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Capturing Opportunities in a Changing Industry

Barry AsinPresidentStaffing Industry Analysts

September 21, 2011

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Agenda

Current State

Future State

Challenges and Opportunities Ahead

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Healthcare Industry Job Growth

Source: Bureau of Labor Statistics and Staffing Industry Analysts, Inc.

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Healthcare “Quits” Rising Again

Source: Bureau of Labor Statistics, JOLTS data

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The 2009 View From Hospitals on Staffing

“…we are driving for new cost savings. The tough economy has a silver lining in that our labor force is more stable, more productive, and eager to work

more hours. Due to our prior efforts and helped by the tough economy, in the first quarter turnover

was down 22% year over year, contract labor costs were down 33% and overtime was down 16%.”

Trevor Fetter, President, CEO, Tenet HealthcareQ1 2009 Conference Call - May 5, 2009

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Tenet Healthcare Contract Labor Spend Up in Late 2010 and Early 2011

Source: Company Reports and Staffing Industry Analysts

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SIA Monthly Pulse Survey Improving

Source: Staffing Industry Analysts Monthly Pulse Survey

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Largest Healthcare Staffing FirmsRanked by estimated 2010 U.S. temporary staffing revenue

Rank Company

2010 U.S. Staffing

Revenue ($M)

Market Share

1 AMN Healthcare Services $765 10%2 CHG Healthcare Services $513 7%3 Cross Country Healthcare $364 5%4 Jackson Healthcare $339 4%5 Maxim Healthcare Services $297 4%6 Medical Staffing Network $289 4%7 Team Health $199 3%8 Supplemental Healthcare $178 2%9 On Assignment $139 2%

10 C&A Industries $123 2%11 CareerStaff (Sun Healthcare Group) $92 1%12 Adecco $91 1%13 Favorite Healthcare Staffing $84 1%14 ATC Healthcare $65 1%15 Kforce $56 1%

$3,591 47%

Top 5 Market Share2005 = 25%2011 = 32%

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Public Company Results Improving

Source: Company Reports and Staffing Industry Analysts

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Average Gross Margin of Public Companies

Source: Company Reports and Staffing Industry Analysts

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Public Firms Seeing the Difference…

“Going into the third quarter…Travel nurse, allied and local staffing are all expected to contribute to this growth, with travel nurse volumes again expected to be above prior year pro-forma levels by more than 30%.”

Brian Scott, CFO, AMN Healthcare Services 8/4/2011

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…Public Firms Seeing the Difference…“All markets we served, including nurse travel and physician staffing continue to improve during and exiting the quarter…we saw a particularly strong growth in our Physician staffing division in the month of June, we saw a year-over-year growth in revenue for the first time in 22 months…As we have previously noted, now that revenue growth has returned we firmly believe that Physician and Nursing can provide

some of the greatest growth opportunities in 2012 and beyond.”

Peter Dameris, President/CEO, On Assignment 8/4/2011

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…Public Firms Seeing the Difference…

“…due in large part to the broad based resurgence in demand, the dynamics in our nurse and allied staffing business are considerably different and more favorable than they were just one or two years ago…applicant activity during the second quarter was approximately 23% ahead of year-ago levels”

Joe Boshart, President and CEO, Cross Country Healthcare 8/4/2011

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Pulse Survey Shows Travel Nursing Improving Dramatically

Source: Staffing Industry Analysts Monthly Pulse Survey

2010 Healthcare Staffing Summit

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Travel Nursing Improvements Widespread

Source: Staffing Industry Analysts Monthly Pulse Survey

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Per Diem Nursing Had More Modest Declines and More Modest Improvement

Source: Staffing Industry Analysts Monthly Pulse Survey

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Per Diem Nursing Improvements Widespread

Source: Staffing Industry Analysts Monthly Pulse Survey

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Allied Health Results Improving

Source: Staffing Industry Analysts Monthly Pulse Survey

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Most Allied Health Firms Improving

Source: Staffing Industry Analysts Monthly Pulse Survey

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SIA NALTO Locum Tenens Benchmark Survey

Source: Staffing Industry Analysts/NALTO 2011 Locum Tenens Benchmark Survey

Data collected from 16 companies representing over $1 billion inannualized revenue (61% of market)

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Benchmark Shows Growth in Locums for First Half 2011

Source: Staffing Industry Analysts/NALTO 2011 Locum Tenens Benchmark Survey

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Locums Results Vary by Segment

Source: Staffing Industry Analysts/NALTO 1H 2011 Locum Tenens Benchmark Survey

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Locums Gross Margins Down Slightly in 2011

Source: Staffing Industry Analysts/NALTO 1H 2011 Locum Tenens Benchmark Survey

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Physician Conversions From Locums

Source: Staffing Industry Analysts/NALTO 2011 Locum Tenens Benchmark Survey

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Agenda

Current State

Future State

Challenges and Opportunities Ahead

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Healthcare Staffing Trend by Skill

