Key takeaways:
- Healthcare staffing revenue fell 6% in 2025 to $39.4 billion and is forecast to stay roughly flat in 2026. The pandemic-era boom is over, and the segment that grew fastest is now correcting hardest.
- While the market is bouncing back, that growth is inconsistently distributed. Locum tenens is growing about 5% a year through 2027. Travel nursing is flat, propped up by one-time strike staffing rather than core demand.
- Successful agencies are moving beyond simply hoping for rates to recover. Instead, they are prioritizing structural growth areas, enforcing strict pricing controls, and developing niche expertise to prevent their services from being treated as commodities by procurement departments.
For three years, healthcare staffing was the segment everyone wanted exposure to. Travel nurse bill rates hit numbers nobody had seen, agencies expanded headcount to chase the demand, and private equity paid premium multiples to get in.
Then the correction arrived. It’s been deeper in healthcare than almost anywhere else in staffing, and the 2026 data shows it’s not over yet.
Rather than a total collapse, the current market shift represents a significant sorting process. Agencies that view this as a minor setback to be waited out are finding themselves at a disadvantage compared to those actively restructuring to meet the specific demands of a post-correction environment.
Healthcare staffing fell 6% in 2025, steeper than the industry overall
Staffing Industry Analysts forecast US healthcare staffing revenue at $39.4 billion in 2025, a 6% decline from 2024. For comparison, the overall US staffing industry contracted about 3% in 2025, a milder decline than its 12% drop in 2024. Healthcare fell roughly twice as fast as the industry overall.
SIA’s March 2026 forecast update projects the market at roughly $38.7 billion in 2026, with growth returning to about $39.6 billion in 2027. In other words, healthcare staffing is expected to spend 2026 essentially flat before resuming modest growth. The pandemic surge isn’t coming back. Instead, it’s becoming a smaller, more rate-disciplined market where the easy revenue is gone.
Our 2026 State of Staffing benchmarking report found healthcare was the hardest-hit vertical among agencies surveyed, contracting at a higher rate than any other specialty. (The sample for healthcare was small, so we treat that figure as directional rather than definitive.) The agencies that experienced healthcare’s growth are feeling the correction more sharply than peers in other verticals.
One market on paper, but four markets in practice
The strategic mistake is talking about healthcare staffing as a single thing, because the segments are moving in different directions.
Locum tenens is the clear winner. SIA projects the segment to grow about 5% annually through 2027, driven by ongoing physician shortages and rising use of advanced practice providers like nurse practitioners and physician assistants. Demand is especially strong in emergency medicine, psychiatry, and anesthesiology. Unlike the nursing segments, locum tenens has held its pricing. Higher demand and stable rates are a combination no other healthcare sector can match right now.
Travel nursing is a different story. After three years of contraction, SIA projects it flat in 2026. The flatness is propped up by strike staffing, not by recovering core demand. Health systems are still renegotiating renewal contracts and cutting back on temporary nurse spend. Strip out the labor disruption work and core travel demand is weaker than the topline suggests.
Allied health and per diem nursing sit in between. SIA projects allied health up about 1% in 2026 and 2% in 2027, supported by steady demand in therapy, imaging, and outpatient services. Per diem is forecast to bounce modestly off its 2025 decline, with local demand as the driver as nurses increasingly choose assignments close to home.
So an agency built around travel nursing is operating in a structurally different market than one built around locum tenens, even though both identify as healthcare staffing firms.
The recovery headlines hide how fragile the rebound is
AMN Healthcare reported Q1 2026 revenue of $1.38 billion, up 100% year over year, and noted that travel nurse volume grew year over year for the first time since 2022. While that seems like a turnaround, that’s not the full picture.
Of that $1.38 billion, $722 million came from labor disruption events, or, in other words, strike staffing. That’s more than half the quarter’s revenue from a single, inherently temporary source. AMN’s anticipated Nurse and Allied Solutions revenue to be flat to down 2% year over year in the second quarter of this year, and its Physician and Leadership Solutions segment (which includes locum tenens) down 6% to 8%, as labor disruption revenue normalizes.
So although the headline number was a record, the underlying trajectory is still a normalization. The rebound is evident in some areas and fragile in others, which is why breaking down the data by segment is important.
Margins reinforce the point. SIA reported median EBITDA margins for travel nurse staffing firms dropped to 4.8% in 2024, with the bottom quartile near break-even. A segment running at sub-5% median margins doesn’t leave much room for firms waiting passively for rates to recover.
How healthcare firms are responding to the reset
The firms navigating the changes with confidence have a few things in common. None of them involve waiting for 2022 to return:
- Segment reallocation: Firms with the flexibility to shift capacity toward structurally growing segments (like locum tenens, advanced practice providers, and allied specialties with premium pricing) are doing just that. That doesn’t mean abandoning travel nursing, just not treating it as the growth engine it was three years ago.
- Pricing discipline: SIA’s analysis of firms competing well in the stabilizing market points to data-informed pricing rather than chasing volume at rates that don’t clear margin. In a sub-5% median margin environment, undisciplined pricing is how a firm books revenue and loses money.
- Specialization deep enough to resist commoditization: Health systems are running structured procurement and squeezing generalist staffing spend. The firms holding rate are the ones with true specialty depth (a credentialing process built for a specific clinical area, recruiters who understand the difference between an ICU traveler and a cath lab traveler, or relationships that survive an RFP). Generic healthcare staffing is the most exposed position in the current market.
- Operational discipline: Our State of Staffing data identified this as the strongest separator between growth and contracting agencies across every vertical. The healthcare firms most likely to clear their 2026 plan are the ones running the operating habits (including weekly KPI cadence, named scorecard ownership, and documented workflows) that turn a stabilizing market into share gains rather than just survival.
The reset rewards focus, not patience
Healthcare staffing isn’t going away. The structural drivers are here to stay: an aging population, persistent clinician shortages, and rising demand for advanced practice providers.
The Bureau of Labor Statistics projects about 190,000 registered nurse openings each year through 2034, driven largely by replacement needs as the workforce ages. But there remains a supply-side constraint. The American Association of Colleges of Nursing notes that nursing schools turn away tens of thousands of qualified applicants annually for lack of faculty and clinical placements. Demand keeps outpacing the pipeline. Staffing firms will keep serving that imbalance.
But the market that emerges from this correction will reward different things than the pandemic market did. Speed and capacity won at the peak. Focus and discipline win in the reset. Waiting for 2026 to deliver a rate rebound is a bet the data doesn’t support. Specializing, reallocating capacity, and tightening pricing is a response to the market taking shape right now.
The pandemic made healthcare staffing easy. The reset is making it a business again.
