Auditor General Denise Hanrahan released a report Wednesday raising “serious concerns” about how Newfoundland and Labrador Health Services is managing contracts for private agency nurses, noting each nurse is costing the province an average of $400,000 a year.

“We have serious concerns about how agency nursing contracts are procured and managed by Newfoundland and Labrador Health Services,” Hanrahan wrote. “The authority has not followed proper process in the procurement of agency nursing services and has failed to ensure value for money.

“In managing services, it lacked the controls to verify that contractual terms were followed and that funds were not paid inappropriately. Moreover, Newfoundland and Labrador Health Services failed to adequately plan for agency nursing usage.

“Without effective planning, spending continues at near record levels. By March 2025, the average agency nurse cost over $400,000 annually – typically working more hours as overtime, resulting in less service for the money spent when compared to staff.”

The report flagged one contract in particular with a company referred to as “Agency A.” It said a contract was signed with “Agency A” in 2022 for $28.3 million. The agency had under two years of experience in the agency nursing business at the time, and there was little evidence that a thorough assessment of its credibility or capability was conducted during planning.

There were also problems in general with invoicing.

“In total, we identified almost $4 million worth of payments that were made for ineligible expenses, or for invoices for which the health authority was unable to provide supporting documentation,” the report stated.

Hanrahan released a long list of recommendations in her report:

1. Fully engage its supply chain department, ensuring that legislation, public procurement policy, and best practice are followed.
2. Ensure emergency exemptions for procurement are pursued in accordance with provincial legislation and policy, including appropriate disclosures and pre-contract approvals.
3. Complete formal evaluations against predefined evaluation criteria before awarding contracts.
4. Ensure that any future agency nurse contracts use standardized contract language, terms, and conditions that clearly state Newfoundland and Labrador Health Services’ expectations and standards.
5. Ensure that a comprehensive invoice approval process is documented, communicated and used consistently across the organization.
6. Ensure that the invoice verification and invoice approval duties are segregated and that verifiers and approvers sign and date all invoices when their tasks are completed.
7. Complete an immediate comprehensive audit of all amounts paid to Agency A from April 2022 to present, to recover public funds paid in error.
8. Develop comprehensive nurse staffing plans, with regular reporting that enables management to perform effective evaluation.
9. Develop policies and processes to ensure that casual nurses are utilized as a possible alternative to
   contracted nursing services.
10. Ensure that all employees are aware of their roles and responsibilities under conflict of interest legislation, with processes to ensure compliance occurring on an annual basis.
11. Ensure that conflict of interest screening occurs when assessing potential contractual relationships, such as with property lessors.
12. Rectify any current accommodations that were not acquired through an open, public, and transparent procurement process, in compliance with the Public Procurement Act and the Conflict of Interest Act.
13. Ensure management and the Board of Trustees are provided with complete and adequate information to facilitate assessing and monitoring of all aspects of contracted nursing services usage and spending.
14. Develop and execute a corrective action plan when agency nurse spending exceeds planned expenditure.
15. Formally assess contracted nursing service provider performance during contract execution and consider these assessments before renewing contracts.