Rise in for-profit agency nurse costs in Ontario hospitals 'exorbitant,' says researcher

Ontario hospitals paid for-profit staffing agencies $9.2 billion over a decade, a finding that comes as one hospital aims to stop its use of temp services by September.

The Canadian Centre for Policy Alternatives commissioned Monday's report, titled Hollowed Out: Ontario Public Hospitals and the Rise of Private Staffing Agencies. It focused on increased spending on the agencies for nurses, allied health professionals and administrative support staff from 2013-14 to 2022-23.

Hospitals and long-term care homes turn to staffing agencies when they can't fill all of their shifts with employees. Temporary agency health-care workers allow them to continue providing services during staff shortages, although they charge up to triple the regularly hour rate, hospitals have said.

Real spending on agencies nearly doubled, from $21 per capita to $41 over the study period, according to Andrew Longhurst, a political economist at Simon Fraser University, and the report's author. In comparison, public hospital employed staff increased from $604 per capita to $641 over the same time in the province.

"What we're seeing across the board with the use of private for profit providers is the public governments are paying an exorbitant amount and getting relatively little in return," Longhurst said.

Longhurst says provincial fiscal austerity destabilizes hospitals just as population growth and aging put more pressure on hospital staffing, which exacerbates hallway medicine and the long wait times patients face at emergency departments or for scheduled surgeries.

Using private agencies becomes a "vicious cycle," according to the report, as hospitals become dependent on these more expensive services while the staffing crisis in the public sector increases.

Meanwhile, at Markham Stouffville Hospital, staff are working to reduce reliance on private agencies that provide temporary hires such as nurses to fill shifts in the emergency department, oncology and other units.

"Our goal is that by the end of September we'll be agency free," said Mark Fam, president and CEO of Oak Valley Health, which includes the Markham hospital that serves a fast growing region northeast of Toronto. "We've been able to reduce our agency nursing by two thirds."

To get there, Oak Valley provided newly graduated and internationally educated nurses with extra training and support from seasoned nurses, created a nursing resource team who work across different units, hosted an open house and increased hiring.

The provincial government funds the training for new nursing graduates and internationally educated nurses, Fam said.

Under the Ontario government's Nursing Graduate Guarantee program, employers receive 20 weeks of funding to support new graduate nurses and internationally educated nurses transition into full-time practice. The program has hired more than 3,300 nurses since 2020, according to the province.

Nurses working for temp agencies, meanwhile, say they can earn more than double the wages of staff nurses doing the same jobs in the same hospitals, with full control over their work schedules.

Vickie Idowu, interim manager for the resource team and staffing office, said the hospital provides extensive orientation to its nurses, so that they more effectively integrate into the workflow — a key distinction from temp workers.

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"They get to know what's happening on the unit, so when they're ready to go and start working, they're well prepared," she said. "And what actually will make them different from using the agency is that these are our staff."

Idowu said having their own staff helps provide continuity of care compared with agency folks who may only see a patient once a week. "They're familiar faces and patients are more comfortable with them."

Longhurst said compared with big cities, hospital budgets were particularly strained in smaller and northern areas of Ontario, where hospitals have revenues under $100 million and reliance on for-profit agencies is higher.

In 2022-23, private agency costs consumed a larger share of staffing expenditures, especially in Ontario's North West (17 per cent) and North East (11 per cent), according to the report. That's up from 2013-14, when private agency costs as a share of total labour costs were below six per cent in all Ontario health regions.

Ontario had the lowest per capita hospital spending in Canada at $1,805, behind B.C. ($1,902) and Quebec ($2,028) in 2022, according to the report.

"I think longer term if we continue down this road, we're going to see our publicly funded health care systems across the country struggling to deliver care in a cost effective way that actually meets the needs of patients," Longhurst said.

Elsewhere across Canada, Quebec passed a law to phase out the use private placement agencies by 2026, which is being challenged in court. Similarly, New Brunswick introduced legislation that would cancel a travel nurse contract, and the company is suing over alleged breaches of contract .British Columbia also plans to phase out use of the agencies.