January 19, 2004
Matchmaker | A new Portland company tries to meet the health care industry's voracious personnel needs
By Taylor Smith
Nine years ago, Marcella Sowerby thought she'd had enough of the health care industry. After nearly two decades in the business, working as everything from a nurse's aide to CFO for a nursing home administrator, Sowerby was fed up with the industry's bureaucracy and burned out by the long hours. She dabbled in real estate, opened an Italian restaurant in York and worked as an executive recruiter for Executive Search of New England in Portland.
A year ago, Sowerby did some consulting work for Alternative Nursing Care, a Portland firm that provides short-term staffing for health care facilities and doctors' offices. The company was losing business, and asked Sowerby to figure out why. She found that even though Alternative Nursing Care hadn't changed, the health care industry had. Sweeping changes included administrators' need for regular staff rather than temporary (and costly) solutions provided by companies like Alternative Nursing Care. She found that many hospitals and health care facilities had big, unmet staffing needs, and tried to convince Gail Nowak, president of Alternative Nursing Solutions, to alter her business model to suit the changing industry. Nowak balked, but urged Sowerby to pursue the idea herself. That's why, in July, Sowerby found herself back in the industry she thought she'd left for good when she founded Medical Source Inc., a recruitment specialist that deals exclusively with staffing in the health care industry. Sowerby considers herself especially well suited to the challenge. "I had been doing executive recruiting since 1998, but I also understood the health care industry because I was on their side of the fence before that," she says.
Mainebiz spoke with Sowerby recently about the market her new company is trying to serve and the challenges of launching a highly specialized company.
What was involved in launching Medical Source?
We share our office on Brighton Avenue with Alternative Nursing Care. But I didn't anticipate how much it would cost me to get the company going. We needed software programs for databases and for scheduling, computers for the four-person staff, and a marketing plan. The marketing has been the most expensive part, because we hired a marketing person to design brochures and a website for the company, and also to do press releases and a logo.
How much has the launch cost?
It's cost about $25,000 so far, and [in 2003] I definitely spent more than the company took in. But I hope to bring in around $765,000 in revenues [in 2004].
How did you arrive at that number?
By working with my accountant and doing performance projections. We looked at how we'd bring in that revenue based on monthly direct-hire placements and the number of temp hours per month. We're estimating about two direct hires a month, and we should move about 300 people through our system next year.
Did those start-up costs come out of your pocket?
Yes, but I've had plenty of people offer me capital in exchange for an equity stake in the company. Even people who've done work for me have asked for payment in equity. I haven't taken them up on their offers, but it's told me I was headed in the right direction.
Medical Source is a very specialized recruitment firm. Why such a narrow industry focus?
Well, there's a great need for medical staffing, and a lot of other staffing companies have looked at addressing that need. But the benefit of being a recruiter strictly for the health care industry is that your network of candidates is larger. If you stay in one discipline, people will know you're there.
How much more expensive is temporary help than regular?
Temporary shift relief can bump up payroll by $20,000 a month at a nursing home, and that's a nightmare for administrators.
Nursing shortages are frequently mentioned in the news, and it seems that other sections of the industry are facing personnel shortages as well. Is that trend going to continue?
The nursing shortage is going to get much worse because the pipeline is drying up. There are currently 126,000 nursing positions that are unfilled nationally. That problem is also getting into areas like speech pathology and physical therapy. Pharmacy technicians also are very sought after.
Why will it keep getting worse?
For starters, nursing is a very high-burnout profession, with the average hospital RN working 60 hours a week. Also, the health care industry is spending more money on rehabilitation. That's because it costs less for health care companies or the government to offer rehabilitation services than it does to maintain a disease or a condition. For example, the sooner a stroke victim can get rehabilitative therapy, the more likely their recovery will be successful. That move towards preventative medicine ˆ as opposed to just prescribing drugs ˆ is a better health care plan, but it also creates a lot more jobs that need to be filled.
What kinds of jobs does Medical Source fill?
We staff all the different departments of hospitals and nursing homes, and if someone wants to open a doctor's office we can find everything from accountants to office staff to nurse practitioners. We don't do any recruiting for physicians yet, because the process is very involved. But we should be recruiting physicians in the next two or three years.
How does Medical Source get paid for its recruiting?
Our fee is 18% of the employee's first year salary, which we charge to the employer.
Is that typical?
It's actually considered fairly low. The typical fee is more like 25%-30% of the first year's salary. But we can afford that because we've got a fairly small staff and low overhead. Also, we're new and we want to get our foot in the door.
How have you spread the word about Medical Source?
