Medical Solutions: A Tiered Solution

Welcome to the 211th Pari Passu Edition.

In today's write-up, we will look at Medical Solutions, the second-largest travel nursing firm in the United States. In June 2026, the company completed an LME that represents how far liability management tactics, lender co-ops, and intercreditor dynamics have evolved, making it a must-know transaction.

Medical Solutions held a core role when hospitals struggled with nurse shortages during COVID. As patient counts surged and permanent staff burned out, hospitals had no choice but to turn to agencies like Medical Solutions to get enough nurses, paying high premiums. Bill rates more than doubled and volumes soared, making healthcare staffing look like one of the most attractive businesses in the country.

In September 2021, Centerbridge and Caisse de dépôt et placement du Québec (CDPQ) bought Medical Solutions, betting the business would keep growing even after post-COVID normalization. However, reality proved much harsher, as premium bill rates finally backfired and pushed hospitals' labor costs to unsustainable levels. Once the acute crisis passed, hospitals rebuilt their permanent nursing staff to stop paying premiums to staffing agencies. As a result, demand and bill rates collapsed together, margins compressed, and leverage quickly became unsustainable, forcing Medical Solutions into an LME in 2026.

In this write-up, we'll walk through Medical Solutions' business model, trace the path to distress from the 2021 buyout through the 2023 demand collapse, examine the formation of one of the most contentious lender co-ops in recent memory, and break down the 2026 transaction.

Nurses are essential to high-quality patient care, yet hospitals worldwide face a chronic shortage driven by an aging population. Long, demanding shifts fuel burnout, and burnout drives nurses out of the field, deepening the shortage and overworking the nurses who remain. During crises like COVID or labor strikes, these shortages worsen, creating a big gap that companies like Medical Solutions can fill.

Medical Solutions is an end-to-end staffing partner for hospitals and clinics, connecting healthcare systems facing clinician shortages with the nurses and allied health professionals willing to fill those gaps, whether through short-term travel assignments, local per diem shifts, or permanent placement. The healthcare staffing business model is simple: Medical Solutions’ primary responsibility is to recruit travel nurses and allied health workers. Allied workers are clinical workers who are neither doctors nor nurses, including therapists, paramedics, and dietitians. The company adds these workers to its database, and when a client, say a hospital or a clinic, needs to fill a clinician or nurse spot, Medical Solutions matches an available clinician from its database to that opening, places them on a short-term contract, typically 13 weeks for a travel assignment, and bills the hospital an hourly rate for that clinician's time [1]. If you read our write-up on Ingenovis, you will see that these two businesses are very similar.

Medical Solutions makes money the way every staffing agency does: on the spread between what it bills a hospital for a clinician's time and what it pays that clinician. The company pays clinical professionals an hourly wage and covers basic expenses like travel and lodging. The business primarily has variable costs, as volume declines automatically reduce clinician pay. However, the second determinant of profitability is the bill rate itself, which is set by the current market demand/supply profile, meaning agencies like Medical Solutions have very little pricing power. If the bill rate decreases, it poses a larger issue for the company since the costs of providing a nurse, especially wages, mostly stay the same. These dynamics will matter when we discuss the path to distress. The business model is simple, making it a competitive space where dozens of small and mid-sized agencies compete on a commoditized service. As a result, nurse staffing agencies typically earn low EBITDA margins of around 5-15%, and Medical Solutions sat at the higher end of the range with ~14% margin in 2021. 

Because so many healthcare staffing companies exist, managing these relationships can be a lot of work for hospitals. To make it easier, Managed Service Providers (MSPs) act as a single point of contact between a hospital and the staffing agencies it uses [1]. Instead of managing dozens of separate vendor relationships and contracts, a hospital can hand its entire contingent labor program to one MSP, which sources, vets, and coordinates clinicians across whichever agencies are needed to fill open shifts, consolidating billing, credentialing, and compliance into a single platform. Roughly 70% of jobs across the healthcare staffing industry now flow through an MSP or vendor management system, meaning the company holding that contract controls the job flow for that hospital [1]. Medical Solutions has built a significant part of its business around winning and holding these MSP contracts, rather than competing shift by shift as a standalone staffing agency, creating a significant structural advantage. It was reported that MSP contracts accounted for 40% of Medical Solutions' revenue, meaning the business generated revenue by filling spots with nurses from other staffing agencies [2]. This revenue was in the form of a percentage fee on bill rates and represented a structural advantage, as Medical Solutions had more control over contracts and volume.

