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Report urges Queen’s Park to build LTC beds as non-profits

Posted: May 23, 2021

(May 22, 2021)

By: Joanne Laucius, Sudbury Star

The province should make capital funding available to not-for-profit LTC operators so they can open LTC homes, says a report written by nine policy experts.

Licenses for more than 30,000 LTC beds in Ontario are set to expire in 2025 and 15,000 new beds are in the works, said Investing in Care, Not Profit, which calls on Queen’s Park to develop of the 30,000 new beds as non-profit spaces.

Since the beginning of the pandemic, advocacy groups have demanded an end to for-profit LTC in Ontario. But the cost of converting the homes is daunting. About 58 per cent of nursing homes in Ontario are for-profit, the highest proportion of any province in the country.

The report’s authors range from academics and lawyers to policy consultants and former senior public servant Alex Himelfarb. It was published by the Canadian Centre for Policy Alternatives, a progressive think tank.

The report argues that the current arrangement skews towards for-profit providers and delivers a lower standard of care at a higher cost.

“The moment is right to push to get for-profit taken out of nursing homes,” said Hugh Armstrong, a professor emeritus of social work and political economy at Carleton University and one of the authors.

“We need to avoid turning over new licenses to for-profit. We have to push to make change happen. It won’t happen just because it’s a good idea.”

Ontario currently provides both capital and operating funding to LTCs. In one example, a 160-bed home in an urban centre would get a capital grant of $8.22 million from the province once construction is completed and a capital funding subsidy for the 25-year term of the license amounting to another $36.9 million.

But ownership of the land and the building remains with the provider. It’s like the bank owning your home after you pay off the mortgage, said the report, which was commissioned the Ontario Health Coalition, which represents seniors’ and patients’ organizations, unions and health professionals.

While a non-profit provider can be expected to continue to provide long-term care over the long term, a for-profit company may find other ways to use the real estate, the authors argue.

While Ontario has no choice but to increase LTC capacity, it’s cheaper for governments to borrow money on behalf of non-profit providers, said Armstrong. Private entities will eventually pass the cost of borrowing on to the public while holding on to the assets that public money creates.

The report recommends that the province commit to going ahead with an “orderly and phased” reduction of for-profit LTC, whether in homes owned or operated by for-profit companies. “While broad reforms are clearly necessary, a significant reduction in for-profit care will be essential to success.”

Financing capital costs is a major obstacle for most not-for-profits because they lack the capital reserves needed to qualify for a mortgage, said the report.

Commercial banks routinely turn not-for-profits away. So does the province’s lender, Infrastructure Ontario, which considers not-for-profit LTC homes to be a credit risk. Not-for-profits who go to the Canada Mortgage and Housing Corporation for funding find the federal housing agency requires a mortgagee to have cash reserves of 15 per cent of the mortgage.

“It’s a tilted playing field,” said Armstrong.

In some ways, the report echoes concerns outlined by the Ontario’s Long-Term Care Commission’s final report, released on April 30.

The commission acknowledged that the pandemic has “seriously undermined’ ” the reputation of for-profit providers. However, in its recommendations, the commission urged the province to consider allowing investors to pay the up-front costs of building nursing homes while allowing “mission-driven” entities to run them.

The province will need between 96,000 and 115,000 new beds by 2041 just to keep up with demand — and that doesn’t take into account the beds that needs to be re-developed. Billions are needed to do the job, said the commission.

“The private sector has available capital for this task. There is, however, no reason that the accommodation and care of residents need to be handled by the same entity that creates or redevelops the beds.”

The commission recognized the problem without taking the necessary final step to solve the problem, said Armstrong. While public-private partnerships might have short-term benefits, the benefits should weighed against long-term risks and costs.

“Who would make the determination between for-profit and mission driven? If an entity is for-profit, it has an obligation to seek profit,” said Armstrong.

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