Auditor general raises ‘serious’ concerns over agency nurses costs and planning

A new report from Newfoundland and Labrador’s auditor general on health-sector contracts found that NL Health Services, the province’s health authority, did not follow proper procedures when contracting agency nursing services and, “failed to ensure value for money.” 

The report also says the province “failed to undertake basic planning,” including preparing the details of what is needed, the rules for contracts, and how bids will be reviewed and chosen before engaging private companies. This resulted in an average annual cost of over $400,000 per nurse, Denise Hanrahan notes in her report. Agency nurses often worked more overtime hours and provided “less service for the money spent” than regular staff. 

“To say some of the findings in this report are surprising may be putting it mildly. Newfoundland and Labrador Health Services has not followed its own processes and best practice in the procurement and payment of agency nursing services,” Hanrahan said in a statement Wednesday. “Health Services failed to adequately plan for its use of agency nursing, resulting in spending that continues at near record levels. By March of this year, the average agency nurse will cost taxpayers over $400,000 annually.”

Since the pandemic, the province has relied heavily on agency nurses to fill gaps in the province’s strained healthcare sector.

“This report validates what we’ve been saying all along – laws were broken, people profited, nurses were ignored, and Newfoundlanders and Labradorians were short-changed,” Registered Nurses’ Union President Yvette Coffey said in a statement Thursday. “This is gross mismanagement. Newfoundland and Labrador Health Services must be held accountable, and there must be consequences.”

In 2022, NL Health Services awarded a $28.3 million contract to a company with less than two years of experience in the nursing agency industry. The report notes that there was “little evidence that a thorough assessment of its credibility or capability was conducted.” The report did not disclose the name of the company but referred to it as “Agency A”.

The province also failed to have proper checks in place to ensure it was only paying for valid expenses. The report also notes, “strong indications of potential billing fraud” by Agency A for electric vehicle rentals. It states the agency was invoiced and was paid over $90,000 for 81 weeks of electric-vehicle rentals for nurses who were not in the province.

NDP calls for investigation

NDP Leader Jim Dinn has called for a full investigation into travel nursing contracts, specifically highlighting findings involving Agency A.

“Being reimbursed for non-reimbursable expenses, renting electric vehicles for nurses who did not appear to have the vehicle, or for nurses who were not even in the province — this must be investigated,” Dinn said in a statement after the report’s release Wednesday.

Dinn added that the details revealed in the auditor general’s report raise serious questions about oversight, accountability, and the use of public funds. “This Liberal government is asleep at the wheel, and their solution of throwing money at private companies instead of supporting our public healthcare system has worsened the healthcare crisis for people in this province.”

Progressive Conservative leader Tony Wakeham said in a statement the provincial government should be held accountable for its “mismanagement,” adding, “travel nurses from a Toronto-based company are being paid four times the salary of local nurses in Newfoundland and Labrador. That’s outrageous.”

The total waste incurred to date stands at a staggering $241 million — enough to hire 2,000 full-time nurses, which could significantly enhance healthcare services across our province. I commend the Auditor General for shedding light on this blatant abuse of taxpayer dollars. Our citizens deserve better, and we will hold this government accountable for its mismanagement.”

Recommendations

Hanrahan also notes in the report that although the provincial government has said it has made progress on lowering the number of agency nurses used in the province, “expenditures continue at near record levels.”

In a part of the report that deals with health sector contracts, the Hanrahan outlines 15 recommendations. These include: evaluating bids based on clear, predefined criteria before awarding contracts; using standardized agreements for agency nurses that clearly outline N.L. Health Services’ expectations and standards; conducting a full audit of all payments made to Agency A since April 2022 to recover any overpayments; and developing detailed nurse staffing plans with regular updates.

N.L. Health Services said it accepts all 15 recommendations outlined in the report and has “already taken action to address many of these recommendations.” The health authority points to its two-year plan, launched in April 2024, aimed at reducing reliance on agency nurses. However, Hanrahan’s report notes that progress under the plan has been slow, and the expected results have not been achieved.

“While there was an urgent need to hire agency nurses during the COVID-19 pandemic to ensure local nurses could receive time away from work, patients could continue to receive care, and some facilities could remain open, the report by the Office of the Auditor General identified where improvements need to be made,” Minister of Health and Community Services Krista Lynnn Howell said in a statement Wednesday. “Progress has already been made on previous direction for the health authority to limit spending and reduce its use of agency nurses. We have the utmost confidence that the CEO of the provincial health authority will implement all additional necessary steps to ensure all proper measures are put into place.”

A news release from the health department Wednesday says Howell has directed NL Health Services to: “expedite the immediate comprehensive audit recommended by the Auditor General, report any fraudulent findings to the appropriate authorities in accordance with the fraud management policy, and recover any public funds paid in error; engage the Board of Trustees and Chief Executive Officer, based on the findings of the Auditor General, to determine whether appropriate action has been taken, disciplinary action up to and including termination, or training where warranted, and report to the department; [include] the Deputy Ministers of Finance and Health and Community Services as observers to future Board of Trustee meetings; review processes and approvals related to contract management and leased accommodations to determine where existing processes and approvals failed; revise and make public the plan to reduce reliance the on agency nurses and report directly to the Board of Trustees and the Department of Health and Community Services on key performance indicators; immediately engage a third party to assist in providing timely and detailed budget monitoring, as previously directed; immediately develop and implement its internal audit function, as previously directed.”

Health minister’s directives ‘not enough’: RNU

Coffey said in her statement Thursday that Howell’s directives “are a starting point, but they are not enough. This is a crisis of integrity, not just finances. It demands more than policy memos. We need independent oversight, public transparency, and legal accountability.” 

The RNU is calling for a full investigation under the federal Competition Act, the provincial Conflict of Interest Act, “and criminal laws pertaining to fraud, breach of trust, and public corruption.” It’s also called on the province’s public accounts committee to launch its own investigation. 

Late Thursday morning the public accounts committee announced it will be contacting NL Health Services to request an action plan for implementation of Hanrahan’s recommendations.

“The Public Accounts Committee is committed to ensuring that Newfoundland and Labrador Health Services follow appropriate procurement, planning and management processes when executing contracts for agency nursing,” said PC MHA and Committee Chair Pleaman Forsey.

Dinn said the auditor general’s report reveals more than a policy failure. “I can only imagine how nurses and other healthcare workers are feeling—overworked, denied time off, and burned out, all while companies get rich off our healthcare dollars,” he said in a news release Wednesday. “People are still waiting for family doctors or stuck on years-long waitlists for basic procedures. This isn’t just a failure of policy. It’s a slap in the face to the very people holding our public healthcare system together.”

Coffey wants those responsible for the misspending and potential fraud to face consequences. “The government says they have confidence in the leadership of the health authority. But Newfoundlanders and Labradorians deserve more than confidence; they deserve consequences, answers, and reform.”

The public accounts committee said Thursday it will be requesting officials “to appear at a future public hearing on these important matters.”