Medical Solutions is an umbrella for multiple businesses it acquired over two decades, including Aureus Medical Group, Matchwell, Host Healthcare, FocusOne Solutions, and WorldWide HealthStaff Solutions [7]. All continue to operate under their own brands, except Aureus Medical Group and FocusOne Solutions, which were absorbed into the Medical Solutions name. We will discuss these companies more in depth in a moment.

Medical Solutions has a long history dating back to 2001, when Scott Anderson and Albino Sánchez founded the business in Omaha, Nebraska. The company started out as a lean, three-person operation with a simple core business: connecting travel nurses and other healthcare professionals with hospitals, clinics, and long-term care facilities that needed temporary or contract staff. The company built its identity around a "Service That Inspires" philosophy, differentiating itself in a crowded staffing market by focusing heavily on the day-to-day experience of both its traveling clinicians and its hospital clients, rather than competing purely on price. That approach fueled unusually fast, sustained growth. Medical Solutions landed on Inc. magazine's Inc. 5000 list of America's fastest-growing private companies 11 times in its first 12 years, including one appearance on the more exclusive Inc. 500. 

In 2012, McCarthy Capital & Tenex Capital Management acquired Medical Solutions, marking its first private equity ownership. Shortly after that, in 2013, Medical Solutions acquired OA Nurse Travel for $31mm. OA Nurse Travel was a horizontal acquisition that made Medical Solutions the third-largest travel nurse staffing company in the US, with over 1000 nurses employed. By 2015, Medical Solutions' revenue grew 5 times, and that year it was sold to Beecken Petty O’Keefe & Company (BPKO) and Heritage Group for an undisclosed amount [17]. By 2017, revenue reached $320mm, representing 142% growth over the past three years [18]. These numbers reflect rising demand for travel nurses as the aging population continued to put pressure on hospitals. BPKO’s holding period didn’t last long, as in 2017, TPG Growth acquired Medical Solutions for approximately $500mm [19]. Here, the story gets more interesting as the company had a material transformation under TPG’s ownership. 

In 2018, Medical Solutions acquired PPR Travel Nursing, a travel nurse staffing and interim leadership firm based in Jacksonville Beach, Florida, along with PPR's own recent acquisition, 360 Healthcare Staffing, a post-acute care staffing company based in Tampa, Florida. PPR and 360 Healthcare added roughly $150mm in combined revenue, resulting in $475mm 2017 pro forma revenue. Later, in 2019, the company acquired C&A Industries, the 8th-largest healthcare staffing company, with $479mm standalone revenue. C&A, like Medical Solutions, was based in Omaha, Nebraska, and the deal combined two Omaha-based industry leaders. The rationale was diversification, as C&A brought allied health, non-clinical staffing, and managed services capabilities that complemented Medical Solutions' core travel nursing business. This major acquisition resulted in the new entity generating over $1bn in revenue and becoming the 4th-largest healthcare staffing company in the country [20]. 

In 2020, COVID created an enormous tailwind for Medical Solutions and other similar nurse staffing businesses. As hospitals faced unprecedented patient surges and staff shortages, demand for travel nurses spiked sharply, and bill rates rose well above pre-pandemic levels as facilities competed for a limited pool of available clinicians. The sharp rise in demand pushed industry-wide bill rates from $80 per hour to $200+, largely boosting staffing companies' profitability. Medical Solutions itself noted that in 2020 it deployed clinicians to more than 4,500 healthcare facilities across all states, and this demand surge, with no acquisitions during the period, drove the company's revenue from roughly $1bn in late 2019 to $1.6bn by mid-2021 purely from organic growth.

