What the Travel Nurse Market Contraction Means for Recruiters
May 12, 2025
May 12, 2025
Kelly Stone
The travel nursing industry is facing challenges as we move through 2025. According to Staffing Industry Analysts (SIA), the segment is projected to decline again, on top of the 37% contraction experienced from 2023 to 2024. This market contraction represents a fundamental shift that requires strategic responses from industry professionals.
For firms that built revenue models around pandemic-era rates and MSP dependency, the message is clear: you must adapt to stay profitable.
Understanding the Current Landscape
The 2020–2022 period was an outlier. COVID-related funding, emergency waivers, and critical demand for RNs drove bill rates and assignment volumes to record highs. But the healthcare system can’t sustain that spend. Since then, we've witnessed a steady decline as healthcare systems reassess their staffing strategies and budgets. This contraction doesn't exist in isolation—it's the result of converging market forces that are reshaping the industry. Today:
- Average bill rates have dropped from $133.47 in 2022 to $106.78 in 2023. Many agencies entered the space during the boom years, creating saturation just as the market began to contract
- Many health systems are cutting contract labor. Many hospitals are operating on thin margins, forcing them to reduce premium labor costs wherever possible.
- Travel nurses are opting out; burnout is as prevalent (if not greater) among travel nurses as their localized counterparts.
Strategic Pivots for Recruiters
Despite these challenges, there are concrete steps recruiters can take to maintain and even grow their business in a tighter market:
Diversify Your Services
Successful agencies are broadening their scope while leveraging their existing expertise and relationships. While the volume may shrink, certain assignments will always require mobility; however, to stay competitive, think about diversifying into adjacent segments like:
- Per diem nursing: offers local, flexible staffing options that supplement revenue streams while utilizing existing recruitment infrastructure.
- Allied health: physical therapists, respiratory therapists, and imaging technicians remain in high demand with notably less market volatility than nursing.
- Advanced practitioners for telehealth and rural placements.
Pivot some of your recruiting focus into these segments to offset the travel nurse decline. This approach provides continuity of service for both clients and candidates during periods of travel assignment scarcity.
Technology + A Relationship-First Approach
This contracted market demands that agencies prioritize relationship development as their fundamental business strategy. This approach requires a deliberate shift from transactional interactions to partnerships, and the technology that is available today can enable this approach. Forward-thinking agencies are investing strategically in their digital capabilities to improve relationship building and to outperform competitors.
A fully optimized tech stack offers the most significant competitive advantage in today's market. Integrated recruiting systems can:
- Reduce time-to-fill with AI-powered matching.
- Cut credentialing delays with automated verification.
- Deliver better experiences via mobile-first workflows.
Artificial intelligence is also impacting recruitment in meaningful ways. AI-powered tools can now screen thousands of profiles for specific clinical competencies, predict candidate interest based on past behavior patterns, and even recommend optimal pay packages based on market conditions.
These technologies don't replace the human element of recruitment but rather enhance it by handling routine tasks and providing data. With the help of AI, recruiters can focus their personal attention on relationship-building that requires human connection. This will lead to better client retention, and with the cost of acquiring a new client being much greater than maintaining an existing one, also help the bottom line.
Looking Forward: Adaptability Wins
The travel nurse market is unlikely to return to pandemic-era volumes in the foreseeable future, but the need for flexible staffing solutions in healthcare remains strong. Agencies that adjust their strategies to focus on operational efficiency, relationship development, service diversification, and especially technological advancement will emerge from this contraction period stronger and better positioned for sustainable growth.
Ultimately, the most successful agencies will be those that are adaptable and able to combine the necessary human element of recruitment with the power of digital transformation.