That's been one of our biggest challenges. We want to make sure that health care people and practices know we're here. Our approach is to visit potential clients, tell them what we do and listen to what their needs are. Eventually I'd like to be a household name in doctors' offices and medical facilities. But to get there, we've got to be very thorough.
What's a typical recruitment scenario?
If a large doctor's office calls and says they need a practice manager, we'll go to the office and see what the practice is like. Who's working there? What's the culture like? Who's in charge of hiring, and what are they looking for in a new practice manager? We answer those questions and look through all of our candidates to find two or three good matches. Then we'll do all the background and reference checks before we go back and present the candidates.
Have you gotten good feedback from clients?
Yes, we have. If we hadn't, we wouldn't be in business long. We were just down in Massachusetts at a health care symposium, and I ran into a hospital representative who was excited to see us there. She told us that the reason she loves using us is that our price structure is so much better than what she usually has to pay. We've also had a lot of success with a local hospital that's converted three people from temporary positions to full-time positions through Medical Source.
How many employees have you placed so far?
We've probably placed around 25, and most have been temp-to-hire employees or contract positions.
Who comes to you looking for a job?
We get a lot of leads from conversations we have with local people. We're also getting résumés from people from all over the country. We post open positions on Internet job board sites and have gotten responses from people in Ohio, Texas, from all over.
Is it tough to get people to relocate to Maine?
It depends. Northern Maine can be a tough sell. But southern Maine, from Lewiston south, it's not difficult at all. One of the nice things I've noticed is that people from New Jersey, for example, are thrilled with the thought of moving to Maine. Also, the pay scales in southern Maine and New Hampshire are getting very competitive with salaries in Boston.
What are some typical salaries?
Nursing is all over the map, and it really depends on the facility. A staff nurse typically will make $45,000-$50,000 a year, while specialty nurses, like in pediatrics, might make $60,000-$75,000 a year. A physical therapist can make around $60,000 a year, while physician's assistants usually start at around $45,000.
Where would you like to see Medical Source five years down the road?
I'd like to see the company expand. Within a couple of years, I'd like to see my current employees heading up teams of recruiters that are doing nothing but therapy placements or doctor's office placements. We're also trying to boost our network of candidates. For example, we worked with Northeast Technical Institute in Portland and a consultant group in Boston to set up a pharmacy technician class in Portland. The first class was in October and every class has been full. You can't just tell clients that you'll find people to help them; sometimes you have to take matters into your own hands.
Are there any encouraging trends in the health care industry?
Yes; I'm seeing a lot more men getting into nursing, which is great because it means people are looking at this profession. I asked one guy who came into our office why he got into nursing. He said that he'd always have a great paying job, no matter what the economy was like.
A year ago, Sowerby did some consulting work for Alternative Nursing Care, a Portland firm that provides short-term staffing for health care facilities and doctors' offices. The company was losing business, and asked Sowerby to figure out why. She found that even though Alternative Nursing Care hadn't changed, the health care industry had. Sweeping changes included administrators' need for regular staff rather than temporary (and costly) solutions provided by companies like Alternative Nursing Care. She found that many hospitals and health care facilities had big, unmet staffing needs, and tried to convince Gail Nowak, president of Alternative Nursing Solutions, to alter her business model to suit the changing industry. Nowak balked, but urged Sowerby to pursue the idea herself. That's why, in July, Sowerby found herself back in the industry she thought she'd left for good when she founded Medical Source Inc., a recruitment specialist that deals exclusively with staffing in the health care industry. Sowerby considers herself especially well suited to the challenge. "I had been doing executive recruiting since 1998, but I also understood the health care industry because I was on their side of the fence before that," she says.
Mainebiz spoke with Sowerby recently about the market her new company is trying to serve and the challenges of launching a highly specialized company.
What was involved in launching Medical Source?
We share our office on Brighton Avenue with Alternative Nursing Care. But I didn't anticipate how much it would cost me to get the company going. We needed software programs for databases and for scheduling, computers for the four-person staff, and a marketing plan. The marketing has been the most expensive part, because we hired a marketing person to design brochures and a website for the company, and also to do press releases and a logo.
How much has the launch cost?
It's cost about $25,000 so far, and [in 2003] I definitely spent more than the company took in. But I hope to bring in around $765,000 in revenues [in 2004].
How did you arrive at that number?
By working with my accountant and doing performance projections. We looked at how we'd bring in that revenue based on monthly direct-hire placements and the number of temp hours per month. We're estimating about two direct hires a month, and we should move about 300 people through our system next year.
Did those start-up costs come out of your pocket?
Yes, but I've had plenty of people offer me capital in exchange for an equity stake in the company. Even people who've done work for me have asked for payment in equity. I haven't taken them up on their offers, but it's told me I was headed in the right direction.