This is where our story begins, as in 2021, Centerbridge Partners and Caisse de dépôt et placement du Québec (CDPQ) acquired Medical Solutions from TPG for ~$2.25bn. This valuation was more than 4x what TPG paid back in 2017, showing the incredible growth that the company experienced. Centerbridge acquired the company at a ~10x multiple, implying adjusted EBITDA of ~$225mm. To finance the transaction, the company issued a $180mm RCF due November 2026, a $1bn 1L term loan and a $200mm delayed draw term loan (DDTL) due November 2028, and a $270mm 2L term loan due November 2029. To fund the rest of the purchase price, Centerbridge and CDPQ contributed ~$950mm cash equity, resulting in a 58% LTV. The $200mm delayed draw term loan was structured to fund the company's future acquisitions [2][3].

With that capital structure and a near-zero interest rate environment, the company had $56mm in cash interest and ~$12.5mm annual term loan amortization. After making a quick cash flow walk, we see that the company was expected to generate about $110mm in free cash flow in 2021.  

In 2022 and 2023, Centerbridge went shopping to continue the roll-up strategy that previous sponsors executed. Medical Solutions layered three acquisitions onto its platform, likely funded by drawing on its $200mm DDTL. In July 2022, it acquired Matchwell, a Durham, North Carolina-based subscription and AI-enabled marketplace that added recurring, higher-margin per diem and local staffing revenue outside the traditional bill-pay spread model. Four months later, in November 2022, it acquired Host Healthcare, a San Diego-based travel nursing and allied staffing firm that had grown revenue roughly 1,500% between 2019 and 2022, a deal that pushed Medical Solutions past its rivals into the number 2 spot in U.S. travel nursing. Finally, in March 2023, it acquired Worldwide HealthStaff Solutions, an international direct-hire recruiter sourcing nurses from the Philippines and the UAE, adding a permanent-placement revenue stream insulated from swings in domestic travel nurse demand. Together, these acquisitions grew Medical Solutions’ revenue up to ~$3bn in 2023. 

While COVID made healthcare staffing businesses quite attractive, the party did not last too long. Although investors knew bill rates would normalize as the pandemic eased, the dynamics proved far more damaging than expected.

In 2023, the expected bill rate normalization materialized, as hospitals that had spent two years paying a premium to plug staffing gaps finally regained the ability to fill shifts with their own workforce. The mechanics were simple: now that the pandemic was over and hospital demand had decreased, hospitals had an easier time filling nurse vacancies themselves, reducing demand for staffing agencies and normalizing bill rates. 

After acquiring Matchwell, Host Healthcare, and Worldwide Healthstaff Solutions, the company's pro forma revenue reached approximately $3bn in 2023. In 2024, that revenue declined by a staggering 32% down to ~$2.2bn [12]. Such a sharp decline wasn't just because the pandemic ended. According to the American Hospital Association, median hospital operating margins collapsed from 5.6% to -1.4% between December 2021 and March 2022 [5]. The pressure concentrated in inflation and rising labor costs, as median labor expense per discharge climbed more than a third since 2019, and contract nurse wages rose to more than three times what hospitals paid their own employed staff. Hospitals had every reason to move away from agency labor because the price was unsustainable, as shown by their material margin compression. 

This caused a massive decline in supply, which was quite problematic. As we noted, bill rate is dictated by supply and demand for clinicians in a given specialty and market, and the wage is dictated by what a nurse can earn elsewhere, whether at a competing agency, directly from a hospital's own internal staffing program, or on a 1099 platform that doesn't carry the same employer burdens a traditional W2 staffing firm does. Essentially, Medical Solutions had very little pricing power and had to adjust prices to what the current supply and demand suggested. Bill rates drastically fell, and the company could not cut nurse wages proportionally, as nurses would oppose any pay cut in an already stressful job and might churn. Because of this mismatch, bill-pay spreads declined, which subsequently caused adjusted EBITDA margin to fall to 6% in 2023 from 13% in 2022 [4]. This was an industry-wide problem: Ingenovis experienced the same margin compression in 2023, with margin falling from 12% in 2022 to 4% in 2023. 

