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The Recruitment Conundrum:

Why pay parity for staff specialists is at least cost neutral and could save NSW Health $35 million a year

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March 2025

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Key Messages

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• NSW pays staff specialists 30% less than equivalent psychiatrists in QLD and VIC.

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•  VMOs ($2,350/d + GST) and Locums ($3,050/d + GST) are more costly than Staff Specialists ($1,009 to $1,363/d)

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• In 2023, actual locum spending was $60m, well before resignations occurred.

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•  Paying a 25% allowance to all staff specialists is likely to be cost neutral to NSW Health, and has the potential to save $35m per year

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Key facts

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• There are 410 staff specialist positions in NSW, of which 30% were vacant in January 2025.

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• Locums are routinely employed on medium to long term contracts to fill gaps caused by failures to recruit to permanent positions in rural, regional, and now metropolitan hospitals.

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• Regional and rural services have relied on VMOs for decade due to staff specialist remuneration being insufficient to attract permanent staff.

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• NSW Health did not routinely collect data on locum expenditure before 2023. Data collected for that year showed a total spend of approximately $60m.

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Workforce Modelling

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• Service gaps caused by loss of SS Psychiatrists and failure to recruit will require VMOs or Locums to fill in those gaps.

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• If all positions in NSW were filled with staff specialist, and all were paid a 25% allowance, the actual cost to NSW Health would be cost neutral.

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• Recruiting to a permanent SS workforce reduces additional unaccounted costs relating to orientation, on-boarding, service gaps due to loss of continuity of care, loss of clinical leadership, training & research.

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• This data was published in The Guardian on 12 February 2025: https://www.theguardian.com/australia-news/2025/feb/12/nsw-health-could-save-35m-a-year-by-giving-psychiatrists-a-25-pay-rise-modelling-suggests-ntwnfb​