Welcome back, humans! In Part 1, I showed you what changed in 2025 - market stabilization, AI maturation, and the data quality reality check. This week: what's coming next, and why the 2029 healthcare staffing landscape will look nothing like today.

Spoiler alert: the middle ground is disappearing faster than you think.

The 2026 Reality

Let's start with what's actually projected for next year, courtesy of Crystal Fullilove and Staffing Industry Analysts' (SIA) research:

If you were hoping for a return to boom years, I have bad news. But here's the interesting part: while the overall market is flat, individual firm performance is diverging rapidly.

Fullilove's research showed that 54% of healthcare staffing executives expect AI to replace 40%+ of manual processes within three years. Meanwhile, 80% of firms aren't ready for that transformation yet.

That gap? That's your 2026 storyline. Some firms will close it. Most won't.

The conference consensus: 2026 is when technology adoption separates the winners from everyone else. The firms that solved data quality in 2025 (like we talked about in Part 1) will pull ahead. The firms still "evaluating options" will fall behind.

Timothy Landhuis, VP of Research at SIA, put it directly: voice AI adoption will accelerate now that the data quality baseline is improving. Translation? The technology that seemed too futuristic in 2024 becomes table stakes in 2026. Ready or not.

Three Strategic Positions Emerging

After analyzing the executive panels and the mergers and acquisitions (M&A) sessions, I'm seeing firms cluster into three distinct strategic positions. Not "three choices you should make" - three patterns that are already forming whether anyone planned them or not.

Position 1: The Consolidators

The M&A panel was remarkably blunt: 50% of healthcare staffing executives are considering M&A in the next 12 months. That's not "thinking about it someday" - that's "evaluating deals right now."

With interest rates stabilizing and private equity sitting on record dry powder, consolidation is accelerating. Greg Palmer, Chairman & CEO of Supplemental Health Care, emphasized

"Firms need their house in order first - rock-solid technology, strong management, clean financials. No one's buying a mess, even at discount prices."

But here's the problem: when valuations are at the bottom, traditional M&A grinds to a halt. Sellers won’t accept depressed multiples, buyers won’t overpay, and everyone’s stuck waiting for the market to improve. Unless you get creative.

The Travel Nurse Across America and totalMed merger demonstrated a creative solution: a cashless merger. Rather than arguing over current valuations, both companies combined their equity and bet on their combined future value instead. No cash changes hands, no painful valuation negotiations, but both firms immediately gain the scale and cost structure needed to compete.

When neither party wants to sell at the bottom, you can create the leverage needed to compete.

What we're seeing: Firms already at $20M+ revenue with PE backing or strong balance sheets are actively pursuing roll-up strategies. The goal? Get big enough that margin pressure hurts less because fixed costs spread across more revenue.

By 2029, this group will be the dominant players - extending their 53% market share toward 60-70%.

Position 2: The Specialists

Three conference sessions showcased CEOs who prove there's another way: own something too specialized for the giants to serve profitably.

Kenny Kadar, President of Coast Medical Service, grew the company from $500,000 to $50 million by dominating school nursing. Similarly, DeLibra Wesley, CEO of National Recruiting Consultants, built exclusively for school districts after recognizing the overlap between allied health and special education. Furthermore, Ethan McWilliams, President of Wilderness Medical Staffing, mastered one of healthcare's most extreme niches: staffing an island between Alaska and Russia with 89 residents, 365 days a year with a PA.

The pattern? Find markets where deep expertise matters more than scale, relationships are too complex to replicate, or geography creates natural barriers.

"It is so tempting to be everything to everybody… staying true to who you are when you first start out is critical."

What we're seeing: Firms serving markets under $100M where relationships trump efficiency. The giants could serve these markets, but the margin profile doesn't justify the operational complexity. That creates defensible positions for specialists willing to say "no" to everything else.

These firms won't grow to $500M. But they also won't get crushed by the consolidators. They're owning space too small to matter to the big players but plenty big enough to build profitable businesses.

Position 3: The Optimizers

If you're not acquiring and your niche isn't defensible enough, there's a third position emerging: operational excellence through technology.

At the conference, the results spoke for themselves: Brian Gill, Founder & COO of TalentBurst, Inc., achieved 30%+ year-over-year growth without adding headcount. Catherine Pearson, President at Ingenovis Health, saw 200% more placements from database reactivation. Connected Healthcare saved 200 hours per week through data enrichment while achieving 35% more placements month-over-month.

That's EBITDA margin expansion through operational leverage - growing top line while controlling costs. John Maaske, CEO of Triage Staffing, emphasized the discipline required:

"We probably say no to more than we say yes."

