Direct Answer
Healthcare staffing business models fall into three primary categories: travel staffing, per diem staffing, and locum tenens. Each model differs in contract length, cash flow timing, compliance burden, and profitability profile. Travel staffing emphasizes longer assignments and higher margins, per diem focuses on volume and speed, and locum tenens centers on physician coverage with extended payment cycles.
Travel Staffing Model Explained
Travel staffing places clinicians—typically nurses—on 8–26 week assignments at hospitals facing shortages. Agencies generate revenue through bill rates negotiated with facilities, minus clinician pay, housing stipends, payroll taxes, and compliance costs.
Key Characteristics:
- Predictable assignment durations (13 weeks is standard)
- Higher bill rates than per diem (often 20–40% higher)
- Front-loaded expenses before hospital payment
Implication: Travel staffing requires strong working capital or external financing because agencies pay clinicians weekly while hospitals often pay in 30–60 days.
Takeaway: Travel staffing offers higher margins but demands more upfront cash.
Per Diem Staffing Model Explained
Per diem staffing fills short-term, shift-based needs, sometimes with less than 24 hours’ notice. Revenue is driven by high shift volume rather than long contracts.
Key Characteristics:
- Daily or shift-based placements
- Faster credentialing but constant scheduling
- Lower bill rates but rapid redeployment
Implication: Per diem models can scale quickly but require sophisticated scheduling systems and constant clinician availability.
Takeaway: Per diem staffing prioritizes speed and volume over long-term margin stability.
Locum Tenens Staffing Model Explained
Locum tenens staffing places physicians and advanced practice providers in temporary roles, often lasting months. Bill rates are high, but so are recruiting and compliance costs.
Key Characteristics:
- Long placements (3–12 months)
- Credentialing cycles of 60–120 days
- Payment cycles frequently exceed 60 days
Implication: Locum tenens agencies experience slower cash conversion cycles and rely heavily on financing to sustain growth.
Takeaway: Locum tenens delivers high revenue per placement but tests cash flow endurance.
Which Business Models Are Right for Your Agency?
- Choose travel staffing if you want predictable contracts and scalable margins.
- Choose per diem staffing if you can manage high operational tempo and real-time scheduling.
- Choose locum tenens if you have strong credentialing infrastructure and patient capital.
