Online healthcare marketplace Nomad Health raises $12M

Nomad is going to use the funding to expand from a dozen to all 50 states

Financial trends and news by Steven Loeb
February 27, 2018
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(Editor's note: Join us at SplashX Invent Health: Future of Clinics on March 15, at HP headquarters in Palo Alto. We'll take a deep dive into how local care is changing and becoming more about wellness and less about sick-care. Hear from Walgreens Health's CMO, HP's global medical director, Sutter Health's Walk-in Care, Kaiser, and CEOs of Omada, Health IQ, JustAnswer; Plus VCs from McKesson, Norwest, Mayfield, Khosla, DCVC, Comcast.) 

There’s a big clinician shortage in the United States right now, meaning there are not enough doctors and nurses to take care of all the patients who need care. By 2030, there is expected to be a shortfall of over 100,000 doctors in the United States, according to the Association of American Medical Colleges. At the same time, there is an impending shortage of 1.2 million nurses by 2022, according to the Bureau of Labor Statistics

Part of that has to do with the tools that we have today to hire and recruit clinicians, which are painfully out of date, Dr. Alexi Nazem, co-founder and CEO of Nomad Health, an online marketplace for healthcare jobs, told me.

"They are really inadequate. They’re analog, they haven’t changed in 40 to 50 years, there’s a lot of phone calls and faxes and third party brokers," he said.

"Nomad is a completely different way of dealing with that situation. I’m a doctor myself and have suffered through most of these terrible methods for hiring and recruiting doctors and my co-founders and I felt like there had to be a better way."

What Nomad does is act as a direct marketplace for healthcare jobs, so instead of needing to use a third party staffing agency, which is the way that most of these jobs are placed right now, clinicians and organizations can interact directly with each other on the platform. 

On Tuesday, the company announced that it has raised $12 million in a Series B round led by Polaris Partners, along with existing investors First Round Capital, RRE Ventures, and .406 Ventures. This round brings Nomad's total funding to $17 million. 

Founded in 2015, Nomad works with both clinicians and healthcare facilities to match employees and employers looking for freelance work. 

From the clinicians perspective, they go to Nomad and express their preferences, such as location, salary and the hours they can work. They can also share information about their background qualifications, such as where they went to med school, where they did their residency, and their board certifications. 

At the same time, healthcare facilities are able to post their jobs to Nomad, with specifications regarding salary, experience and certain certifications. They will be immediately presented with candidates that match exactly those qualification but also who have expressed those preferences.

Once the two sides are matched and agree to terms, the contracting happens electronically on the Nomad platform. Once the clinician starts working, all of the time management and payments also happen electronically through the platform.

"Nomad works to make the process simple, in the sense that really essentially the only question the doctor has to answer is, 'Do I want to work this job?' and the only question the healthcare facility has to answer is, 'Do I want to hire this doctor?' Everything else is managed automatically through the Nomad platform," said Nazem.

In some ways it acts much like a typical job recruiting site like LinkedIn, Monster and others; where Nomad separates itself from other job recruiting sites is by putting its focus on the unique problems that occur only in the healthcare space. The platform supports the entire process of recruiting a healthcare worker, including credentialing, licensing, and malpractice insurance.

"None of these other tools are specifically built for healthcare. Healthcare is unique in every facet, and demands solutions that are tailored made for the industry. Hiring in healthcare is very different from hiring in other industries. There are a lot more hoops to jump through and you’re targeting a different population," said Nazem.

For example, to practice medicine or nursing in a specific state you need to have a license to practice in that state. A separate license is required for each state. That provides some friction in the staffing market, so one of the ways Nomad helps is by finding clinicians that already have the correct state licenses to make the recruiting process go quicker. 

"These are government agencies that issue these licenses, and they can be highly variable in the amount of time it takes. It can take weeks or months, and when there’s a pressing need that is a step that is great to be not have to go through," said Mazem.

"Nomad helps you get quickly connected with people who have the appropriate qualifications helps circumvent that step. We do help with additional licensing for doctors and nurses, but the first preference is help find someone already licensed because that speeds things up."

