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Time to end profit-making in seniors’ care

Photo by Cristian Newman via Unsplash

By Andrew Longhurst  and Kendra Strauss, from “Policy Notes” via the Canadian Centre for Policy Alternatives

The coronavirus pandemic has shone a light on serious problems in Canada’s seniors’ care system, as nursing homes quickly became the epicenters of the outbreak. These problems are not only due to the greater vulnerability of seniors to the disease, but also to how care is organized and staffed. 

In recent weeks, BC’s provincial government announced extraordinary and positive measures to mitigate the spread of COVID-19 in the province’s long-term care (nursing homes) and assisted living facilities. Specifically the public health order has:

  • Required that most staff work at one facility only (“single-site order”);
  • Enabled public health officials to ensure compliance with the single-site order; 
  • Required that all workers are paid the unionized industry standard; and, 
  • Committed to full-time hours for workers required to work at a single site.

These changes were necessary because many seniors’ care workers have to patch together a living by working multiple low-wage, part-time jobs in different health care facilities. The BC government will temporarily “top-up” wages to bring them in line with the industry standard for unionized staff.  

Notwithstanding these important and welcome changes, a number of concerns remain about how BC’s home and community care sector is meeting the needs of seniors during the pandemic. The BC Seniors Advocate has expressed concerns specifically about the assisted living sector—a less intensive level of care than nursing homes, where seniors live independently in apartment-style units but receive meals and a variety of support services. Assisted living facilities are not covered by the Residential Tenancy Act, which means residents are not protected by the province’s ban on evictions during the pandemic, nor are they covered by the rent freeze. And there are no limits on fee increases for personal care services in private-pay assisted living (where all costs are paid out-of-pocket by residents).1

These changes were necessary because many seniors’ care workers have to patch together a living by working multiple low-wage, part-time jobs in different health care facilities.

We also still do not know about the impacts on those receiving home care, who may be experiencing reduced visits and assistance, or who may be at greater risk of infection due to use of contracted private home support companies where home support workers don’t necessarily have personal protective equipment or appropriate infection control practices. (Vancouver Coastal Health, Fraser Health, and Island Health are in the process of repatriating publicly-funded home support back into the public sector—an important step that will reduce future vulnerabilities. The BC government announced last year that home support services— provided by community health workers who assist with meals, bathing, etc.—would be delivered directly by these health authorities, as has been done by Interior and Northern Health Authorities all along.)

On a separate and positive note, increased funding will enable community non-profit agencies to provide additional social supports to seniors living at home.

How did these vulnerabilities in eldercare come about? Going into the crisis, our system has been weakened by policy decisions beginning in the early 2000s that:

  • Reduced access and eligibility to publicly funded care; 
  • Produced vulnerabilities and gaps that are impacting seniors and those who care for them; and, 
  • Encouraged profit-making through risky business practices such as subcontracting, which undermined working conditions and created staffing shortages.

A system already under stress

Long-term care facilities (LTCF) are at the centre of COVID-19 outbreaks in BC and beyond.2 In our province about two thirds of long-term care is delivered by non-profit organizations and for-profit companies, with the remainder provided directly by health authorities. The most severe and widely reported outbreak has been at the Lynn Valley Care Centre in North Vancouver, but at the time of writing there are about 20 seniors’ assisted living, rental residences, and care homes, including 15 LTCFs. In a recent CBC report on conditions at the Lynn Valley Care Centre, Jason Proctor wrote:

In interviews with CBC News, family members, health-care professionals and community members spoke about the march of a virus that has moved through the facility in much the same way it has through the world, preying on vulnerabilities that seem obvious in hindsight: Reliance on a subcontracted labour force whose members… work multiple jobs to make ends meet. Gaps in communication. A societal reluctance to talk about the basics of hygiene.

Sub-contracting is also identified by the Globe & Mail in their investigation of how COVID-19 spread at the Lynn Valley Care Home. Sub-contracting seniors’ care occurs when service providers (e.g., home support agencies, LTCFs, assisted living facilities) contracted by regional Health Authorities to provide care then sub-contract with other companies for services such as direct care, cleaning, cooking or maintenance. Contracts are often awarded on the basis of lowest cost, which translates into lower wages, poorer benefits and fewer full-time positions.

