Direct Answer
A healthcare staffing agency is profitable when its bill rates reliably exceed clinician pay, operating expenses are tightly controlled, and cash flow timing is actively managed. Long-term profitability depends far less on total revenue and far more on margin discipline, consistent fill rates, and how quickly invoices convert into cash. Agencies that monitor these fundamentals monthly are far more likely to scale sustainably.
Gross Margin
Gross margin represents the difference between what a hospital pays (the bill rate) and the direct costs associated with placing a clinician, including wages, taxes, benefits, housing, and stipends. In practice, most sustainable agencies target 20–30% gross margins in travel staffing and 15–25% in per diem staffing, depending on market conditions and specialty mix.
When margins slip below these ranges, even strong sales performance can mask underlying financial risk.
Takeaway: Margin compression is the fastest and most common path to unprofitability in healthcare staffing.
Fill Rate
Fill rate measures the percentage of open job orders that are successfully filled. It is one of the clearest indicators of recruiter effectiveness, pay competitiveness, and market alignment. A fill rate consistently below 70% often signals issues such as mispriced roles, slow recruiting processes, or weak clinician engagement.
Higher fill rates reduce wasted recruiting effort and improve revenue predictability.
Takeaway: Improving fill rate lowers cost per placement and strengthens overall profitability.
Revenue per Clinician
Revenue per clinician shows how efficiently each active clinician contributes to agency revenue. This metric is best tracked weekly or monthly and compared across specialties and contract types. Agencies with high revenue per clinician typically balance assignment length, bill rate quality, and clinician utilization more effectively.
Simply adding more clinicians without improving revenue density can increase complexity without increasing profit.
Takeaway: Revenue density matters more than total clinician headcount.
Days Sales Outstanding (DSO)
Days sales outstanding (DSO) measures how long it takes hospitals and health systems to pay invoices after services are rendered. In healthcare staffing, industry averages typically range from 35 to 75 days, with larger health systems often paying more slowly.
Because clinicians must be paid weekly or biweekly, long DSO creates ongoing cash flow pressure even in profitable agencies.
Takeaway: Extended DSO strains payroll-funded business models and increases reliance on external capital.
Operating Expense Ratio
The operating expense ratio compares overhead costs—such as recruiting salaries, sales commissions, technology, and administrative staff—to gross profit. Agencies that keep operating expenses below 50% of gross profit generally retain enough contribution margin to reinvest in growth and absorb market volatility.
Unchecked overhead growth often erodes profits before owners realize it.
Takeaway: Sustainable growth requires expenses to scale slower than gross profit, not revenue.
