The Japanese government’s overhaul of the healthcare system was intended to improve treatment at hospitals, but big profits generated from the change may be producing the opposite effect, reports ajw.asahi.com.

Staffing agencies are reaping the gains from, and reportedly encouraging, the high turnover of nurses at medical institutions. Through the agencies’ steady source of available workers, hospitals can consistently be rewarded under an incentive program for employing a large number of nurses.

The nurses, who are in high demand as the nation’s population ages, are being enticed by generous perks to register with the employment agencies or switch jobs. However, with nurses jumping from one job to the next, concerns have risen about insufficient care at hospitals.

Hospitals pay a referral fee to staffing agencies each time they hire a nurse. The payments come from taxpayer funds, health insurance premiums, and bills paid by patients for treatment under the medical fee-for-service system.

The Ministry of Health, Labour and Welfare plans to review the fee-for-service reimbursement system and improve the public referral service. “This is something we had not anticipated under the current system,” said a ministry official in charge of nursing care.

Staffing agencies proliferated following changes to the healthcare system in 2006. Under the revisions, the health ministry introduced a program in which hospitals with a high ratio of nurses to patients receive more in terms of remuneration.

As hospitals started to compete for more nurses, staffing agencies were created to fill their labour needs. Before online services by employment agencies became available about 10 years ago, hospitals looked for nurses on their own or turned to local governments for referrals.

A survey last summer by the All Japan Hospital Association showed that 70% of its 2,500 member hospitals used staffing agencies at least once in the past three years to secure nurses. The ratio was 85% for hospitals in Tokyo, Osaka and other major cities.

According to SMS Co., a leading Tokyo-based staffing agency specialising in the medical field, hospitals around the nation paid about JPY 25 billion (USD 238 million) to employment agencies in referral fees for nurses in financial year 2012.

SMS said around 40,000 of an estimated 150,000 nurses seeking work turn to employment agencies each year. Hundreds of such employment agencies are believed to be operating in Japan. Officials in the healthcare industry expect the market for these agencies to expand further.

Staffing agencies say they are contributing to Japan’s healthcare system because they provide services based on requests by hospitals and nurses. However, some agencies’ main priority appears to be winning referral fees from hospitals.

With hospitals willing to pay such handsome fees, employment agencies are luring nurses with perks, including cash and gift certificates worth thousands of yen. Some agencies provide as much as JPY 500,000 (USD 4,770) in so-called ‘celebratory money’ to nurses who land jobs with hospitals.

According to one recruitment agency’s website: “Anybody who will register with our company for the first time will receive a JPY 5,000 (USD 48) gift certificate. We will give up to JPY 300,000 (USD 2,860) as a gift to switch jobs.”

Complaints from the employers are now rising about the revolving door of nurses, reports ajw.asahi.com. According to a 2011 survey by the 2,400-member Japan Hospital Association, about 55% of hospitals reported at least one case in which a doctor or nurse hired through an employment agency quit within six months of starting work.