Long-term care facilities (LTCF) are at the centre of COVID-19 outbreaks in BC and beyond

The prevalence of sub-contracting in the eldercare sector is no accident. In 2002 and 2003, the BC government introduced Bill 29 and Bill 94, which stripped no-contracting out and job security clauses from the collective agreements of health care workers and resulted in more than 8,000 job losses by the end of 2004. Together, these laws (which were repealed in 2018) provided health sector employers, including private LTCFs, with unprecedented rights to layoff unionized staff and hire them back as non-union workers through subcontracted companies. Bill 37 also followed in 2004, which imposed wage roll-backs on more than 43,000 health care workers.3

The results were predictable. As CCPA research has demonstrated, policies and legislation enacted during this period negatively impacted wages and working conditions while also reducing funding and access to services

A lack of successor rights for unionized workers meant that subcontracting (often called “contract-flipping”) was used to make union organizing more difficult. For example, the number of unionized community health workers (three quarters of whom work for home support agencies) declined almost 10% between 2008 and 2011, before increasing by about 2.5% from 2008 levels by 2013.4 The number of unionized care aides declined by over 5% between 2008 and 2011, before increasing again slightly by 2013 (for an overall decline of 3.8% between 2008-2013).5

Reduced funding for, and access to, publicly funded seniors’ care from the early 2000s resulted in the rationing of care. Rationing means that access to publicly funded care is limited to those with more acute needs, leaving seniors with less complex needs without access to supports that might prevent deterioration and keep them from needing institutional care. For example, data show that among those aged 65+ who were assessed by Vancouver Coastal Health for long-term care intake between 2011/12 and 2015/16, the proportion of seniors requiring extensive or more physical assistance rose from 49.6% to 54.6%, and moderate to severe cognitive impairment increased from 52.1% to 57.1%.6 So as staffing levels have declined, the care needs of many residents have increased.

Reduced funding for, and access to, publicly funded seniors’ care from the early 2000s resulted in the rationing of care.

At the same time, more of those publicly funded services are being delivered by for-profit companies,7 often in LTCFs that combine publicly funded and private-pay beds. As a recent report by the BC Seniors Advocate highlighted, prior to 1999, 23% of beds were run by for-profit companies; by 2019 it was 34% of beds.8 Health authorities pay for the services provided by LTCFs through block funding which accounts for the direct care hours that each resident is to receive (currently a provincial guideline of 3.36 hours per resident per day) and the cost of other services and supplies such as meals. There are no restrictions on how operators spend these dollars and health authorities do not perform payroll or expense audits to ensure public funds are actually spent on direct care. 

Shockingly, the Seniors Advocate’s report found that:

  • Most direct care (67%) is delivered by care aides, the lowest paid care workers. Health authorities calculate the costs of care on the basis of the master collective agreement, which covers unionized direct care workers. Yet, LTCFs and their sub-contracted companies are not required to pay the rates set out in that agreement. The report states that: “In 2017/18, the industry standard base wage rate for a care aide was $23.48/hour. Some care aides were paid as much as 28% less based on the lowest confirmed wage rate of $16.85/hour, which was found in a for-profit care home”. In other words, care companies make profits by underpaying the workers who provide the majority of direct care despite receiving funding based on the assumption they pay union rates contained in the master collective agreement (industry standard).9
  • Operators are not monitored to ensure that they are providing the number of care hours they are being paid for. Without adequate oversight and reporting, companies thus also make profits by understaffing, which impacts the amount and quality of care that residents receive. 
  • Many LTCFs have a combination of publicly-subsidized and private-pay beds. But the co-located private-pay beds are not consistently included in these facilities’ calculation of delivered care hours. As a result, publicly funded care hours may be used to cross-subsidize the care of private-pay residents who pay out-of-pocket, allowing greater profit-taking from private-pay beds and exacerbating staffing shortages as companies use the same staff to cover both publicly funded and private-pay beds (when private-pay beds should have their own staff complement). 
  • While receiving, on average, the same level of public funding, contracted non-profit LTCF operators spend $10,000 or 24% more per year on care for each resident compared to for-profit providers. In just a one-year period (2017/18), for-profit LTCFs failed to deliver 207,000 funded direct care hours, whereas non-profit LTCFs exceeded direct care hour targets by delivering an additional 80,000 hours of direct care beyond what they were publicly funded to deliver.10

