Three years ago, Peter T. Dameris was looking for a company to acquire after a string of hits in the staffing industry. In 2002, he took Quanta Services, a Houston contracting firm for cable and utility systems, from negative cash flow to more than $101 million. Before that, he negotiated the sale of the IT consulting company Metamore Worldwide Inc., which he helped found in the 1990s, for almost $2 billion. The transactions made Dameris, who grew up in Houston and still carries traces of a Texas drawl, millions of dollars. Now he has set his eyes on a new challenge: On Assignment, a temporary staffing firm for the medical, laboratory and financial industries that was struggling when it should have been thriving amid the biotech boom and state-mandated nursing ratios. While the floundering company couldn’t be sold, Dameris was intrigued and agreed to come on board in November 2003 as executive vice president and chief operating officer. A year later, he was appointed president and CEO. Since then, Dameris has been turning around Calabasas-based On Assignment Inc. As of this month, the company’s stock price is up 19.6 percent from last year. This summer it filed a secondary stock offering to line up cash for future purchases. With third quarter financial results expected to be released Oct. 30, Dameris talked with the Business Journal about how the company is turning around, whether it could go private and what lies ahead. Question: What first piqued your interest about On Assignment? Answer: I liked their business services. I liked that they were in life sciences and in healthcare. The company had fallen on some tough times and I was curious about the prospects of potentially buying it and taking it private. I met with the existing management at the time but unfortunately, because of the performance of the company, it wasn’t possible taking it private because it had no profits. So they asked me to come in and fix it. And I elected to do so. Q: On Assignment offers a lot of services for a lot of industries. A: We are a diversified professional staffing firm. Our primary offering is contract labor, meaning we will get you a chemist, a molecular biologist, a physical therapist, a registered nurse typically for an assignment that lasts 10 weeks. Q: Where do your clients come from? A: It runs the gamut from Amgen, Pfizer, Johnson & Johnson, Chevron, Frito-Lay on the lab support side. And then on our local healthcare business, it would be physician groups, imaging centers, surgery centers. On the healthcare side, it would predominately be an acute care hospital. Q: Is the nursing shortage the main driver of your business? A: There’s undeniably an acute shortage of registered nurses for a variety of reasons: hospitals haven’t been as smart about managing their human capital as other industries; it’s a difficult job, mentally, emotionally and physically. So there’s a lot of turnover. You have to be good at both attracting in and retaining personnel. Also, a lot of nurses elect to be a secondary wage earner in a family. So the older they get the less they work. The population is also aging quickly, so there’s a lot of strain on hospital systems to keep their facilities appropriately staffed. And now with California adopting legislation to have minimum nurse-patient ratios, that’s putting an even greater focus on staffing ratios. Q: How do you go about finding the nurses? A: We have recruiters that are working through professional organizations, through state nursing boards, through job fairs, through Internet job advertisements to establish relationships with nurses and then working with the nurses to attract them to work on a part-time basis versus a full-time basis. We’ll go and find a nurse in Alpharetta, Ga., who has the appropriate number of years of experience in say cardiac ICU and persuade here to take a travel assignment and place that nurse in maybe downtown San Francisco for a 10-week assignment. We quote the hospital an all-inclusive bill rate. Out of that, we take out the airplane ticket, the private apartment we provide the nurse, the rental car we provide to the nurse, her pay, her benefits, he 401-K contribution, all tax withholdings, and whatever’s left over is our profit. Q: Is it true that traveling nurses can make a lot of money because hospitals are willing to pay so much for the services. Is that the case? A: I’ve been in all levels of staffing and we would consistently get north of a 36 percent gross margin when we were doing IT staffing. It’s hard to get higher than a 22-23 percent gross margin with nurse travel. So, no we don’t make a ton of money when you compare it to an accountant or an IT position or a lawyer. The way nurses can make more money is if they elect to travel out of their home. Let’s say they’re living in Tallahassee, Fla. The cost of living is less in Tallahassee than say in San Francisco. But the hospital in San Francisco, to remain competitive, is willing to pay a nurse the San Francisco cost of living versus Tallahassee. So the nurse gets to play that arbitrage without having living costs because we’re picking that up. Q: Let’s talk about the company before you came on board. What went wrong? A: It was a couple of things. The staffing business requires a tremendous amount of operational discipline and focus and the company had lost that focus. They were chasing the next great idea. What happened was the daily activity that generates revenue got obscured or diluted. At the same time, because of the downturn in 2001, the labor markets got soft. You do a combination of a bad labor market, bad economy and poor supervision and execution, that’s a recipe for challenging times for a staffing company. Q: How did you fix that? A: I like to say we patched the boat, we pointed it in the right direction, we have just the right number of people holding the rudder and the wind’s blowing. We were shrinking faster than the industry because of things specific to On Assignment. We stopped doing that and now we’re growing faster than the industry because we’re operating better and tighter than other people. Q: What’s the next step? A: I’ve been very open with my shareholders that we either need to become a bigger company or become part of a bigger company. And we have done everything that’s necessary to now be cable to do acquisitions. We’re profitable; we’ve generated cash; we’ve restored our credibility with Wall Street. We’re now selectively looking at acquisitions. We’re trying to find the right thing. SNAPSHOT – Peter T. Dameris Title: President and CEO Age: 46 Birthplace: Houston Most Admired: Harry S Truman Education: Bachelor’s degree in business administration at Southern Methodist University and a juris doctorate from the University of Texas Law School. Personal: Married, three children
