Toronto hospitals criticized for outsourcing nursing jobs to agencies

TORONTO, CANADA — A landmark arbitration ruling has placed Unity Health Toronto under scrutiny for its increasing reliance on agency nurses and personal support workers (PSWs).
The hospital network, which operates St. Michael’s Hospital, St. Joseph’s Health Centre, and Providence Healthcare, was found to have violated its collective agreement by outsourcing tasks typically performed by unionized employees.
The grievance, filed by CUPE Local 5441 in May 2023, argued that the use of non-bargaining-unit workers breached a clause allowing such practices only in emergencies or when regular staff were unavailable.
Arbitrator Eli Gedalof ruled that Unity Health exercised “total control” over agency staff, effectively treating them as part of its workforce. His decision emphasized that agency workers received hospital-specific training, used hospital resources, and worked under direct supervision.
High cost of agency nurses raises concerns
The use of agency staff has become a growing trend in Canadian hospitals amid staffing shortages.
According to the Canadian Federation of Nurses Unions, public healthcare facilities are projected to spend CAD1.5 billion (US$1.04 billion) on agency staff in 2023-24. Agency nurses can earn up to CAD75 (US$52) an hour—significantly more than the CAD35 to CAD50 (US$24 to US$34) hourly rate for permanent hospital employees—raising questions about cost efficiency and fairness.
Labor lawyer Wassim Garzouzi, representing CUPE Local 5441, criticized the practice as harmful to labor relations. “Paying under-qualified and outsourced personnel more than what you pay your own employees…is toxic,” he said, calling the ruling a step toward addressing these disparities.
Unity Health defended its actions, attributing its reliance on agencies to pandemic-related pressures. The hospital stated that using agency staff is a “last resort” and noted it has formed a task force to reduce such practices.
Hospital staffing vs. offshore outsourcing
The controversy surrounding Unity Health’s staffing practices highlights the distinction between local outsourcing and offshore outsourcing in healthcare. While Unity Health contracted local agencies for temporary clinical staffing needs, offshore outsourcing typically involves delegating non-clinical tasks—such as billing or IT support—to providers in other countries like India or the Philippines.
Offshore outsourcing is often driven by cost savings, as labor costs in countries like the Philippines are significantly lower than in Canada or the U.S., with savings ranging from 27% to 64% depending on the service. Tasks such as medical transcription, billing, and administrative support are commonly outsourced offshore to free up internal resources for patient care. However, this approach comes with challenges like cultural barriers, time zone differences, and data privacy risks.
In contrast, local outsourcing directly impacts patient care by filling clinical roles within hospitals but at a higher cost and with potential labor inequities. Both models aim to address workforce shortages but differ in their implications for cost efficiency and quality of care. Critics argue that over-reliance on either model undermines long-term workforce stability and public healthcare standards.
Ontario hospitals face pressure to reduce agency reliance
The ruling could have far-reaching implications for other Ontario hospitals that rely on agency workers. While Ontario Health Minister Sylvia Jones noted that agency staff account for less than 2% of total hours worked in hospitals, critics warn that the practice creates inequities among workers and erodes public healthcare standards.
“This is about privatizing our health care,” said Rahel Woldeselassie, a St. Michael’s Hospital employee who initiated the grievance. “A lot of these people could have been our colleagues but chose to work for agencies because they pay much higher hourly wages.”
As hospitals face mounting pressure to address staffing shortages while managing costs and labor tensions, this ruling may serve as a turning point in reducing reliance on agency workers across Ontario’s healthcare system.