professionalism alone will win out.
Most importantly, some tech players have become hybrid tech platforms/recruitment agencies, most in the doctor space, but also some impressive examples in allied health, pharmacy and beyond have emerged. Without stating the blinding obvious, getting ahead of the curve is more urgent than ever.
Health services themselves have tried building their own casual pools or internal talent. This has largely failed time and time again, understandably given agency demand still exists, and the incentive internally for the person driving this is not the same. They also lack the vast databases of agencies that have been in the game for years.
The crystal ball: How to win the long game
I’ve had enough coffee meetings and phone calls pontificating to leave me a jittery mess. And recently I’ve consulted to some players that straddle both the tech and recruitment space. If you think tech is replacing it all, you’re wrong. But those that can play the chess board with patience, can see through the fog.
Tech used upfront and in the places it makes sense (job matching, compliance) and at the tail-end (payroll) is essential to win. Candidate (doctor) experience of agency onboarding has improved ten-fold, but health services have stayed in the dark ages, protecting jobs (understandably) and their vintage filing cabinets. Benefits to distinguish yourself ahead of another agency and create true moat, even a pond, are few and far between.
Interestingly doctor rates across 90% of specialties have not have gone up since 2009, some stagnant, some down, and some outliers for the most urgent of scenarios in niche specialties.
Agency fees are no longer loose and negotiable and varying from region to region. States are tying up, or planning to, enforce universal flat (very tiny) percentage agency fees.
Although some tech startups in the singular segments of rostering and time-sheeting for example, can win from bottom-up in fragmented hospitals when departments go rogue with their subscription budget, this is also changing. Austere-minded hospital administrators and leaders are bargaining for wholesale agreements at scale. Their spend is going down, but it’s still big. There are obvious example of agencies out there that can handle and absorb volume and workforce coordination without feeling too much short-term strain.
Where is healthcare recruitment going? (some hints)
Instant job matching - agencies distributing data in a flash to beat the pack (it’s happening now, I’ve seen it).
Identity (think a “passport” for doctors).
Instant payment or “loaning” to doctors (finish your shift & the pay hits your account - no matter how quickly the health service pays the agency).
Health services putting cost first and consolidating (or attempting to) workforce management across whole states.
Less administrative employees, more all-round generalists that can do sales, tech, ops and more.
Who is going to win?
Those with established brands and sizeable databases.
Those where a real personable human (note, I didn’t say hundreds of people) is available 24/7.
Those that perfect the half of the equation they can control right now with tech (compliance & credentialing, job matching, payroll).
Those that have a longer-term plan for stitching together the full workflow, aka, the other half.
Those that makes friends with those that know how to win state and federal agreements (and have deep pockets).
Equally obsessed by this space and want to chat?
