Tasmania Saved $56 Million by Doing One Thing, Hiring Permanent Staff

Healthcare systems around the world are facing a difficult combination of rising demand, workforce shortages, and increasing staffing costs.

Hospitals need enough doctors, nurses, midwives, allied health professionals, and other clinical staff to provide safe and timely care, but recruiting and retaining enough permanent workers can be challenging. When hospitals cannot fill vacancies, they often turn to temporary staffing agencies and locum professionals. Temporary workers can be essential for maintaining services and covering unexpected vacancies, but relying heavily on them can become extremely expensive over time. Recent developments in Tasmania, Australia, provide a striking example. The Tasmanian Health Service has reported that increasing its permanent nursing, midwifery, and medical workforce has generated approximately $56 million in staffing savings in one year, largely by reducing reliance on more expensive agency nurses and locum doctors. The experience highlights an important lesson for healthcare organizations everywhere: strategic permanent recruitment can be both a workforce solution and a financial strategy. And Tasmania is far from alone. As the sections below show, health systems in the United Kingdom and the United States are wrestling with strikingly similar numbers, which suggests this is not a local anomaly but a structural feature of modern healthcare workforce economics.

Tasmania's $56 Million Staffing Saving

The Royal Hobart Hospital has been at the centre of Tasmania's efforts to strengthen its permanent healthcare workforce. According to recent reporting, the addition of 163 nurses and midwives was associated with approximately $36 million in savings, while the recruitment of 73 doctors contributed a further $18 million in savings. Together, those figures account for roughly $54 million of the reported $56 million reduction in staffing costs, with other workforce measures contributing to the overall result. The strategy was straightforward in principle: instead of continually paying for temporary workers to cover workforce gaps, Tasmania increased its permanent workforce. This does not mean temporary healthcare professionals are unnecessary. Agency nurses and locum doctors can provide an essential service when hospitals face sudden vacancies, staff leave, unexpected increases in demand, or shortages in highly specialised areas. The problem arises when temporary staffing becomes the normal solution to a long-term vacancy. A hospital that repeatedly fills the same position with agency or locum staff may end up paying significantly more than it would have cost to recruit and retain a permanent employee. Tasmania's experience demonstrates how quickly those costs can accumulate.

The High Cost of Temporary Staffing

Tasmania has experienced a particularly significant increase in expenditure on temporary healthcare workers. Data reported by ABC News showed that the state's spending on locum healthcare staff increased from approximately $57 million in 2020–21 to $182 million in 2023–24. In 2023–24 alone, the Department of Health spent around $77 million on agency nurses and $105 million on locum doctors. More recent parliamentary discussions have continued to highlight the scale of the issue. In March 2026, Tasmania's Parliament discussed figures showing temporary nurse expenditure had risen from approximately $14.6 million several years earlier to around $105 million. These figures illustrate why permanent recruitment has become such an important issue. Temporary staffing is not inherently bad. In fact, it can be an important safety net. If a hospital has a sudden shortage of nurses because of illness, maternity leave, resignations, or an unexpected increase in patient numbers, an agency nurse can help keep the service operating. However, temporary staffing becomes much less efficient when it is being used to fill positions that should ideally be permanently occupied. The financial difference can become substantial when the same vacancy remains open for months or years.

Tasmania Is Not an Outlier: A Global Pattern

It would be easy to read Tasmania's figures as a one-off, but comparable pressures are visible in much larger healthcare systems, which suggests the underlying dynamic is structural rather than local. In the United Kingdom, NHS trusts in England spent approximately £3.46 billion on agency staff in 2022/23, a figure widely described by health officials as unsustainable. That spending fell to around £3.02 billion in 2023/24 and then to roughly £2.07 billion in 2024/25, following a deliberate government push to cut agency reliance by 30 percent. Health officials characterised the earlier spending levels as taxpayer money being used to cover chronic staffing gaps rather than to build lasting capacity, and noted that some agencies had been charging as much as £2,000 for a single nursing shift amid more than 100,000 vacancies across the service. The subsequent reduction of close to £1 billion in a single year was directly attributed to reducing dependence on agency staff and, notably, was used in part to help fund permanent pay increases for NHS staff. In the United States, the pattern looks somewhat different but points toward the same underlying issue. Nursing shortages have been estimated to cost U.S. hospitals in the tens of billions of dollars annually in overtime, temporary staffing, and related inefficiencies, with some projections putting the nationwide burden as high as $55 billion. Hospitals reportedly spent around $1.7 billion on travel nurses in 2024 alone, and during the most acute phase of the COVID-19 pandemic, some health systems were spending over a third of their entire nursing labor budget on travel staff.

