The Doctor Is In (The Marketplace)
The health care industry is going through a rapid transformation.
Especially when it comes to the growing number of doctors and nurses looking for locum tenen or freelance work. Unfortunately, many of the processes in place to connect these clinicians with the health care facilities looking for them are paper-based and friction-filled — and not economically advantageous for them.
Zander Pease, co-founder and head of product for Nomad Health, said recruiting in the industry for these types of positions were also in need of a major evolution as well.
Nomad connects freelance clinical workers, which includes both doctors and nurses, with health care institutions that need their services. While the estimated $15 billion market may be considered small compared to the tremendous health care industry itself, it’s still a significant market opportunity that’s ready for disruption.
In this week’s episode of The Matchmaker Is In, Pease joined host Karen Webster to discuss how the platform is not only addressing this friction, but battling for scale in a market crowded with traditional brokerage firms.
It’s secret weapon? A digital-first, cost-saving approach as a major differentiator against its competitors.
As Pease explained, health care-specific brokers have been the only option available to doctors and nurses looking to find locum tenen opportunities for decades. Traditionally, a hospital looking for a doctor would have to use multiple brokers to perform the search for them.
Pease said this introduced a number of problems, including high costs, low transparency and a slow, manual process.
“The brokers that we are competing against charge between 30 and 70 percent markup, which we feel is particularly egregious. They also do that in a way where it’s not apparent to either side of the market,” Pease noted.
He also described the process these brokers use as very slow and antiquated, requiring clinicians to send and fax paper documents, get them notarized and generally deal with an experience that many eventually want to avoid.
“We’re really attacking a number of angles here — we’re creating a much better product experience on both sides; for the first time we let clinicians and facilities talk to each other directly and not through a middleman, and we are saving both sides a lot of money,” Pease said.
Here is an excerpt of the conversation.
KW: What’s driving the demand for temporary doctors?
ZP: On the doctor side, it’s really all over the place, and there are a number of reasons. There may be someone who has some leave, so the hospital scheduling has issues with their current doctors going on vacation, maternity leave or someone leaves unexpectedly. In some cases, hospitals look for locum tenens for strategic initiatives. For example, if they want to try out a geriatric center for a year, rather than hiring those surgeons full-time immediately, they can hire locum tenens to see how the venture goes. There are also hospitals that have seasonal needs. But [the] largest trend is the doctor-geographic imbalance. There are tons of doctors and specialists in urban areas but not nearly enough of them spread across the country. We find a lot of facilities actually turn to locum tenens to have a specialization at least on a rotating or part-time basis.
KW: As with any matchmaker or marketplace, you need to satisfy the supply and demand side. As you were thinking about building Nomad Health, where did you start?
KP: In any two-sided marketplace, it’s always really tough in the beginning to build up that critical mass of liquidities. We started pretty evenly on both sides. We focused on the Northeast, launching in a couple of states, but for any facility we went to we tried our best to handle their placement for any kind of doctor. Similarly, in targeting doctors, we’ve had individuals from all over the country sign up. The industry as a whole is a bit concentrated in three specialties — internal medicine, emergency medicine and psychiatry — so we’ve also been paying particular attention to those areas.
KW: Do you have some of the same challenges with density in a geography that other matchmakers have? Do you have any geographic constraints?
ZP: We do! We’re serving a collection of mini markets, because doctors, in particular, must have a state license to practice in that particular state, and they go through an application process for that which can take weeks. In general, when we onboard a doctor, they have a set number of state licenses already and most come in without expanding beyond their state licensure currently. Even if we have thousands of doctors, we may only have one or two thousand in a particular state.
KW: Clearly there are the board requirements for clinicians, but how far do you go at vetting the qualifications of the professionals you place? Is there a ratings or ranking system that institutions can rely on?
ZP: We are fundamentally a marketplace, but we’re also very much in the trust and safety business, so we have a level of background checks and health care sanctions checks that we do for our doctors. In addition to that, there’s a whole process called credentialing, which is regulatorily mandated for all health care institutions. In most cases, due to the credentialing requirement, we can’t do that full check on behalf of the facility. Since they have to do it themselves, we try to facilitate all of the information they need [in order] to do that check as easily as possible. As we grow as a company, we will also do our best to do that on behalf of some of our smaller clients. But in general, hospitals have pretty stringent guidelines that require them to perform those checks themselves.
KW: Health care is an area that is really evolving and becoming more complicated, but there’s also tremendous cost pressures on the system. Do you see this type of practice expanding as hospitals and other institutions look to provide capable service but maintain a different cost structure?
ZP: Yes, I think there [are] two ways to answer that. One is that many facilities we talk to are often loathed to think about locum tenen or contract work, simply because it is so expensive. One of the duties of our model is that we can hopefully change people’s minds about that by being significantly cheaper than the market in general. The second way to answer that question is that in most cases, clinicians are the scarce resource, so it actually comes down to them and the professional experience and lifestyle that they want to have. We definitely see, in general in society, a growing trend toward freelance work, and particularly in hospital medicine, which is one of the main areas for the locum tenens. There’s been a real increase in doing this kind of work, especially for younger doctors coming out of residency. I don’t think anyone thinks it’s going to become how the vast majority of health care works, but we definitely see it growing.
KW: You’ve been at this now for over a year; what have you learned about the business and about scaling the platform over that period of time?
ZP: That’s a pretty big question! I think the biggest lesson is something I already touched on: where this is a ton of small marketplaces stitched together by licensure, type of clinician, type of specialty for the doctor, so it’s even more critical and important to engage the liquidity that we have because we’re not able to rely on a single big pool for any job or any doctor. It’s a smaller universe of possibilities out there, and I think we are doing a great job of it, but it’s an extra added pressure to the concept of achieving critical mass.
KW: Keeping the good talent, which is the scarce resource, loyal is creating efficiency and giving them control by having more of a self-service experience than perhaps your competition provides— is that pretty much the secret sauce?
ZP: Yes, it’s a little extraordinary to think about, but if you’re a doctor and interested in finding a contract job, there is nowhere for you to go to find that temporary placement. You have to call up a broker and do a phone interview with them, send your CV and go through a number of hoops before you even know what could be out there for you. That’s really frustrating because you probably have to do that at two or three places and once you do, they have your personal information and are going to continue contacting you for as long as they want. At Nomad Health, we spend a ton of time on our product, making sure that we are not sending them spam and instead only sending them jobs that they are actively interested in.
KW: Are there matchmaker platforms you’ve taken inspiration from?
ZP: I often use LinkedIn because it’s known by everyone, but to drill down a little bit more, I consider LinkedIn to be a first generation online network or marketplace. They were the first ones to connect everyone professionally, and so it’s a great product for finding people and reaching out to them. But there’s a reason why that didn’t take hold enough in health care in particular and a big reason why there’s an opportunity for us.
It’s not enough simply to connect people; there [are] a ton of very specific functions that we serve for health care professionals, such as helping with the licensing and credentialing, the application process, health care sanctions checks, etc. Those things are very specific to our market, and because of that, we look at similar markets, which are, by necessity, serving generally more technical areas. An example of that would be WorkMarket, which is an online marketplace for on-site technical labor, like IT professionals. Similarly, they’re a second generation product in a sense that they productized the entire transaction process in a way that LinkedIn or more general marketplaces have not.