Health Tech

Nurse Labor Marketplace ShiftMed Snags $200M as Workforce Shortage Intensifies

ShiftMed, an online marketplace for W-2 healthcare workers, recently raised $200 million in funding. The company’s platform allows providers to post their open shifts in hopes they will be filled by local nurses.

Though the nursing shortage has been a problem for years, the issue is getting more and more dire. Nurses across the country are holding strikes and rallies for better staffing levels, and more than half of nurses working in direct patient care say they plan on leaving their current position over the next two years.

A company focused on alleviating this crisis received $200 million in funding on Monday. ShiftMed, an online marketplace for W-2 healthcare workers, has now raised $250 million to date. Its recent funding round was led by Panoramic Ventures with participation from Blue Heron Capital and Audacious Capital.

The McLean, Virginia-based company was founded in 2015 to give healthcare providers more access to credentialed workers, CEO Todd Walrath said in an interview.

“Our marketplace shows nurses all the jobs that they can work, lets them pick the best schedule, and lets them pick the best rate that might meet their needs. It gives them diversity of choice. So if some people want to work in a skilled nursing facility, an assisted living facility, a hospital, or in the home, they have all the choices on one platform,” he said.

ShiftMed has about 350,000 workers on its platform, three-quarters of whom work part time, Walrath pointed out. He said it’s common for ShiftMed nurses to pick up only two or three shifts a week.

About 2,000 providers across the country put their open shifts on ShiftMed’s platform, using APIs from their human resources software, such as Workday or Kronos. Providers pick the wage that they will pay workers, and then ShiftMed applies a slight markup to that hourly wage.

“We make a little bit of money on a lot of workers — that’s our business model. Because we have hundreds of thousands of workers on the platform, we can do that very cost effectively,” Walrath declared. “Think of it as almost like wholesale. The worker gets the wholesale rate, the client pays the retail rate, and we get a little bit of markup in between the wholesale and the retail rate.”

But ShiftMed is not the only healthcare labor marketplace to recently secure a large sum of funding. IntelyCare raised $115 million last year, and ShiftKey raked in $300 million less than a month ago. 

So how does ShiftMed differentiate itself from these competitors? Walrath pointed to a couple markers of distinction. His company offers workers shifts across a variety of settings — spanning from acute hospitals to post-acute care facilities to the home.

Secondly, the fact that ShiftMed only pays nurses as W-2 employees, rather than as 1099 workers is a competitive benefit. A 1099 employee is an independent contractor who gets paid for a specific task, whereas a W-2 employee receives a regular wage for fulfilling a role within a company.

“We understand the labor laws very clearly,” Walrath said. “We believe that when you send workers into a facility and they are supervised by the facility, it would be illegal to provide them as a 1099. They’re supervised, they use the building’s equipment, they’re punished if they’re late and they’re hired and interviewed just like real W-2 workers. So we believe those workers should be paid as W-2.”

Not all healthcare labor marketplaces share these beliefs. For example, most workers in Clipboard Health’s marketplace are 1099 independent contractors.

By giving healthcare providers more access to on-demand W-2 labor, Walrath believes his company can help hospitals escape their expensive reliance on travel nurses. The travel nursing sector has grown from an $8 billion industry in 2020 to a more than $13 billion industry in 2022, he pointed out. Travel nurses can operate as either W-2 or 1099 employees, depending on their agency.

Hospitals often think the primary way to fix their labor shortage problem is through travel nurse agencies because they’ve had relationships with these companies for decades, Walrath said. But this notion is unsustainable, he declared.

“[The travel nurse industry] is an artificial marketplace that was created through greed and high margins and is controlled by a handful of large companies. They’re propping up these $150 per hour wages for RNs, which translates into $300,000-$400,000 a year of expenses, and hospitals can’t afford it. They’re locking them into 13-week contracts, and they don’t even need the labor for that long. And for the most part, hospitals don’t know that there are other alternatives out there,” Walrath said.

Photo: Dilok Klaisataporn, Getty Images