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How Ontario’s elder-care policies favour for-profit homes

Posted: May 25, 2022

(May 21, 2022)  

By: Karen Howlett, The Globe and Mail 

Bernard Boreland, CEO/administrator with Mariann Home chats with resident Margaret Bourke, in the long-term care facility in Richmond Hill, Ont., on Mar 22. FRED LUM/THE GLOBE AND MAIL

Bernard Boreland’s first inkling that the Ontario government planned to claw back wage increases for his nursing-home workers came in an e-mail from a senior bureaucrat in July, 2019.

In it, the bureaucrat warned Mr. Boreland, chief executive officer of Mariann Home in Richmond Hill, north of Toronto, that a new collective agreement offering pay hikes of 4.75 per cent over four years to his employees “could be outside” the draft measures in the government’s proposed wage restraint legislation.

The not-for-profit home was forced to withdraw the offer and comply with Bill 124, which caps each annual pay raise for three years at 1 per cent for most employees in the public sector. The legislation applies to every nursing home other than those that operate “for the purpose of gain or profit.” It has left the not-for-profit sector struggling to recruit and retain health care workers while their for-profit rivals are free to offer higher wages. 

“Bill 124 is crushing us,” Mr. Boreland said.

Ontario’s Premier, Progressive Conservative Leader Doug Ford, is campaigning for re-election on a promise to deliver 30,000 new long-term care beds and upgrade 28,000 outdated ones by 2028. The New Democrat, Liberal and Green Party leaders, meanwhile, have all pledged to phase out for-profit nursing homes, accusing them of prioritizing profits over residents’ care.

As the province embarks on the most ambitious expansion of long-term care in a generation, Bill 124 is just one way the Ontario government has handed the for-profit sector a competitive advantage, The Globe and Mail has found.

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An emergency kit with snacks and water is kept in an elevator at the Mariann Home.FRED LUM/THE GLOBE AND MAIL

A new long-term care act that became law in April no longer requires government bureaucrats to make licensing decisions based on an applicant’s record for providing care to the elderly. The old act, by comparison, required them to consider whether there were “reasonable grounds” to believe a home would not compromise the health and safety of its residents. Critics say the change gives officials a freer hand to license for-profit homes with poor track records.

And for-profit operators have an easier time than not-for-profits when it comes to bankrolling projects under the province’s funding model for building new nursing homes. Homes must finance projects up front, typically by raising at least 30 per cent of their construction costs and borrowing the rest. While not-for-profit owners often have difficulty raising the money, most commercial operators, particularly the large chains, have plenty of access to capital.

Ontario’s long-term-care construction blitz will keep for-profit companies entrenched in the sector, according to a Globe and Mail analysis of the 31,705 new beds announced so far. The province already has the highest share of for-profit nursing homes in the country, and that will remain unchanged under the current government plan. The for-profit sector’s share of beds will dip only slightly, to 52 per cent from 53 per cent, the analysis shows.

The Globe’s review also shows that some of the worst-performing long-term care homes during the coronavirus pandemic are slated to get new beds. Canada had the highest rate of COVID-19 fatalities in nursing homes among other wealthy countries during the first wave of the pandemic. Long-term care residents in Ontario accounted for two-thirds of the province’s deaths, and a majority of those who died lived in for-profit homes.

The province intervened in 35 of the homes hardest hit by COVID-19 outbreaks, ordering hospitals to take over temporary management. All but six of those homes were owned by for-profit companies.

Sixteen of the 35 homes have been awarded just over 1,000 new beds, the analysis shows. They include Orchard Villa, a home in Pickering owned by for-profit chain Southbridge Care Homes, and Altamont Care Community in Scarborough, owned by for-profit chain Sienna Senior Living. The Canadian Armed Forces, which the federal government deployed to hard-hit homes, chronicled horrific conditions at both facilities, including poor infection control practices and neglect and abuse of residents.

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For-profit operators have an easier time than not-for-profits when it comes to bankrolling projects under the province’s funding model for building new nursing homes.

Long-Term Care Ministry officials have yet to approve licenses for many of the new beds, a process that typically happens when a project is further along.

Jane Meadus, a lawyer at the Advocacy Centre for the Elderly in Toronto, said it remains to be seen whether the ministry will issue those licenses to homes that had had what she called “very bad outcomes” during the pandemic.

Ivana Yelich, a spokesperson for Mr. Ford, said the new long-term care act improves accountability by allowing “interested parties” to appeal licensing decisions to the Minister of Long-Term Care. She added that there are 120 not-for-profit projects in development or under construction across the province.

“The Ontario PCs have a plan to fix long-term care and to ensure our seniors get the quality of care they need and deserve – both now and in the future,” she said in a statement.

The province has not made a major investment in long-term care since 1998, when the Progressive Conservatives under Mike Harris created 20,000 new beds. More than two-thirds of the beds went to for-profit operators, which received government funding for the first time to build nursing homes, according to an Ontario Health Coalition report.

The design of Ontario’s older nursing homes contributed to the pandemic’s heavy toll in long-term care. Residents living in facilities where many of them shared sleeping space and bathrooms with two or three other people were particularly vulnerable.

The outdated homes are a legacy of decades of neglect, critics say. Ontario lags every other province in banning multibed wards. One-third of its 626 nursing homes do not meet current provincial government design standards, which require residents to be housed in single or double-occupancy rooms.

Frank Marrocco, Ontario’s retired associate chief justice and chair of an independent commission that examined the devastating effect of the coronavirus on the province’s nursing homes, said in an interview that the government did not embrace his report’s call for a new long-term care model.

The report, released last April, echoes many advocates’ concerns about the dominance of real estate developers in the for-profit sector. “For many,” it says, “it can be difficult to understand how investment vehicles such as real estate investment trusts can be responsible to their investors and, at the same time, for the care of residents.”

