Long-term care companies look to Ontario government to make up pandemic-related losses

Long-term care companies look to Ontario government to make up pandemic-related losses

The three publicly traded companies that own long-term-care homes in Ontario say their pandemic-related costs outstripped government funding by millions of dollars in recent months, a time when COVID-19 spread through their sector like wildfire, causing unimaginable tragedies.

About 60 per cent of Ontario's LTC homes have for-profit ownership, mostly by privately-held companies. But two publicly-traded corporations and a real estate investment trust (REIT) own and operate long-term care homes in Ontario — Sienna Senior Living, Extendicare and Chartwell Retirement Residences, representing about one-in-five LTC homes in the province.

Sienna Senior Living has 37 long-term-care homes in Ontario, as well as private-pay retirement homes and seniors' properties in B.C. Extendicare operates in four provinces — it owns 33 long-term-care homes in Ontario and operates 36 others on behalf of other owners. It also has retirement homes and a home-care business. Chartwell Retirement Residences is predominantly an owner of retirement homes but also owns 20 Ontario long-term-care homes.

All three released second quarter financial results earlier this month, providing a window into their pandemic-era finances. Each reported a loss, due in part to extra costs in their LTC homes that went well beyond the government funding. They also continued to pay dividends and disbursements at their pre-pandemic levels, totalling about $118 million between them over the last six months.

The quarterly update comes as the issue of whether for-profit companies should continue to operate long-term care homes becomes an increasingly controversial one at Queen's Park.

NDP Leader Andrea Horwath held a press conference Friday to denounce "negligent" for-profit operators. She demanded they not be given back control of the long-term care homes that experienced crises during the height of the pandemic, prompting the province to send in the Canadian Armed Forces or teams of hospital staff to manage them.

"I believe Ontarians deserve a public, community-based non-profit, long term care system, one that doesn't siphon away front-line funding to pad the pockets of former premiers and multinational corporations," she said, with a nod to former PC Premier Mike Harris, who is chair of Chartwell's board.

Of the three publicly-traded chains, Chartwell is the only one that did not have external management brought on to any of its homes.

Horwath said the owners of the homes that required external management should not be reimbursed and she finds it "arrogant" for those companies to expect taxpayers to make them whole when so many people died in their homes.

"In fact, the shareholders need to take a haircut and actually, you know, recognize that their profits should not be put ahead of the care of our seniors," she said.

In Q2 investor calls, the three publicly-traded companies expressed varying degrees of optimism that the Ford government will provide additional funding, with Chartwell being the most confident.

"[We're] optimistic that the governments will fund our additional expenses in our long-term care operations. So we're hopeful that that's a timing adjustment," said CFO Sheri L. Harris, referring to the extra pandemic costs in Q2. Chartwell reported its same-property long-term care net operating income was down by $1.9 million compared to the year prior. It said it incurred pandemic-related expenses in excess of the government funding of $7 million overall, of which $2 million relates to Ontario LTC.

In a statement to QP Briefing, the company's vice-president of marketing said Chartwell "answered the call of the government to do all we could to protect our residents, families and staff," meeting and sometimes exceeding government directives. "Various government officials publicly stated that the government would spare no cost to do what is right to protect our population from this virus. We did our part in our residences and believe and expect that the government should fulfill theirs," said Sharon Ranalli.

Sienna reported a net loss of $6.8 million in the second quarter of 2020, in part due to pandemic expenses that were not covered by the government — its long-term care homes, the majority of which are located in Ontario, incurred $6.4 million in COVID costs than the government funding that was provided.

And Extendicare said about two-thirds of its pandemic costs in long-term care have been covered by the governments so far, and it expects additional costs in its mostly Ontario-based LTC division to see about $5.5 million a month in COVID costs going forward — and noted it has a greater ability to absorb those costs than others in the sector.

"So the larger operators certainly have more flexibility to cover that than the smaller operators do, as you can imagine. So we don't really view this as a sustainable situation. We think that there's going to have to be a reaction to it," said CEO Michael Guerriere.

So far, the Ford government has not committed publicly to additional funding and it did not do so in response to a question from QP Briefing.

"Over the course of the pandemic, our government has announced investments totalling $268 million to cover 24/7 screening, additional staffing, enhanced cleaning and sanitation, and additional surge capacity," said Gillian Sloggett, a spokesperson for the minister of long-term care. "This emergency funding comes in addition to a 1.5 per cent increase in the level of care per diem for long-term care, effective April 1, 2020, which applies to all long-term care homes."

Dr. Samir Sinha, director of geriatrics of the Sinai Health System and director of health policy research at Ryerson University's National Institute on aging, told QP Briefing that the formula has led to a "natural evolution" of for-profit ownership in the sector.