It's not about chasing every opportunity. It's about serving the right opportunities more efficiently than competitors.

What we're seeing: Firms in the $10M-$100M range that can't or won't pursue aggressive M&A but have solid operations to build on. They're using technology as a force multiplier - achieving scale economics without proportional headcount growth.

The key insight? Culture determines success more than technology sophistication. You can buy the best AI platform available, but if your team doesn't believe in it, you've bought expensive shelfware.

The 2029 Landscape

Fast forward four years. Here's what the M&A panel consensus projects:

The top 10 largest healthcare staffing firms will control 60-70% of the market (up from 53% today). The mechanics are already visible:

• MSP/VMS proliferation favors firms that can absorb fees and maintain margins
• Rising fixed costs (insurance, technology, compliance) squeeze smaller players disproportionately
• Direct client contracts increasingly flow to firms with national scale and brand recognition
• The long tail contracts dramatically - firms between $5M-$50M without clear positioning get caught in the squeeze

But here's what surprised me in the data: niche specialists aren't just surviving in 2029 - they're thriving in segments too complex for giants to serve profitably. The consolidation doesn't eliminate small firms. It eliminates undifferentiated firms.

School nursing? Wilderness medicine? Specialized allied health in rural markets? Those businesses will still exist in 2029, owned by firms that mastered their niche rather than trying to compete everywhere.

The firms that won't exist? The ones trying to be everything to everyone while the market consolidates around them. As multiple executives emphasized: saying "no" is a strategic capability. By 2029, it will be a survival skill.

The Technology Timeline

One more prediction track worth noting: how technology itself evolves.

2026: Voice AI adoption accelerates now that data quality baselines are improving. Platform adoption reaches 60% of the market (from 34% today). The "shocking" becomes normal faster than anyone expects.

2027: Agentic AI systems start proving viable at scale. Tito Goldstein, Co-Founder of Teambridge, made the boldest prediction at the conference: "In the next year, there will be a billion dollar company with one employee". By 2027 we'll see if he's right. Not replacing humans, but orchestrating work in ways that seemed impossible two years earlier.

2029: AI isn't a competitive advantage anymore - it's basic infrastructure. Like having a website in 2010 or a mobile app in 2015, not having operational AI will be the remarkable thing. The question shifts from "should we adopt AI?" to "how well have we integrated it?"

The conference revealed something fascinating: firms that waited for AI to mature before adopting missed the learning curve advantage. By the time the technology is "ready," the firms that fumbled through early adoption have two years of organizational learning baked in. You can't fast-forward that learning curve with a budget. You only get it through time and iteration.

You can't fast-forward that learning curve with a budget. You only get it through time and iteration.

What This Means by Firm Size

Based on patterns across conference sessions, here's how different firm sizes are positioning:

Sub-$10M firms: Specialize aggressively or prepare to exit. The operational overhead required to compete as a generalist is increasingly unsustainable at this scale. The survivors will own defensible niches.

$10M-$50M firms: The squeeze zone. Either optimize operations to achieve scale economics without proportional headcount growth, or become an attractive acquisition target. Trying to grow traditionally in this range is swimming upstream.

$50M-$100M firms: Decision point - pursue scale through acquisition or dominate a large niche. The firms that try to stay independent without clear specialization will struggle as fixed costs rise and margin pressure continues.

$100M+ firms: Continue M&A strategies, extend technology advantages, and absorb market share as smaller competitors exit or consolidate. These firms are playing a different game than everyone else.

The pattern? By 2029, every successful firm will have answered one of three questions: Can we compete at scale? Can we own a defensible niche? Can we grow without scaling headcount proportionally?

The firms that haven't answered those questions by then will be answering a different one: who's acquiring us, and at what multiple?

The Bottom Line

Here's what 28 sessions, 90 speakers, and countless predictions boil down to: the five-year transformation is beginning right now.

The three-year correction (2022-2024) was about market stabilization. The five-year transformation (2025-2029) is about strategic positioning. Consolidators, specialists, and optimizers - three viable futures. The undifferentiated middle isn't one of them.

The principle remains true: technology should "speed you to a human touch, rather than eliminating it." But this year's conference added the timeline: firms that figure out human-AI partnership by 2026 will define 2029. Firms that don't will be explaining to their boards why they're not profitable enough to stay independent.

The market has stabilized. The strategies have emerged. The technology exists. Now comes the hard part: picking your position and executing before the window closes.

Good luck out there, humans. Based on the data, you're going to need it.