Medical Source is a very specialized recruitment firm. Why such a narrow industry focus?
Well, there's a great need for medical staffing, and a lot of other staffing companies have looked at addressing that need. But the benefit of being a recruiter strictly for the health care industry is that your network of candidates is larger. If you stay in one discipline, people will know you're there.
How much more expensive is temporary help than regular?
Temporary shift relief can bump up payroll by $20,000 a month at a nursing home, and that's a nightmare for administrators.
Nursing shortages are frequently mentioned in the news, and it seems that other sections of the industry are facing personnel shortages as well. Is that trend going to continue?
The nursing shortage is going to get much worse because the pipeline is drying up. There are currently 126,000 nursing positions that are unfilled nationally. That problem is also getting into areas like speech pathology and physical therapy. Pharmacy technicians also are very sought after.
Why will it keep getting worse?
For starters, nursing is a very high-burnout profession, with the average hospital RN working 60 hours a week. Also, the health care industry is spending more money on rehabilitation. That's because it costs less for health care companies or the government to offer rehabilitation services than it does to maintain a disease or a condition. For example, the sooner a stroke victim can get rehabilitative therapy, the more likely their recovery will be successful. That move towards preventative medicine ˆ as opposed to just prescribing drugs ˆ is a better health care plan, but it also creates a lot more jobs that need to be filled.
What kinds of jobs does Medical Source fill?
We staff all the different departments of hospitals and nursing homes, and if someone wants to open a doctor's office we can find everything from accountants to office staff to nurse practitioners. We don't do any recruiting for physicians yet, because the process is very involved. But we should be recruiting physicians in the next two or three years.
How does Medical Source get paid for its recruiting?
Our fee is 18% of the employee's first year salary, which we charge to the employer.
Is that typical?
It's actually considered fairly low. The typical fee is more like 25%-30% of the first year's salary. But we can afford that because we've got a fairly small staff and low overhead. Also, we're new and we want to get our foot in the door.
How have you spread the word about Medical Source?
That's been one of our biggest challenges. We want to make sure that health care people and practices know we're here. Our approach is to visit potential clients, tell them what we do and listen to what their needs are. Eventually I'd like to be a household name in doctors' offices and medical facilities. But to get there, we've got to be very thorough.
What's a typical recruitment scenario?
If a large doctor's office calls and says they need a practice manager, we'll go to the office and see what the practice is like. Who's working there? What's the culture like? Who's in charge of hiring, and what are they looking for in a new practice manager? We answer those questions and look through all of our candidates to find two or three good matches. Then we'll do all the background and reference checks before we go back and present the candidates.
Have you gotten good feedback from clients?
Yes, we have. If we hadn't, we wouldn't be in business long. We were just down in Massachusetts at a health care symposium, and I ran into a hospital representative who was excited to see us there. She told us that the reason she loves using us is that our price structure is so much better than what she usually has to pay. We've also had a lot of success with a local hospital that's converted three people from temporary positions to full-time positions through Medical Source.
How many employees have you placed so far?
We've probably placed around 25, and most have been temp-to-hire employees or contract positions.
Who comes to you looking for a job?
We get a lot of leads from conversations we have with local people. We're also getting résumés from people from all over the country. We post open positions on Internet job board sites and have gotten responses from people in Ohio, Texas, from all over.
Is it tough to get people to relocate to Maine?
It depends. Northern Maine can be a tough sell. But southern Maine, from Lewiston south, it's not difficult at all. One of the nice things I've noticed is that people from New Jersey, for example, are thrilled with the thought of moving to Maine. Also, the pay scales in southern Maine and New Hampshire are getting very competitive with salaries in Boston.
What are some typical salaries?
Nursing is all over the map, and it really depends on the facility. A staff nurse typically will make $45,000-$50,000 a year, while specialty nurses, like in pediatrics, might make $60,000-$75,000 a year. A physical therapist can make around $60,000 a year, while physician's assistants usually start at around $45,000.
Where would you like to see Medical Source five years down the road?
I'd like to see the company expand. Within a couple of years, I'd like to see my current employees heading up teams of recruiters that are doing nothing but therapy placements or doctor's office placements. We're also trying to boost our network of candidates. For example, we worked with Northeast Technical Institute in Portland and a consultant group in Boston to set up a pharmacy technician class in Portland. The first class was in October and every class has been full. You can't just tell clients that you'll find people to help them; sometimes you have to take matters into your own hands.
Are there any encouraging trends in the health care industry?
Yes; I'm seeing a lot more men getting into nursing, which is great because it means people are looking at this profession. I asked one guy who came into our office why he got into nursing. He said that he'd always have a great paying job, no matter what the economy was like.
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