He said he isn't particularly concerned with profit-making being part of the equation, noting that all homes, regardless of ownership, are paid by the same funding formula.

The province provides funding envelopes dedicated to specific needs — food, nursing and personal care, and support services.  Homes aren't allowed to retain unspent funds, except for funds from an "other accommodation" envelope and the copayments generated by preferred accommodation premiums.

Sinha noted that that is how back-office efficiencies can allow for profits to be made.

"Ultimately, at the end of the day, I think these for-profit organizations and chains are in the business of providing care, but they're also responsible to their shareholders," he said.

"But I think, we should be more concerned if we think for-profit entities or chains are not providing substantially better care," he continued.

And he said there is research to show that that is the case. Dr. Nathan Stall led a study that found Ontario LTC homes with for-profit ownership had a higher death rate on average when there was a COVID-19 outbreak. Further, it found that ownership by large chains was associated with larger outbreaks and more deaths.

The research found that the primary reason for the disparity was that the privately-owned homes were more likely to be older and not up to the current provincial standards, presenting infection control challenges. The older homes had four-bed ward rooms, which have since been banned, shared washrooms, less space overall, and are generally more difficult to clean. Beyond that, it found chain ownership was a negative factor, which Stall hypothesized could have been due to breakdowns in centrally controlled policies or the movement of staff between homes early in the pandemic.

The Ford government recently acknowledged that the redevelopment of long-term care homes had stalled and revamped the LTC capital programs, sweetening the financial incentives, in an effort to get companies to move forward with their projects. In their Q2 investor calls, all three companies spokes positively of the changes.

The companies also announced new initiatives, or damage control efforts, from hiring on medical experts with impressive CVs to sending executives on "listening tours" to paying into a fund for employees.

Those moves come after all three saw stock prices plunge in March, without fully recovering to date. They each own homes that were ravaged by COVID-19 and all three are facing lawsuits from the families of their residents.

Sienna owns two long-term care homes that were assisted by the Canadian Forces — Altamonte Care Community, where 53 residents died — and Woodbridge Vista Care Community — where 31 residents died. The initial Canadian Forces report on Altamonte was particularly high-profile and disturbing — it detailed severe staffing shortages that left residents underfed, left bedbound with untreated wounds and an allegation of neglect and abuse, as well as degrading comments being made by overstressed staff.

It's also the owner Camilla Care Community, one of the homes that the province has taken over management of, and transferred to a local hospital system. After assuming the management, Trillium Health Partners reported allegations of abuse and neglect to the provincial government and local police.

Extendicare is the manager of another home that needed CAF assistance — Orchard Villa — a home where 70 residents died, the highest death toll in the province. The army found cockroaches, flies and the stench of rotting food, and reported rushed staff weren't always sitting residents before feeding them, with one incident “that appeared to have contributed to a patient death.”

At Extendicare Guildwood, 48 residents died and the Scarborough Health Network was brought in to manage it. The hospital staff documented alarming "gaps” in leadership in which administrators were absent and physicians refused to enter the home.

While Chartwell didn't require external management of its homes, it did not escape without a human toll. Thirty-two COVID-19 positive residents died at the Chartwell Ballycliffe Long Term Care Residence and 22 died at Chartwell Westbury, and there were smaller outbreaks at other homes.

QP Briefing reached out to all three companies for comment. Sienna referred questions to the Ontario Long-Term Care Association.

"While it sadly has taken a pandemic for long-term care to get the attention from governments that it needs, we now have an obligation to address the longstanding human resources emergency, reduce red tape, rethink the operating funding model, build and re-build outdated buildings and continue to work together to ensure that our residents, staff, families and communities never face the tragic losses experienced in some homes in the first wave of the pandemic," the association said in a statement. "COVID-19 remains a serious threat to residents in long-term care, and it’s critical for everyone to be united in the fight against this deadly virus.”

In its statement, Chartwell pushed back against the NDP's narrative on for-profit homes, stressing that government funding for resident care and services cannot be siphoned off for profit. "What is not spent on care and services is returned to government," Ranalli said.

"Knowing that there is no vaccine in the near future and that we face ongoing risk in our residences, we continuously implement new learnings from the first wave of the pandemic and continue to work in close partnership with government, local health authorities and others in the health system to maintain our outbreak avoidance and response measures."

In a statement, Extendicare said the company takes its responsibility to it's residents extremely seriously.

"From our COVID-19 testing program, to our massive PPE procurement network, to the expertise of our Infection Prevention and Control teams, our size, scope and structure has clear benefits for our residents and staff," it said. "Our management relationships provide consulting and other services across the country to for-profit, not-for-profit, hospital and municipal long-term care homes alike, and with more than 5,000 beds in Ontario, we are an integral part of the province’s holistic health care system."

This story has been updated to include a statement from Extendicare.

Jessica Smith Cross

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