Interestingly, not every recent study points in the same direction. A 2026 cost-of-labor analysis commissioned by the National Association of Travel Healthcare Organizations found that, once wages, benefits, and other indirect costs were fully accounted for, the loaded hourly cost of a travel nurse and a permanent nurse were much closer than commonly assumed — in that particular analysis, permanent staff actually came out slightly more expensive per hour. This is a useful corrective: it shows that the financial case for permanent recruitment is not automatic or universal. It depends heavily on local labor markets, benefits structures, turnover rates, and how long a given vacancy would otherwise sit unfilled. The Tasmanian and NHS examples are compelling specifically because they involve chronic, large-scale, long-duration reliance on temporary staffing — the exact conditions under which permanent recruitment tends to pay off most clearly. The consistent thread across Australia, the UK, and the US is this: temporary staffing costs tend to rise sharply wherever permanent vacancies persist for long periods, and every system that has taken a serious, sustained run at reducing structural reliance on agency and locum staff has reported meaningful financial benefits as a result.

Why Permanent Employees Can Be More Cost-Effective

Permanent employees typically represent a longer-term investment for a healthcare organization. A hospital employing a permanent nurse or doctor is not simply purchasing hours of clinical labour. It is building a workforce that develops familiarity with the organization, its procedures, its patient population, and its clinical teams. A permanent employee can become deeply integrated into a department. They learn how the hospital operates. They develop relationships with colleagues. They become familiar with local systems and protocols. Over time, they can take on additional responsibilities, mentor junior staff, participate in quality improvement, and develop specialist expertise. A temporary worker may also do all of these things, particularly if they remain in one organization for an extended period. However, the fundamental difference is that temporary staffing is generally designed to address short-term workforce requirements rather than create a permanent workforce. For hospitals, the financial benefits of permanent recruitment therefore extend beyond the basic difference between an employee's salary and an agency or locum rate. There is also a morale dimension that rarely appears in headline savings figures but has real financial consequences. Pay disparities between agency staff and permanent employees performing the same work can generate resentment among permanent teams, and in some cases have been linked to a cycle where permanent staff resign only to return through an agency at a higher rate — a pattern serious enough that UK regulators have specifically moved to restrict it. Left unaddressed, this dynamic can quietly erode the very permanent workforce a hospital is trying to build, making the underlying shortage worse rather than better.

Permanent Recruitment Can Improve Workforce Stability

Financial savings are only one part of the equation. A stable permanent workforce can also provide operational benefits. When a hospital constantly changes temporary staff, departments may need to spend additional time onboarding workers and ensuring they understand local processes. Temporary professionals are highly qualified, but every organization has its own systems, technology, policies, and ways of working. A permanent employee has the opportunity to develop that institutional knowledge over time. Workforce stability can also make it easier for departments to build cohesive teams. Healthcare is fundamentally collaborative. Doctors, nurses, allied health professionals, pharmacists, technicians, and support staff need to communicate effectively and understand one another's roles. A stable workforce gives teams more opportunity to develop those relationships. Beyond team cohesion, workforce stability has been linked more broadly to continuity of care and to a reduced burden on the permanent staff who remain. Health workforce researchers have repeatedly noted that chronic reliance on temporary staffing to plug rota gaps tends to correlate with higher rates of burnout among permanent employees, who often absorb the coordination and supervisory load that comes with frequently rotating temporary colleagues. Reducing that burden is not simply a matter of morale — it also has a direct bearing on staff retention, and therefore on how much a hospital will need to spend on recruitment and temporary cover in the years ahead. The Tasmanian Health Service has specifically linked permanent recruitment with improvements in workforce stability and outcomes. At the Royal Hobart Hospital, recruitment has included candidates from local, interstate, and international sources.

