Doctors, nurses and administrators are concerned about staff shortages as the number of people hospitalised with COVID-19 in NSW surpasses 1000.
There are now 1066 people in the state's hospitals with the virus, 83 of whom are in intensive care, and 24 of whom require ventilation.
At the peak of the Delta outbreak, on September 21, there were 1266 people hospitalised with infections, and 244 in intensive care.
Australian Medical Association vice-president Chris Moy says his colleagues and medical administrators are "struggling" with staff shortages as case numbers rise.
NSW Nurses and Midwives' Association general secretary Brett Holmes says his members are "distressed and angry".
Dr Moy described the "double whammy" of COVID patients ending up in hospital and staff being furloughed because they are either sick, COVID-positive or close contacts.
"People look at the numbers and see the 1066 in hospitals but the health system doesn't just look after COVID and people are having critical surgery delayed," he told AAP.
A NSW Health spokesperson said as of December 30, 2510 healthcare workers were in isolation after being exposed to COVID-19.
Exemptions may be given in exceptional circumstances for healthcare employees who are deemed critical and who cannot work from home but only if they are asymptomatic, the spokesperson said.
Dr Moy said NSW Health's policy change was indicative of the "desperation" to fill up rosters.
He said there was frustration in the medical community because testing, tracing and quarantine should be the first line of defence against the virus.
"The hospitals are at the bottom of the cliff and we shouldn't be relying on this last line of defence, we should have protection at the front to slow the thing down," he said.
"If you can slow down the peak of that wave it spreads out when people are sick and gives us a good chance of getting boosters in arms."
NSW recorded two more deaths and 18,278 new infections on Sunday.
Dr Moy said increasing the availability of rapid antigen tests for frontline workers would be critical.
Mr Holmes said his members were working with unprecedented staffing levels and extremely concerned about their ability to deliver safe patient care.
"In fact they know they can't," he told AAP.
At one major Sydney hospital, members reported nurse-to-patient ratios were dire with three nurses caring for "up to 18 critically unwell coronary patients".
At another Mr Holmes said the ICU was short-staffed by 19 people and was still running with 11 workers fewer than it should have.
"Anyone who has been given the opportunity to take some well earned rest is now getting pressured to come back, even people who have been very close contacts are being told they'll have to come back if they're considered essential," he said.
The union is calling for the NSW government to introduce a shift-by-shift COVID-19 allowance to provide nurses and midwives an incentive.
"There has got to be some recognition of what these people are going through and the extraordinary measures that are being made," Mr Holmes said.
"The idea that they are all going to be protected by their PPE and rapid antigen testing is going to be put to the test."
NSW Labor leader Chris Minns told reporters the hospital system was clearly under strain and the government hadn't prepared for the large number of COVID Omicron cases.
"PCR testing centres have been closed right across NSW over this busy holiday period. Rapid antigen testing has not been distributed to the people of NSW," he said.