Health systems’ nurse shortage crisis isn’t going away anytime soon—and investors are taking note

The news: Tech-enabled healthcare staffing solution Incredible Health scored $80 million in Series B funding, bringing the company’s valuation to $1.65 billion. Investors included major healthcare network Kaiser Permanente.

Why it matters: The healthcare labor crunch isn’t getting better anytime soon. That presents a major opportunity for on-demand staffing platforms like Incredible Health to gain new clients.

How we got here: Many nurses are leaving their hospital positions to become travel nurses—a role that typically includes higher pay and more flexibility than a health system position.

• About 77% of hospital-employed nurses reported seeing a growth in travel nurses, per a recent Incredible Health study.
• Some (34%) of nurses are planning to leave the profession altogether due to burnout and poor compensation, according to the study.
• Plus, onboarding nurses comes with a high price tag for some health systems. Hospitals like Atlanta’s Piedmont Hospital System began offering $30,000 sign-on bonuses to new nurses, while Baptist Health System is offering up to $20,000, for instance.

The bigger picture: Digital health funding is drying up compared with last year’s boom. That includes Series B raises. During the first six months of this year, average Series B checks were 25% smaller compared with the same period in 2021, per Rock Health.

• So, the fact that a startup like Incredible Health scored $80 million in Series B funding during a digital health funding slowdown signals that healthcare hiring solutions are a need-to-have.
• Investors will likely continue pouring funds into on-demand nurse staffing platforms, especially as the healthcare labor shortage intensifies and health systems struggle to find permanent talent.
• Similar to Incredible Health, nurse staffing platform IntelyHealth bagged $115 million in VC funding earlier this year, for instance. The sources included major health system investor Kaiser Permanente.

The big takeaway: We expect healthcare staffing solutions to continue gaining investor attention, despite a digital health funding slowdown.