Tasmania's Recruitment Strategy

The move toward permanent staffing did not happen through a single recruitment campaign. Tasmania has undertaken broader efforts to attract healthcare professionals to the state. In 2025, the Tasmanian Government reported that almost 3,000 healthcare workers had joined the Tasmanian Health Service following its major recruitment campaign. The reported additions included 972 nurses, 535 doctors, and 257 allied health professionals over the preceding year. The state has also introduced a range of measures intended to make recruitment and retention more attractive. These have included additional allowances, graduate employment opportunities, mentorship and clinical coaching, scholarships for professional development, longer-term contracts for doctors, and incentives designed to attract allied health professionals to regional Tasmania. This is important because recruitment alone does not solve workforce shortages.

Healthcare organizations need to think about the entire employee timeline: Recruit → Relocate → Integrate → Develop → Retain

Finding a qualified professional is only the first step. The organization must then make it possible for that professional to successfully begin working, settle into the new environment, develop professionally, and remain with the employer. Each stage of that lifecycle carries its own risks if neglected. A candidate who is well recruited but poorly relocated may withdraw before their first shift. A professional who relocates smoothly but is poorly integrated may struggle to reach full productivity for months, effectively costing the hospital a period of reduced capacity even after the position is technically filled. A clinician who integrates well but sees no path for professional development may simply leave within a year or two, sending the hospital back to square one and eroding much of the financial benefit that permanent recruitment was supposed to deliver. Retention, in other words, is not a separate concern from recruitment — it is the stage that determines whether the investment in recruitment actually pays off.

International Recruitment Can Be Part of the Solution

For many healthcare systems, local recruitment alone may not be enough. Healthcare workforce shortages are occurring across multiple countries, while qualified healthcare professionals are increasingly willing to consider international careers. This creates an opportunity for hospitals to expand their recruitment strategies beyond their immediate geographic area. International recruitment can allow healthcare organizations to access a much larger pool of qualified professionals. However, international recruitment requires considerably more planning than simply posting a job advertisement. Healthcare professionals may need to complete professional registration, language testing, credential verification, immigration processes, medical examinations, and other requirements before they can begin working. Hospitals may also need to consider relocation, accommodation, onboarding, cultural integration, and ongoing support. This is where specialist international healthcare recruitment organizations can provide significant value. Rather than leaving hospitals to manage every stage themselves, recruitment partners can help coordinate the process from identifying suitable candidates through to placement.

Why International Recruitment Needs to Be Done Properly

International healthcare recruitment also comes with responsibilities. A successful recruitment strategy should benefit both the employer and the healthcare professional. Hospitals need qualified professionals who are properly registered and capable of performing their roles. Healthcare professionals need transparent information about salaries, working conditions, registration requirements, contracts, relocation, and expectations. Recruitment should therefore be based on suitability rather than simply filling a vacancy as quickly as possible. Ethical recruitment is particularly important when recruiting from countries that may themselves experience healthcare workforce shortages. International mobility can provide healthcare professionals with valuable career opportunities and help receiving countries address shortages, but recruitment should be conducted responsibly and in accordance with relevant international and national standards. For healthcare organizations, this means working with recruitment partners that understand both the employer's requirements and the candidate's journey.

The Employer's Perspective: Cost vs. Recruitment Investment

It can initially appear cheaper to continue using agency workers. A hospital may already have relationships with agencies, and bringing in a temporary worker can sometimes be much faster than completing a permanent recruitment campaign. But hospitals should consider the total cost of the vacancy, rather than simply the immediate cost of recruitment. Consider a hospital department with several vacant nursing positions. If the vacancies remain open, the hospital may need to use agency nurses repeatedly. It may also incur additional costs related to overtime, staff burnout, recruitment administration, onboarding, and workforce instability. Eventually, the cost of repeatedly covering the vacancies can exceed the cost of investing in permanent recruitment.

