ShiftMed, a mobile app that connects healthcare workers and providers, clinched $200 million in fresh funding to fuel its growth as investors continue to pour money into healthcare staffing companies.
ShiftMed, which launched in 2016 in the home healthcare space, reports that it experienced 8x revenue growth in the past two years. The company built an on-demand workforce marketplace that connects more than 350,000 credentialed nurses and aides looking for flexible work with healthcare providers needing additional nursing staff. ShiftMed contracts with healthcare providers to link them with workers on demand, including home-based care workers, via their mobile app.
The company's services are now available in 110 markets across the United States. ShiftMed now has an office workforce of around 400 employees, according to executives.
The latest hefty funding round was led by healthcare investors including Panoramic Ventures among others. ShiftMed executives declined to disclose the company's current valuation.
ShiftMed intends to use the fresh capital its national footprint across all segments of the healthcare market.
The company's massive funding round, one of the largest so far in 2023 behind Monogram Health's $375 million round, is notable as the venture capital market constricts in a challenging economic environment.
"This is the fourth or fifth time that we've raised money in our eight-year existence. We usually do this every 18 to 24 months. It's definitely the hardest market since 2008, 2009, since the financial crisis, I would say," Todd Walrath, CEO and founder of ShiftMed, said in an interview. "It took us probably twice as long to do it. I thought the process would take three to four months and it probably took six to seven months to do."
"I think what got this deal done for us was our growth rate is just undeniable. Most people's portfolio companies are not growing in the last 12 months, they're flat. So when you walk in and say, 'Hey, we grew 8x over the last 24 months, people say, how did that happen? Nobody's growing at that rate.' In some ways, if you have a really good story, it's a little easier to get people's attention."
Walrath added, "There are so many people that now have a thesis around the nurse shortage and they're investing in technology and solutions, training, everything that can address it because that need is not a temporary need. It's going to be here for 10 to 15 years. We hit that thesis really dead center in terms of what we're focused on every day."
The company says it works with more than 1,500 enterprise healthcare partners ranging from health system acute and outpatient settings to post-acute and in-home providers.
"Healthcare providers need solutions that streamline workforce management, bring labor costs back into balance and improve patient outcomes with better care. We see ShiftMed’s growth as validation for the market need. The team continues to execute against a multi-billion market opportunity," said Paul Iaffaldano, general partner at Panoramic Ventures, in a statement.
ShiftMed nabbed $45 million in funding back in October 2021. At the time, the company reported it began 2021 servicing just 10 U.S. markets and that jumped to 56 markets by the fall.
Historically, traditional staffing providers have focused on the travel nursing segment due to the high margins where several large players control the market. Travel nursing rates continue to exceed the budgets of national healthcare providers, which is unsustainable, according to Walrath.
The travel nursing sector has grown from $8 billion in 2020 to more than $13 billion in 2022.
As an alternative to pricey travel nursing staff, ShiftMed provides healthcare organizations with a regulatory-compliant W-2 solution that connects them with a local pool of clinicians and even part-time nurses.
Nursing shortages, while common before COVID-19, have become nearly ubiquitous in the wake of the pandemic.
Walrath worked in the post-acute healthcare market for nearly 15 years and witness the ongoing labor issues plaguing the industry.
"People were talking to me all the time about the labor, the retention of the labor, the hiring of the labor, the onboarding of the labor, the credentialing of the labor. My thesis was that it's kind of bad for both sides. There's high turnover, but there are lots of open jobs," he said in an interview.
The key, he said, is to create flexibility for workers and better workforce management for healthcare organizations.
"We kind of turn the thing upside down, which is now we recruit the workers onto the platform and then expose them to all the work opportunities that are out there rather than having this kind of one-to-one relationship where every single provider can only offer you this schedule or these shifts and you got to re-credential every time. Now we have over 300,000 workers on the platform, which gives our partners lots of selection. And we also have more than 500,000 shifts a week. That gives our workers lots of selection, too," he said.
By using mobile and cloud-based software that provides workforce optimization, health systems are able to offer a modern, unified solution to their workforce that increases retention, creates part-time work opportunities and decreases reliance on travel agencies, according to the company.
ShiftMed also provides access to additional local staff, reducing operating costs by 30% to 40% compared to travel staffing alternatives, the company claims.
"Problems with the workforce started in 2010. We've had a steady increasing gap between demand and supply for 10 years now and it will continue to get worse for another 10 years. The first baby boomer turns 80 in 2026. We're not even in the first innings of thislabor shortage. Now COVID exacerbated that but COVID didn't cause the gap," Walrath said.
During the past two years, many hospitals received funding from the government but the bulk of those funds were spent on travel nursing staff, he said.
A 2021 survey by ShiftMed found that nearly half of U.S. nurses (49%) say they are at least somewhat likely to leave the nursing profession in the next two years. "We have to keep the nurses we have we have and create more flexibility in the work arrangements. Let them work part-time, let them pick their schedules," he said.
There is a new crop of startups that aim to use technology to help hospitals fill staffing gaps. These hiring platforms have grown rapidly in the past few years and are attracting major funding from investors. Last month, ShiftKey, a healthcare staffing technology company, scored $300 million, bringing its valuation to more than $2 billion, as first reported by Axios.
In August, Incredible Health, a tech-enabled career marketplace for healthcare jobs, nabbed $80 million in fresh funding to help it scale and expand to more states.
Trusted Health pulled in $149 million in funding in November 2021. App-based marketplace Clipboard Health snagged $80 million in funding over two rounds, boosting its valuation to $1.3 billion.
Nurse staffing platform IntelyCare also hit "unicorn" status this year after a $115 million series C funding round.
As it's grown, ShiftMed has built out new features to benefit nursing professionals such as its new InstantPay service in which ShiftMed nurses can earn up to 75% of their pretax earnings after clocking out of a shift.
The company also has inked several partnerships to enhance its features and capabilities. ShiftMed teamed up with Uber Health, Uber's healthcare arm, to remove transportation barriers for healthcare professionals.
With an exclusive, integrated go-to-market approach, ShiftMed's professionals can access on-demand rides with Uber Health directly within the ShiftMed app. They'll be able to request rides to and from their upcoming shifts, for both in the home and in a facility.
Last month, the company announced a technology partnership with UKG, a provider of HR, payroll and workforce management solutions. Through the collaboration, organizations that utilize both ShiftMed and UKG technology can access ShiftMed's 350,000-plus contingent workforce within UKG and manage the scheduling of all personnel from one system.