The commission concluded that the province needs to restore public trust by having commercial, “profit focused” enterprises build the homes, then leave the operation to people who focus on caring for residents – a model already used in Ontario for building hospitals, courthouses and other public-sector facilities.

“We need a different approach,” Mr. Marrocco said. “I’ve got no biases against capitalism, but this version did not work out well.”

To track down the ownership of long-term care homes that have been awarded new beds, The Globe reviewed multiple types of records, including news releases issued by the Progressive Conservative government and documents from the province’s Long-Term Care Ministry. In dozens of instances, the beneficial owners of for-profit entities wereconcealed behind numbered companies and limited liability partnerships.

The number of beds in Ontario will jump from 78,532 in August, 2019 to just over 110,000 if all goes according to plan. The Globe’s analysis shows that the Ontario government has awarded 36 per cent of the 31,705 new beds to 10 for-profit chains. The not-for-profit sector (excluding municipally owned homes) has been awarded 43.4 per cent of the beds. But long-term care advocates say many not-for-profit projects are at risk of not going ahead unless the province reforms its funding model for building new homes.

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Bill 124 has left the not-for-profit sector struggling to recruit and retain health care workers while their for-profit rivals are free to offer higher wages.

The biggest obstacle is raising money up front. Unlike the large chains, not-for-profit homes do not build up reserves that can be used to help finance projects, and banks are less inclined to lend to them. Small, for-profit homes owned by families face similar challenges.

To encourage companies to build new homes and renovate existing ones, the government enriched the funding the province provides to offset borrowing and construction costs. Once construction is complete, a home is eligible to receive a construction funding subsidy designed to cover up to 60 per cent of its construction cost, depending on a home’s location and size.

But the subsidy has not kept pace with rising construction costs in recent months, leaving homes facing a more significant unfunded portion, said Lisa Levin, chief executive officer of AdvantAge Ontario, a group that represents not-for-profit homes.

Steven Harrison, CEO of the not-for-profit Tri-County Mennonite Homes, said he has approval from the province to replace the 97-bed Nithview Home, near Waterloo, with a new 192-bed home. But, he said, he is still working on trying to raise roughly $25-million to finance the $80-million construction cost.

Once the project is complete, Nithview would be eligible to receive a construction subsidy of $22.03 a day for each bed, payable for the next 25 years. But that does not address the upfront funding challenges.

“I’m not asking for a free ride,” Mr. Harrison said. “But what I am asking for is at least equality and a little bit of equity.”

At least two not-for-profit homes have put new beds awarded to them on hold: Perley Health, a 450-bed home in Ottawa, and Grey Gables, a 66-bed municipally owned home near Owen Sound. Saint Mary’s Care Centre, a small for-profit company, has withdrawn altogether from its plans to build a new 160-bed home in Orillia. Another for-profit company is taking over the project.

The government introduced a lending program in December to make it easier for not-for-profit homes to secure construction financing, but had not approved any loans as of late April.

Without changes to the funding model, advocates say, small operators deeply rooted in cultural and religious communities, already part of a dwindling breed, will not be able to finance expansions.

Mariann Home, a 64-bed facility owned by the Missionary Sisters of the Precious Blood, has been trying to expand for more than two decades. The sisters bought a 10-acre lot in Vaughan in 1999 with the intention of building a new home. In 2013, Mr. Boreland, the CEO, asked the province for 76 new beds and finally got the go-ahead in March, 2021, to build a new home with 140 beds. He thinks the widespread praise the home received for keeping the coronavirus at bay might have worked in its favour.

“They were ignoring us for years,” he said. “I think it’s because of our pandemic response that we got some sort of notice.”

In January, 2020 – two months before the pandemic was declared – Mr. Boreland started stockpiling personal protective equipment after two employees travelling in China alerted him to a “bad flu” going around that country.

The home barred its employees from working at other homes and offered additional shifts to those who did, weeks before the government imposed its own single-employer rule to control contagion. Mr. Boreland ran COVID-19 vaccination clinics at the home once a week for residents, staff and their family members.

During a tour of the home on a Tuesday morning in March, Globe journalists were shown a makeshift “pandemic room,” with cardboard boxes containing face masks, gloves and gowns stacked floor to ceiling. The three-storey brick building, built in 1972, looked inviting, with walls painted in pastel shades of yellow, green and blue, and distinctive decals that personalized residents’ bedroom doors. The aroma of freshly made hamburgers wafted from the kitchen.

A resident sitting in her wheelchair kissed Mr. Boreland’s hand after he assured her that her son was visiting later in the day. Anne Magee, another resident, teared up as she recalled how Mr. Boreland had arranged to transfer her husband of 61 years, Tony, to Mariann Home from another nursing home last August, just days before he died. She had seen him only twice during the pandemic.

“He died in my arms,” she said. “It was a beautiful ending.”

Despite the homey atmosphere, Mr. Boreland said, the government’s wage-restraint legislation, which labour unions are challenging in the courts, has “bogged down” his attempts to recruit health care workers for both the existing and new facility. Mariann Home avoided a nursing crisis during the first wave of the pandemic by hiring more staff. But, as the pandemic heightened competition for health care workers in subsequent waves, Mr. Boreland said, the home began losing staff to for-profit facilities.

Richard Mullin, a spokesperson for the Treasury Board President’s office, said for-profit homes are exempt from Bill 124 because they have “independent means of raising revenue and market forces provide them with an incentive to manage growth in their compensation costs.”

Mariann Home must raise $17-million to build its new facility. The cost of the project has jumped to $47-million from an initial estimate of $32-million, Mr. Boreland said. But he has put fundraising efforts on hold until he gets zoning approval to build the new home.

“At this point, it’s a waiting game for us,” he said.

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