A useful way for finance and workforce teams to approach this is to ask a small set of structured questions before defaulting to another temporary placement: How long has this position actually been vacant, and how long is it realistically likely to remain vacant under current recruitment settings? What has been spent on temporary cover for this role over the past 12 to 24 months, and how does that compare with the fully loaded cost of a permanent hire? Is the shortfall driven by a genuine, short-term event, or by a structural gap that will simply recur once the current temporary arrangement ends? What non-financial costs — onboarding time, supervisory burden, team morale, continuity of care — are being carried by permanent staff as a result of the vacancy? None of these questions guarantee a particular answer.

As the KPMG/NATHO analysis noted above shows, in some local markets temporary staffing can be genuinely comparable in cost to permanent employment. But asking the questions systematically, rather than defaulting to whichever option is fastest to arrange, is what allows a hospital to make a genuinely informed decision rather than an habitual one. The Tasmanian experience demonstrates this principle on a large scale. The reported $56 million saving was not created by simply cutting healthcare staffing. It was associated with increasing permanent staffing and reducing dependence on more expensive temporary staffing arrangements. That distinction is important. The goal is not to spend less on healthcare professionals. The goal is to spend healthcare workforce budgets more effectively.

Permanent Recruitment Does Not Eliminate the Need for Agencies

It would be a mistake to conclude that hospitals should completely eliminate agency and locum staffing. Temporary healthcare professionals serve an important purpose. Hospitals experience unpredictable circumstances. Staff become sick. Employees take parental leave. Demand changes. New services open. Major emergencies occur. Specialist professionals may be required for short periods. In these circumstances, temporary staffing can be invaluable. The problem is not temporary staffing itself. The problem is structural dependence on temporary staffing to compensate for permanent workforce shortages. A healthy workforce strategy therefore needs both flexibility and stability. Permanent employees can provide the foundation of the workforce, while agency and locum professionals can provide flexibility when unexpected requirements arise. Even health systems that have made the most aggressive moves against agency spending, such as the NHS, have been careful to frame this as reducing structural over-reliance rather than eliminating temporary staffing altogether. Agency and bank staff continue to play a recognised role in covering acute pressures, hard-to-staff rural and regional areas, and specialist gaps that cannot be filled through permanent recruitment alone. The goal, consistently, is balance rather than elimination.

What This Means for Hospitals Around the World

Tasmania is a relatively small healthcare market, but the underlying issue is much broader. Healthcare systems globally are facing pressure from ageing populations, increasing demand for healthcare services, workforce shortages, and competition for qualified professionals. The result is a growing need for healthcare organizations to think differently about recruitment. Hospitals cannot simply wait for qualified professionals to appear. They need proactive workforce strategies. That may include improving retention, expanding training pipelines, developing graduate programs, offering competitive employment packages, recruiting from other regions, and, where appropriate, recruiting internationally. International recruitment can be particularly valuable for organizations located in areas where the local healthcare workforce is insufficient to meet demand. For employers, the question is therefore changing from: "How quickly can we find someone to fill this vacancy?" to: "How can we build a sustainable workforce that reduces our dependence on expensive temporary staffing?" That is a much more strategic question.

Recruitment as a Long-Term Investment

Healthcare recruitment is sometimes viewed primarily as an administrative function. A hospital has vacancies. A recruiter finds candidates. The candidates are hired. But workforce recruitment has a much larger financial impact. Every unfilled position can affect staffing costs, overtime, agency spending, productivity, staff morale, and potentially the capacity of a department to provide services. Conversely, every successful permanent hire can potentially create value over many years. This is particularly true for highly skilled healthcare professionals. A doctor, nurse, allied health professional, or specialist who remains with an organization for several years can become an important part of its institutional knowledge and clinical workforce. The recruitment decision therefore has consequences far beyond the first day of employment.

