For-Profit Nursing Agencies Are Siphoning Public Health Funds

A study published last month by the Canadian Federation of Nurses Unions (CFNU) shows that Canadian hospitals and nursing homes are projected to have paid at least $1.5 billion to private nursing agencies in the past fiscal year.

At a time when health-care systems across the country are in crisis, and unions are sounding the alarm about chronic staffing shortages, provincial governments are instead funnelling vast sums of public money to for-profit staffing agencies.

Growing reliance on for-profit staffing firms has been an open secret for some time. But until recently, no one had attempted to put a total dollar figure on this spending. That such large sums of public money are being diverted from the public health-care system and ending up in private hands is particularly troubling. It is also another example of creeping privatization that must be resisted.

The report, entitled “Opening The Black Box: Unpacking The Use Of Nursing Agencies In Canada,” was commissioned by the CFNU and authored by Joan Almost, a nursing scholar at Queen’s University.

In the report, Almost tracks the use and cost of for-profit, private nursing staff agencies across Canada. The results are truly startling and illustrate a system in crisis yet seemingly wedded to a short-term solution that only exacerbates underlying staffing issues.

Since the COVID-19 pandemic, health-care systems have grown increasingly dependent on private, for-profit staffing agencies to fill critical labour shortages. As health-care workers — particularly nurses and other front-line staff — exited the sector due to burnout and overwork, hospitals and other facilities turned to private agencies to address staffing shortfalls.

Yet this simply diverted public money that should have been used to raise nurses’ salaries and recruit more full-time staff and handed it over to for-profit agencies. Nurses’ unions are now calling out this model as not only a threat to their members but also to our public health-care system more broadly.

According to the CNFU report, money spent on agencies has grown six-fold since 2020. The spike in spending is the result of two factors. First, health-care facilities are simply relying on greater numbers of agency nurses. Since the pandemic, the number of agency nursing hours has grown considerably. In 2023-24, for example, temporary agency nurses worked the equivalent hours of 3,724 full-timers.

At the same time, agencies are now charging much more for the hourly wages of the temporary nurses they provide. The average hourly rate charged by agencies to health-care providers shot up by 34 per cent between 2020-21 and 2023-24. On average, for-profit agencies charged just more than $133 per hour in the last fiscal year.

Almost pegs the total spending on agencies for the fiscal year of 2023-24 at $1.5 billion, up from $247.9 million in 2020-21. Yet, the report’s author also told The Globe and Mail that these figures are “just the tip of the iceberg.” Agencies may also charge exorbitant fees for other travel-related and ancillary costs, as revealed by a previous investigation published by the Globe earlier this year. Moreover, because data on nursing staff agencies is difficult to obtain, there is a good chance that the report’s figures are an under-estimation.

Aside from the earlier Globe investigation, little has been written about the growing use of nursing staff agencies, and their business practices and finances remain opaque. Almost therefore obtained records from the Canadian Institute for Health Information through the use of Access to Information requests and surveyed executives, managers, and workers to create her detailed composite of agency use and cost in Canada.

As the report characterizes the problem, staffing agencies are “a bandage for a chronic nursing shortage that has been building for the past two decades.” But rather than address the underlying drivers of health-care staffing shortages, such as low pay, overwork and rigid scheduling, hiring through for-profit agencies winds up costing more for a short-term fix.

Staffing agencies have operated as a marginal feature of our public health-care system for decades. Their use was previously largely confined to providing travel nurses to remote locations and to filling last-minute emergency shifts in urban areas. Post-pandemic, however, these nursing staffing agencies became a prominent and problematic staple of the health-care system.

Agencies typically hire nurses and then arrange contracts to supply these health professionals to hospitals, long-term care homes, and other facilities for weeks or even months at a time. As their use surged during the COVID-19 pandemic, agencies began raising the hourly rates they pay nurses and consequently charging health-care providers much more. This in turn began to draw nurses away from the public system — nurses who in many cases had had their pay held down by government austerity or restrictions on and interference with public sector collective bargaining.

In general, nurses working through for-profit agencies earn much higher hourly wages than those employed directly through public hospitals and other health-care facilities, though they often lack the various other employment benefits that typically come with direct employment, such as pension and benefit coverage. According to nurses surveyed for the CFNU study, the primary reason for working through agencies was “better pay.”

At the same time, for-profit agencies earn a mark-up on the staff they provide, paid of course by health-care providers. These inflated costs are ultimately borne by the public more broadly, largely in the form of higher health-care cuts for less service. Nurses employed through the public system also pay a price, as their working conditions continue to deteriorate amid a lack of spending on the recruitment and retention of permanent staff.

While health-care job vacancies have decreased from their truly historic levels in 2022-23, they nevertheless remain significantly elevated, particularly among nurses. In many ways, our national health-care crisis remains a labour crisis. There is also surprisingly little regulation of private staffing agencies, which in part has allowed their associated costs to balloon. As CFNU president Linda Silas put it to the Globe, “All you need is a laptop to be able to promote yourself to employers.”

The report recommends a range of solutions to reduce the health-care system’s reliance on private nursing agencies. First, it calls for the creation of a publicly-funded, government-run centralized staffing agency to regulate the use of temporary staffing and control its costs.

Importantly, Almost also encourages public facilities to become “employers of choice,” not only through raising the compensation of nurses but also through more flexible work arrangements and greater training and professional development opportunities. Ultimately, to squeeze out for-profit agencies, the public system needs the resources and capacities to attract and retain nurses.

Additionally, the report calls on government to listen to nurses and recognize their essential skills. Solving the nursing and broader health-care staffing crisis requires not just hearing from the people performing this vital work but involving them in the crafting of policy solutions.

Simply put, the present dependence on for-profit agencies is both unsustainable and counterproductive. In the face of service cuts, health-care providers have opted for a band-aid solution to their staffing shortages. But in doing so, they have worsened the root cause of the problem: the inability to recruit and retain nurses in the public system.

Paying a premium for temporary staff only drains away resources that should be used to build a permanent workforce of well-compensated nurses employed in the public sector. Every dollar spent on private agencies is a dollar siphoned out of the public health-care system. The profits of staffing agencies come at our expense.

As the report nicely summarizes the issue: “Agencies were never intended to fill a chronic nationwide full‑time nursing staff shortage, and the system cannot continue to accommodate this spending.”

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