Margin declines were also a byproduct of negative operating leverage caused by fixed costs. These fixed costs include the corporate overhead required to run a national staffing operation, such as recruiting infrastructure, compliance and credentialing systems, and the technology stack behind Ciro and its MSP/VMS platforms, none of which could scale down proportionally as shift volume fell, leaving a shrinking top line to absorb largely the same cost base.

One factor worth highlighting is how owning MSP relationships did not help Medical Solutions protect profitability. This is because MSP fees are typically priced as a percentage of the bill rate itself, meaning that as bill rates fell industry-wide, MSP fee income compressed right alongside the bill rate. Owning the MSP relationship defended Medical Solutions' job flow and market share, allowing it to win volume from competitors like AMN, but it did nothing to protect the margin or revenue on that volume.

Another important factor came in 2022 and 2023 when the sponsors extracted two dividends totaling $550mm. The first dividend was $200mm and was paid in 2022, when the business was still performing well. The second, however, was $350mm and was paid in Q2 2023, by which point the EBITDA margin had already started to fall drastically [6][4]. This dividend was partially funded by a $350mm accounts receivable securitization facility. A dividend recap funded by new debt on the brink of performance decline signals the financial aggressiveness of the sponsor even in the face of fundamental deterioration.

Adding to the COVID reversal, interest rates began rising in 2022, peaking at ~5.25% in 2024. As the company struggled with profitability in 2023 and 2024, rating agencies reported that it was barely breaking even. By 2025, Medical Solutions' revenue declined to $1.9bn, and EBITDA margins contracted to 4.6%, resulting in $87mm adjusted EBITDA. With this drastically lower profitability, Medical Solutions couldn’t even cover the interest expense. As a result, the company burned approximately $60-70mm of cash in 2025 [13][22].

The 1L trading price has been gradually declining since mid-2024, and by August 2025, the 1L was trading at ~55 cents on the dollar, reflecting severe distress perceived by the market. As the company burned cash, the RCF and the AR Securitization were due in November and September 2026, respectively, creating a reason for the company to pursue a broader transaction to extend maturities, crystallize discounts, and raise new money. 

As distress intensified, advisors corralled creditors to form the first co-op around the end of 2024. While we could not find many details around the first co-op, we do know it united ~90% of 1L debt. The initial co-op expired on September 12, 2025, the same day a new co-op was signed and took effect [8]. 

That new co-op is the focus of today's coverage, as it attracted attention for its aggressive multi-tier treatment structure, which reflects how the purpose and structure of co-ops have evolved.

Before diving in, let’s recall some basics on co-ops, which can also be found in our recent primer. At its core, a co-op is a binding agreement among a group of creditors that restricts individual negotiations with the borrower and generally channels negotiations and decision-making through a steering committee (SteerCo). Co-ops originated as a defensive shield against "lender-on-lender violence," and they protect lenders in a few concrete ways. By requiring members to negotiate only through the SteerCo, a co-op can block an amendment or waiver that would allow a tranche of existing debt to be primed or stripped of collateral, which is the classic mechanism behind an aggressive LME. Locking in a supermajority of the class also unites lenders and prevents the sponsor from cutting side deals with individual lenders, ensuring the group continues to control the credit agreement.

Historically, a key co-op objective was to prevent non-pro rata treatment of creditors. However, over the past year or two, we have seen co-ops that, instead of prohibiting non-pro rata treatment, promote it through tiered structures. Medical Solutions stands as the first example of such structures. The second co-op signed in September 2025 and was structured into four tiers: SteerCo, Initial Parties, Subsequent Parties, and Non-Co-op Parties [10]. Let’s break down these tiers one by one.