The Role of Healthcare Recruitment Companies

Healthcare recruitment companies can help organizations make this transition by expanding access to qualified candidates and reducing the administrative burden associated with recruitment. For international recruitment, this can be particularly valuable. A hospital may know that it needs 50 nurses, for example, but have limited resources to identify qualified candidates in other countries, assess their suitability, assist with documentation, and guide them through registration and relocation. A specialist recruitment network can help connect employers with candidates across multiple markets. This can turn international recruitment from a complex project into a structured process. At Huz Health, our focus is on connecting healthcare organizations with qualified doctors, nurses, allied health professionals, and emergency responders internationally, while supporting candidates throughout the recruitment process. The broader objective is simple: help healthcare organizations build the workforce they need while helping qualified healthcare professionals access international career opportunities.

The Future of Healthcare Recruitment

The Tasmanian example provides an important lesson for healthcare employers. When workforce shortages become chronic, repeatedly paying premium rates for temporary staff may become an increasingly expensive solution. Permanent recruitment can require more planning and investment upfront, but it can create substantial long-term value. Tasmania's reported $56 million staffing saving demonstrates the potential scale of that value. The state recruited additional permanent nurses, midwives, and doctors and reduced its dependence on more expensive temporary staffing arrangements. The NHS's own reduction of close to £1 billion in agency spending in a single year shows the same principle playing out at far larger scale, and hospital systems in the United States continue to search for the right balance between travel staffing and permanent hiring as shortage projections stretch out toward 2037. The lesson is not that every hospital should stop using agencies. Instead, healthcare organizations should consider whether their staffing model has the right balance between permanent workforce capacity and temporary flexibility. Where vacancies are persistent, investing in permanent recruitment may make financial sense. Where local recruitment cannot provide enough candidates, international recruitment can expand the available talent pool. And where international recruitment is used, it should be structured, transparent, ethical, and supportive of both healthcare professionals and employers. Ultimately, the strongest healthcare systems will not simply be the ones that can find temporary workers when a vacancy appears. They will be the ones that can build, recruit, develop, and retain a sustainable healthcare workforce for the long term.

Tasmania's experience shows that doing so can have a significant financial benefit as well as strengthening the workforce itself. For hospitals facing persistent staffing shortages, permanent healthcare recruitment should therefore be viewed not merely as an HR expense, but as a long-term investment in financial efficiency, workforce stability, and the ability to deliver quality patient care.

Sources

‍ABC News — "Cost of locums to Tasmania's health system triples in three years to $182 million" Read the ABC News report‍ ‍

ABC News — "Tasmanian government spent more than $105 million last year to employ temporary nurses" Read the ABC News report‍ ‍

Tasmanian Government — "Recruitment blitz delivers hundreds of new doctors and nurses" Read the Tasmanian Government announcement‍ ‍

Tasmanian Parliament — House of Assembly records on healthcare staffing costs Read the parliamentary record‍ ‍

Tasmanian Department of Health — Recruitment initiatives and workforce information Read the Department of Health information‍ ‍

Tasmanian Government Careers — Current healthcare recruitment opportunitiesView Tasmanian Health Service vacancies‍ ‍

House of Commons Library — "NHS workforce: Size, characteristics and staffing levels" Read the briefing‍ ‍

NHS England — "Letter: Further action to reduce NHS spending on temporary agency staffing" Read the letter‍ ‍

BBC News — "NHS England wasted money on agency staff - nursing union" Read the report‍ ‍

Nurse.org — "Do Travel Nurses Cost More Than Staff? Here's a Breakdown of The Data" Read the report‍ ‍

AAG Health — "The 81 Most Shocking Healthcare Staffing Statistics of 2025" Read the statistics‍ ‍

Health Affairs Forefront — "COVID-19's Impact On Nursing Shortages, The Rise Of Travel Nurses, And Price Gouging" Read the article‍ ‍