The company also does license verification against versus public databases to ensure that the licenses are real and up to date. 

The company makes its money from the healthcare facilities, who sign contracts with Nomad, but there’s no cost up front for them to use the platform. The only time that any charge occurs is when there’s a successful recruitment; when they hire a doctor or nurse, they pay a 15 percent commission. That means that if the doctor is being paid $100 an hour, Nomad is getting paid $15 an hour.

That saves the facilities significant money, Nazem said, because it charges a much lower rate than a broker would charge. 

"The traditional staffing agencies charge a 40 to 70 percent commission, and that’s outrageous. We charge 15 percent commission, so, on average, hospitals are saving 30, 40 50 percent per hire when they are working with Nomad."

Over 1,500 healthcare facilities are using Nomad today, and there are over 30,000 clinicians on the platform. In the last year the company has grown approximately 20x across the number of jobs posted, the number of clinicians and the number facilities on the platform. 

Nomad will use the new funding to shore up its platform by launching new features and optimizing its existing feature set. 

"There’s a laundry list of product features and optimizations that we want to build and it’s just been a capacity issue. We know what our clients and clinicians want and there’s a ton of features we can either optimize or completely create new that would smooth every stage of the process, from improving the matching algorithms to connect people all the way down to those last mile steps like the contracting and payments," Nazem said.

"For example, doctors and healthcare facilities, when they’re in the middle of hiring process, coordinating every stage of that hire is complicated and you want to have it completely tracked, so we wil go deeper into applicant tracking systems. We already have that but we’d like to provide more granular detail. Other features include the ability to schedule and conduct interviews on the platform. So really just making it simpler more straightforward and more centralized to do every aspect of hiring."

The company willalso use the money for to grow its footprint from about a dozen states, which includes most of the eastern seaboard, California and Texas, to nearly all 50 states in the U.S., which is its ultimate goal.

To support its new features, and its expansion, the company will be growing its team in the next year, particularly in engineering and sales. It currently has 25 employees and plans to grow by 50 to 100 percent. 

In addition to the new funding, it was also revealed that Brian Chee, Managing Partner at Polaris, will be joining the Board of Directors at Nomad Health. 

"I am so excited about Brian joining our board," Nazem told me.

"He brings a very valuable, deep set of experiences in the healthcare technology world. He also has an extraordinary network in this space; already he has been connecting us with really preeminent organizations and thinkers in healthcare and also helping us think about what’s the strategic right vision going forward. He’s scaled many businesses in healthcare, which is a tough industry to scale in, and so he's helping us take the company from the position where we’ve proven this is a product that the market wants to where we can take it from a dozen states to 50 states, from 1,500 facilities to tens of thousands of facilities. He’s been there multiple times before, specifically in healthcare technology, and that muscle memory is going to be so valuable for us.”

Ultimately, the medium term goal for Nomad is to become the marketplace for all healthcare jobs, to be the single source staffing solution for health organizations.

"We want to be the single place for them to hire doctors, nurses, physical therapists, all health professionals and to hire them for all sorts of positions. Today, we do only free lance positions so short term doctors, short term nurses, but we’d be love to be able to offer other types of work as well through the platform. Similarly, the other side of the coin is that this becomes the single place that healthcare professionals will have to go to find their jobs. Nomad will be the place where all the jobs are and all the clinicians are, so we become the job finding and hiring marketplace for healthcare," said Nazem.

The long term vision is for Nomad to become a workforce management platform, and also a career management platform, going beyond just recruitment. 

"We won't be just a place to find and take a job, but also to do onboarding, to do continuing education, to do credentialing and licensing on an ongoing basis. Anything that’s related to managing your clinical workforce, and anything related to managing your clinical job, these are very, very unorganized processes today. In fact, I would call them completely disorganized and so offering that centralized well-managed, easy to use solution I think would be a major benefit to the healthcare system at large, both in an efficiency and from a cost standpoint," said Nazem.

"We can actually be better at getting clinicians to the bedside, solving this clinician shortage, and repurposing those dollars that are spent today, those tens of billions, even hundreds of billions, of dollars, that are spent on workforce management on things that are better uses of those dollars.”