The Health Services Union (HSU) has warned fatigued staff at NSW hospitals are feeling the effects of "under-investment" after the state recorded another 20,794 COVID-19 cases and four deaths.
In the 24 hours to 8pm, hospital admissions rose to 1,204, up from 1,066 in the previous reporting period.
It's the highest number of people being treated for COVID-19 in the state's hospitals since September 23.
There are now 95 patients in intensive care.
The HSU has warned the hospital system will reach a critical phase within two to three months if changes are not made by the state government.
Union secretary Gerard Hayes told the ABC staff at hospitals were chronically fatigued and feeling the effects of "under-investment" in resourcing.
"Now we're paying the price for that, and if we do not do something about that immediately, we are going to see people starting to leave the industry because this pressure that they're under for the last 18 months cannot be sustained," Mr Hayes said.
Last week the state government changed the isolation period for healthcare workers who are close contacts to one week — a move Mr Hayes said was a "short-term, knee-jerk reaction".
Michael Bonning, chair of the Australian Medical Association (NSW) council and a Western Sydney respiratory specialist, said it was becoming difficult to staff critical care areas of hospitals.
He said many staff have been furloughed due to having close contact with positive cases.
"COVID is really pushing us to be able to, you know, to be able to staff our hospitals appropriately," he said.
"It just means pushing [staff] harder and harder [when] one of this things we were trying to do across this Christmas period was to try to give staff downtime, to try to prepare them for, you know, what comes next."
Dr Bonning echoed the union's calls for better funding and more staff.
"You can't materialise healthcare workers overnight," he said.
"You have to plan for a healthcare system that runs at about 85 per cent capacity at all times so that, when you have surges like this, you're actually prepared for that."
Testing rates continue to stay under the 100,000 mark with 96,765 COVID-19 swabs taken.