How nursing staffing agencies are costing Ontario hospitals untold millions

Hospitals across Ontario have dramatically ramped up their use of nurses from private staffing agencies to the tune of untold millions of dollars, according to the province’s auditor general.

A new auditor’s report finds that hospitals are filling staffing gaps by hiring agency nurses at significantly higher hourly rates than they pay the nurses they directly employ. 

The report found some hospitals that more than tripled their spending on agency nurses in the course of just one year, from 2021-22 to 2022-23, while hospitals in northern Ontario saw a 25-fold increase in their use of agency nurses over a four-year stretch. 

The trend “has put financial pressures on hospitals,” says the report.

“There’s a big dependence on agency nurses,” acting auditor general Nick Stavropolous told a news conference Wednesday.

But even with his powers as the province’s financial watchdog, Stavropolous could not find out precisely how much money that dependence adds up to.

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Ontario Health Minister Sylvia Jones makes an announcement in Toronto while Premier Doug Ford stands behind her in the background.
Health Minister Sylvia Jones says Jones says the government is trying to reduce reliance on agency nurses by boosting the size of the nursing workforce, through investing in the nursing education system and clearing the path for internationally-trained nurses to gain accreditation. (Frank Gunn/The Canadian Press)

The auditor says that’s because neither the Ministry of Health nor Ontario Health — the agency that coordinates hospital funding — specifically tracks agency staff costs. 

The report shows agency nurses collectively worked more than 1.7 million hours in Ontario’s hospitals in 2022-23, double the number of hours in the previous year. 

At least $170 million on agency nurses

The report also cites ranges for how much hospitals pay the staffing agencies: $99 to $106 an hour for a registered nurse to work in the emergency department of a hospital in southern Ontario, while hospitals in northern Ontario pay anywhere from $100 to $160 an hour.

If you take the bottom end of those ranges, and multiply it by the hours worked, Ontario hospitals spent at least $170 million on agency nurses last year. 

The auditor’s report urges the government to monitor how much is being spent on nursing staffing agencies to “determine the reasonableness of payments.”

There is “no legislation that caps the amount these private, for-profit companies can charge hospitals,” the report says, recommending the government consider regulating the rates. 

Two health care professionals walk down the empty hall of a hospital, putting on their personal protective equipment.
Healthcare workers walk through the pediatrics department of Markham Stouffville Hospital on Dec. 1, 2022. According to an analysis by the province’s financial accountability officer, Ontario’s average hourly wage for nurses is the lowest in Canada. (Evan Mitsui/CBC)

Both the Ontario NDP and Liberal Party have proposed capping nursing agency fees. Health Minister Sylvia Jones has declined to make that commitment. 

“We do not want to limit hospitals and operators in home and community care to actually provide the staff and the services they need,” Jones told a news conference at the Legislature on Wednesday. 

Jones says the government is trying to deal with the issue by boosting the size of the nursing workforce, through investing in the nursing education system and clearing the path for internationally-trained nurses to gain accreditation.

“We’re opening up and making sure that there is no red tape to limit people’s ability to come and practice in the province of Ontario,” she said. 

Hospital pays agency up to $106/hr for RNs

One chapter in the auditor’s annual report focused on the emergency departments at a sampling of major Ontario hospitals, including Mount Sinai, SickKids, CHEO (formerly Children’s Hospital of Eastern Ontario), Windsor Regional, and William Osler Health System (which brings together Brampton Civic and Etobicoke General hospitals).

That chapter cites figures from one unspecified hospital emergency department: it pays its full-time permanent nurses $35 to $50 an hour, while an agency pays its nurses $75 an hour. To hire a registered nurse to work in the emergency department, the hospital pays the agency up to $106 an hour. 

Private agency nurses cost much more. Hospitals need them anyway

Canadian hospitals are facing a nursing shortage partly because many nurses have left for more flexible, higher paying nursing agencies. CBC’s Christine Birak found out why the cost to the public system is more than just financial and what it would take for nurses to come back.

Doris Grinspun, chief executive of the Registered Nurses Association of Ontario, says while increasing the size of the nursing workforce is important, the government won’t solve the problem without paying nurses better wages. 

“They’re not going to stay in the system if we don’t provide that competitive compensation, good benefits, and also workloads that enable them to do quality work,” Grinspun said in an interview.

She said Ontario would not be in the same staffing crisis if the government had not capped nurses’ salary increases through Bill 124.    

NDP Leader Marit Stiles said nurses are being driven to join the privately-run staffing agencies because they aren’t being paid enough at their hospital jobs.

“Hospitals are saying they’re worried they won’t even make payroll because they’re having to spend so much more, year after year, month after month, on these private agencies,” Stiles told reporters Wednesday.

“When it comes down to it, this is all about [the government] diverting more of our public health care dollars into their private shareholder friends’ pockets,” Stiles said.  

A woman standing in front of a podium with a microphone.
Doris Grinspun, CEO of the Registered Nurses’ Association of Ontario, says while increasing the size of the nursing workforce is important, the government won’t stem the outflow of nurses from hospitals to agencies without paying better wages. (Registered Nurses’ Association of Ontario)

Ontario currently has the lowest hourly wages for nurses in Canada, according to an analysis by the province’s financial accountability officer. 

Liberal Health critic Adil Shamji has proposed a bill that would prevent what he calls “price-gouging” by capping agency fees. 

Shamji said Wednesday at Queen’s Park that his bill “takes aim at some of the most predatory practices that nursing agencies use, such as literally parking in hospital parking lots and poaching nurses as they come out of work.”  

The auditor found northern Ontario hospitals used agency nurses for 15,000 hours in 2018-19, soaring to 391,000 hours in 2022-23, a 25-fold increase. 

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