In Ontario, the unpredictable funding climate of the 1990s led health care organizations to look for ways to reduce costs. Adopting a just-in-time staffing policy, they employed fewer full-time workers, scheduled part-time workers to work regular shifts, took on more casual staff, and became increasingly reliant on agency nurses and overtime to cover shifts. These policies resulted in higher costs and reduced surge capacity, and placed the health of nurses and patients in jeopardy. Fewer staff meant more overtime. Stress-related absenteeism increased. Some nurses reacted to casualization by working for multiple employers. During the SARS (severe acute respiratory syndrome) epidemic in Toronto, nursing resources were stretched to their limits. An exploratory investigation, based on relevant literature and interviews with 13 nurse administrators who held key positions during the epidemic, confirmed the lack of spare capacity in the health care system and indicated that community and long-term care sectors had less capacity than acute care. Low surge capacity in these sectors increased the vulnerability of the entire health care system. Capacity issues should be addressed as part of a larger human resources initiative to create a more flexible workforce. Since SARS, a number of government and organizational initiatives have been developed to increase nursing capacity.