Source: Staffing Industry Analysts Forecast September 2011

8.8

11.4

8.17.68.2

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Locums and Allied Now a Majority of Revenue

Source: Staffing Industry Analysts Forecast September 2011

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2011 and 2012 Forecast for Total US Staffing

Source: Staffing Industry Analysts Forecast September 2011

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Healthcare Staffing Temp Growth Forecast at 9% Growth in 2012

Source: Staffing Industry Analysts Forecast September 2011

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Agenda

Current State

Future State

Challenges and Opportunities Ahead

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Challenges and Opportunities Ahead

Legal and Legislative Environment

New Business Models

Quality and Cost Concerns

Targeting the Right Customers

Driving Sales

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Healthcare Reform

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Healthcare Reform Impact on Healthcare Staffing

Positives

Volume increases due to increased access to insurance

Pockets of opportunity

• Helping clients with transition

• Accountable Care Orgs (ACO)

• Health Information Management

Uncertainty

Negatives

Increased focus on cost control likely to move through healthcare institutions

More complex and increased employer responsibilities

Uncertainty

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Medicare and Medicaid Reimbursement

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Tax Challenges…

…And Opportunities

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Tax Challenges and Opportunities

Travel Reimbursements/Tax-Advantage Plans

Independent Contractor Status

Independent Contractor compliance

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Electronic Medical Records

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Electronic Medical Records Push Has Significant MomentumGrowth Drivers

Inadequate medical records systems

Government incentives

• $19B in U.S. stimulus package for Healthcare IT

• $40B – $45B in reimbursements from Medicare and Medicaid systems

• Penalties for noncompliance: January 2015

Source: CTG, Healthcare IT News and Staffing Industry Analysts

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Electronic Medical Records Driving Growth at IT Staffing and Solutions Firm CTG

“Healthcare revenue was up 30% in the second quarter…Electronic medical records work again contributed to most of the growth in our healthcare business with EMR revenue increasing 31% over last year's second quarter. EMR projects made up 50% of healthcare revenue.”

Jim Boldt, Chairman and CEO, CTG

July 25, 2011

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ICD-10 Conversion

Brings the US in line with rest of the world

From 14,000 to 68,000 diagnostic codes

Required by October 1, 2013

Failure to comply = unable to bill, submit or receive payment for services

Predicted to surpass Y2K and HIPAA compliance in time requirements, financial investment and technology changes

Source: ctg.com

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Internal Float Pools

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Management Strategies Used by Large Hospitals

Source: Staffing Industry Analysts 2011 CW Buyer Survey – Preliminary

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Healthcare Staffing and Quality

Dr. Linda Aiken

University of Pennsylvania School of Nursing

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Healthcare Staffing Costsvs. Costs of Traditional Employees

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Most Healthcare Workers Outside of Hospital Setting

Source: Bureau of Labor Statistics – Aug 2011

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Healthcare Employment Growth By Setting

Source: Bureau of Labor Statistics – Aug 2011

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Healthcare/Life Sciences Skills Dominate Projected Fastest Growing Occupations

Rank Occupation

2008 Employment Level (000)

% Change 2008-2018 Rank Occupation

2008 Employment Level (000)

% Change 2008-2018

1 Biomedical engineers 16.0 72 16 Medical assistants 483.6 34

2 Network systems/data comm analysts 292.0 53 17 Physical therapist assistants 63.8 33

3 Home health aides 921.7 50 18 Veterinarians 59.7 33

4 Personal and home care aides 817.2 46 19 Self-enrichment teachers 253.6 32

5 Financial examiners 27.0 41 20 Compliance officers 260.2 31

6 Medical scientists, ex epidemiologists 109.4 40 21 Occupational therapist aides 7.8 31

7 Physician assistants 74.8 39 22 Environmental engineers 54.3 31

8 Skin care specialists 38.8 38 23 Pharmacy technicians 326.3 31

9 Biochemists and biophysicists 23.2 37 24 Software engineers, systems software 394.8 30

10 Athletic trainers 16.3 37 25 Survey researchers 23.4 30

11 Physical therapist aides 46.1 36 26 Physical therapists 185.5 30

12 Dental hygienists 174.1 36 27 Personal financial advisors 208.4 30

13 Veterinary technologists/technicians 79.6 36 28 Environmental engineering techs 21.2 30

14 Dental assistants 295.3 36 29 Occupational therapist assistants 26.6 30

15 Software engineers, applications 514.8 34 30 Fitness trainers/aerobics instructors 261.1 29

Source: Employment Projections Program, U.S. Department of Labor, U.S. Bureau of Labor Statistics

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Unemployment in Healthcare Occupations

Source: Bureau of Labor Statistics

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Penetration Rate of Temp Work by Occupation

Source: Bureau of Labor Statistics

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Driving Sales An Opportunity for Healthcare Staffing

Source: Staffing Industry Analysts Monthly Pulse Survey

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Questions?

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In Conclusion