Healthcare staffing spending is projected to return to growth in 2026, reaching around $40 billion nationally after years of contraction. After a stretch defined by travel nursing surges and locum reliance, the physician staffing market is shifting again, and permanent hiring is quietly becoming the smarter move for a lot of organizations.
Here is what changed, and how to know if it is time to shift your own strategy.
Here's what you need to know about the shift in physician staffing:
The pandemic years pushed travel nursing and temporary staffing to record highs. Bill rates spiked, hospitals leaned heavily on contract labor to survive surges, and permanent hiring took a back seat to simply keeping units staffed.
That era is over. Travel nursing revenue dropped 36% in 2024 alone, and pay for contract nurses has normalized well below its pandemic peak. The market has stabilized, but stabilized does not mean it looks the same as before.
While travel nursing cooled sharply, locum tenens for physicians did not follow the same pattern. Staffing Industry Analysts found the locum tenens segment grew by 15% in 2024 and is projected to keep growing at roughly 4 to 5% annually through 2027, making it the only healthcare staffing category that never really pulled back.
That resilience comes from a different root cause. Physician shortages are structural, not a pandemic side effect. The AAMC projects a shortage of up to 86,000 physicians by 2036, and that number is not tied to a temporary spike in patient volume. It reflects retirements, capped residency slots, and rising demand from an aging population.
With the market stabilizing, more organizations are asking whether it is time to shift budget away from locum coverage and back toward permanent hires. A few signals suggest it might be.
If a locum has been covering the same position for six months or more, that is usually a sign the organization needs a permanent hire, not another contract extension.
Locum tenens physicians often cost more per hour than a permanent hire's effective rate once benefits and overhead are factored in. For roles with steady, predictable demand, permanent hiring is usually the better long-term value.
Rotating locum coverage can be hard on patients who want a consistent provider, especially in primary care and behavioral health, where relationship continuity affects outcomes.
Locum staffing is built for flexibility and short-term gaps. If you are opening a new service line or expanding a department, a permanent hire is usually the stronger foundation.
Permanent hiring is not the right call for every situation, and the shift in the market does not change that. Locum tenens remains the better fit when:
Roughly 80% of healthcare organizations plan to maintain or increase locum usage through the next year, which tells you this is not an either-or decision for most systems. It is about knowing which roles fit which model.
Start by looking at your open roles individually rather than applying one staffing philosophy across the board. A rural family medicine role with no local candidate pipeline might need locum bridging for a year while a permanent search runs in parallel. A stable, high-volume specialty in an urban market might be ready to shift straight to permanent hiring.
Capline Healthcare Staffing works with organizations navigating exactly this kind of decision every day, blending permanent placement and contract staffing based on what each role actually needs. Our recent look at supply and demand pressure in dentistry shows how similar staffing tradeoffs play out in a different part of healthcare.
The market has shifted, and organizations that reassess their staffing mix now will be better positioned than those still running on pandemic-era assumptions. Some roles need locum flexibility. Others are ready for a permanent hire.
Talk to Capline Healthcare Staffing about reviewing your open roles and building a staffing strategy that fits where the market stands today.
Travel nursing demand was largely pandemic-driven and has normalized, while locum tenens is tied to structural physician shortages that are not going away.
Look at how long the role has needed coverage, whether patient continuity is affected, and whether the cost of ongoing locum coverage outweighs a permanent hire.
It is stabilizing rather than fully recovered, with overall spending returning to modest growth after a period of contraction.
No. Most organizations use a blend, relying on locum coverage for temporary gaps, rural shortages, and seasonal spikes while building out permanent staff for steady, long-term roles.
