New Study Reveals Ontario Spent $9.2 Billion on For-Profit Staffing Agencies Over 10 Years, Blames Crisis on Underinvestment in Hospitals and Preventative Health Care

The CCPA report is the first investigation into Ontario hospital spending on private agency staff relative to employed staff

TORONTO--(BUSINESS WIRE)--A new research report by the Canadian Centre for Policy Alternatives recommends Ontario make significant increases in hospital funding while phasing out costly for-profit staffing agencies and making investments in preventative health care.

The report Hollowed Out: Ontario public hospitals and the rise of private staffing agencies shows a co-relation between the dramatic growth in agency usage and underfunding of public hospitals over the last decade.

Between 2013-14 and 2022-23, Ontario’s hospitals paid out $9.2 billion to for-profit staffing agencies that cost up to three times more than employing in-house hospital workers.

Agency workers consumed six per cent of total hospital labour costs despite only accounting for 0.4 per cent of all frontline hours. Over the 10-year period in question, hospitals doubled their spending on staffing agencies while their costs on employed staff rose by merely six per cent.

“The use of for-profit staffing agencies is part of a vicious cycle that hollows out the public sector workforce, thereby increasing hospitals’ dependence on private agencies,” said Andrew Longhurst, research associate with the Canadian Centre for Policy Alternatives and author of the report. “The government must take a range of measures to resolve this crisis, but central to that is increasing hospital funding. The wasteful public spending on private agencies would have never emerged as a problem if Ontario’s investments in employed hospital staff kept up with patient needs.”

The report notes that Ontario’s per-capita funding for hospitals is the lowest across Canada. In the period between 2013 and 2022, the Ontario government made real dollar spending cuts in seven out of 10 years, contributing to insufficient growth in staff relative to demand.

The increasingly heavier workloads combined with real dollar wage cuts fueled a 330 per cent increase in job vacancies since 2015. During this period, hospital staff incomes declined by 13 per cent.

The staffing crisis has precipitated a decline in access to care, according to the report, as evidenced by frequent ER closures and long wait-times.

“Saving our hospital services requires an investment in the staff who deliver them,” said Michael Hurley, the president of CUPE’s Ontario Council of Hospital Unions (OCHU-CUPE). “The government must commit to staffing standards including nurse-to-patient ratios to ensure manageable workloads, which would allow staff to provide care to the best of their abilities, improve morale and retention, and help stabilize the system.”

But the system is instead fracturing due to a combination of rising demand, ballooning agency costs, and provincial underfunding, said Longhurst. As a result, nearly half of hospitals faced a budget deficit in 2023-24 with a majority expected to be in arrears this year. Budgetary issues disproportionately impact small and Northern Ontario hospitals.

Agency usage varies across the province but has grown in all but one of the 14 regions of Ontario since 2013. In rural and northern regions – where shortages are often most severe – agency costs jumped: they increased by 480 per cent in the North West, by 372 per cent in North Simcoe Muskoka, and by 216 per cent in the North East.

Longhurst recommended that Ontario follow the example of British Columbia and create a public sector staffing agency that provides relief to the most beleaguered hospitals, while phasing out private agencies over three years.

Other prescriptions to address the crisis include the development of a health care staffing strategy, and investments in hospital services ($2 billion annual increase) as well as primary and community care.

“We can’t afford to underfund much-needed hospital care even as other services are also required,” he said. “We can have better primary and community care and well-funded hospitals to meet the health care needs of Ontario’s residents.”

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