Why Having a Formalized Contract with a Nursing Agency is part of a Good Risk Management Plan

Healthcare facilities award contracts for millions of dollars of service and supply contracts annually. Why is it that contract awards for nursing agency services are so infrequent, and is this opening the facility up to unneeded risk?

Carecor has been a leader in providing Facility Agency Staffing services to healthcare organizations since 1982. During this time, while healthcare has changed a great deal, one thing has remained constant – very few facilities have written contracts in place with their agency, in spite of a culture within those facilities that supports contracts and/or Purchase Orders for other purchased supplies and services.

Nursing Agencies are providing direct patient care services within your facility and the existence of a written contract for service is consistent with a facility’s sound Risk Management practices. Teaching hospitals clearly have contracts with their affiliated educational partners outlining the roles and responsibilities of students. Hospitals have agreements with physicians and others professionals who are treating patients within the health centre. Without a written contract or agreement between a Nursing Agency and the healthcare institution, the responsibilities of the two parties could be unclear. It is always best to outline the terms of a service agreement before incidents occur.

• In the interests of good patient care, what should be basic elements of a contract with a Nursing Agency?
• Has the facility received an original of the Agency’s Certificate of Insurance, directly from the Agency’s Insurance Broker, annually?
• Does the Agency have adequate Malpractice Liability Insurance coverage so that the healthcare facility is not exposed to claims, and is the facility “named” on the Agency’s Policy?
• Does the contract specify all the different types of Insurance the Agency should hold to protect the facility?
• Does the contract specify a “triggering mechanism” so that the Insurance Company notifies the healthcare facility if the Agency’s insurance coverage is changed, not renewed or cancelled?
• Is there an Indemnity Clause within the contract outlining which party will be held responsible if there is a loss or damage under the contract, and has the facility’s insurance carrier and legal counsel reviewed the clauses?
• Has the healthcare facility received a Clearance Certificate to satisfy itself that the Agency is in full compliance with its Workplace Safety and Insurance Board obligations?
• Does the contract clearly establish that the Agency is the employer of the nurses, not the healthcare facility, since without this the facility could be held liable for the actions of the nurse and for any statutory employer contributions to the Canada Pension Plan, Employment Insurance Plan, WSIB, etc.?
• Does the contract specify a term for the services provided, not only to lock in pricing, but also should liability issues arise?
• Do you know that you are getting the best pricing possible, and is that price consistent across all Patient Care Units within the facility?
• By not having a contract with the Agency, have you inadvertently condoned a practice of allowing “kick-back” payments from the Agency to clerks, managers, or those in a position to influence a “buying decision” by the healthcare facility?
• Have you built into the contract key Performance Indicators so that you can objectively measure the Agency’s performance and contract compliance?
• Does the contract clearly identify the cancellation terms for the contract and for actual service requests for agency staff?
• Are there discounts open to the facility for prompt payment of invoices?
• Have you specified the frequency of the invoices?
• Have you availed yourself of all possible donations, sponsorship and fundraising opportunities from the Agency?
• Have you specified that the Agency must meet certain quality standards, such as those organized by the Canadian Council on Health Services Accreditation (CCHSA) or ISO?
• Are the qualifications of the nurses and staff to be provided by the Agency clearly specified, including College of Nurses of Ontario Registration, years of work experience, skill set verification procedures, Mask Fit Testing and Influenza Vaccination practices, etc.?
• Have you put the onus on the Agency to provide the facility with detailed, regular Utilization Data, so that you can manage your use of Agency dollars?
• Are there Confidentiality and Non-Disclosure clauses in the contract, outlining, for example, the role of the Agency’s Privacy Officer, compliance with legislation, the existence of signed Confidentiality Agreements with the Agency’s staff, etc.?
• Is there a clause identifying whether the Agency can assign or transfer the contract in whole or in part to another Agency?
• Under what conditions can the contract be amended and/or terminated?
• Has the contract been signed and dated by both parties, and does the Agency’s representative have the authority to bind and sign the contract on behalf of the Agency?

While this list may seem long, it is important to establish the terms of a relationship with the Agency that the healthcare facility uses. Assistance in formalizing this relationship can come from the Purchasing or Risk Management departments, or the facility’s external legal counsel. When it comes to Patient Care and protecting the interests of the Patient and the Healthcare Institution, a little work up front in drafting a workable contract can pay dividends in delivering high quality patient care from your Agency and reducing potential liabilities for the healthcare facility.