These are significant issues in their own right. Care workers are being underpaid relative to the funding that operators receive. But even if we are unconcerned about fairness, low staffing levels are not conducive to quality care. 

Data from the 2013 Statistics Canada Long-Term Care Facilities Survey showed that although for-profit companies outnumbered public and non-profit providers in the survey, they reported spending less on care aides, licensed practical nurses and other health care staff, and less on dietary, housekeeping and maintenance workers.11 Low staffing places both workers and residents under increased stress and reduces the time carers have with residents. And as the BC Seniors Advocate report points out, low pay and understaffing are a vicious circle—they make it difficult to recruit and retain staff, while operators that employ staff directly (no subcontracting) and pay higher wages do not experience the same kinds of shortages.

Care companies make profits by underpaying the workers who provide the majority of direct care despite receiving funding based on the assumption they pay union rates contained in the master collective agreement (industry standard).

We need only look to the four LTCFs that are part of the Retirement Concepts chain (owned by the Chinese company Dajia Insurance, the successor company of Anbang Insurance Group) to see these dynamics at work. Regional health authorities in recent months have taken over management of these four Retirement Concepts facilities and brought in their own nursing staff due to persistent shortages that were compromising resident care and safety.12

A key reason for staffing challenges is that many LTCF staff, namely care aides, must work more than one job in order to make ends meet. While the provincial government committed to review contracting and sub-contracting in the sector after the crisis, the newly-announced single-site order, increasing wages to the industry standard, and guaranteed full-time hours at one site are as-yet only guaranteed for six months.

Risks associated with for-profit ownership and financialized corporate chains

A large body of academic research demonstrates that staffing levels and staffing mix are key predictors of resident health outcomes and care quality, and that care provided in for-profit long-term care facilities is generally inferior to that provided by public and non-profit-owned facilities. High staff turnover, which is linked to lower wages and the heavy workloads demanded by inadequate staffing levels, is associated with lower-quality care in large for-profit facilities. 

The BC government’s longstanding reliance on attracting private capital into the seniors’ care sector has benefited corporate chains with the ability to finance and build new facilities. Between 2009/10 to 2017/18, BC only invested $37.4 million in LTCF infrastructure, and $3.3 million in assisted living infrastructure, representing on average 0.5% and 0.04%, respectively, of total health sector capital spending over this period.13 In other words, not much at all. 

By 2016, corporate chains controlled 34% of all publicly subsidized and private-pay long-term care and assisted living spaces in BC while 66% of units were owned by either non-profit agencies or health authorities.14

High staff turnover, which is linked to lower wages and the heavy workloads demanded by inadequate staffing levels, is associated with lower-quality care in large for-profit facilities. 

Another way to look at the significance of corporate chains is by looking at the top 10 largest corporate chains by market share—i.e., the share of the total publicly subsidized and private-pay units in BC controlled by the top 10 chains. Over one-quarter (27%) of all assisted living and long-term care units in BC were controlled by the top 10 corporate chains collectively (as of 2016). Among contracted operators, Retirement Concepts (owned by Anbang/Dajia Insurance) controls the greatest share of assisted living and long-term care units in BC. It has 2,158 units or 7.8% market share of publicly subsidized and private-pay units in BC—more than double the number of units held by the second-largest chain.

Corporate chains pose risks to quality of care. While the growth of chains has received less attention in the health services research in Canada, a prominent US study found that “the top 10 for-profit chains received 36 per cent higher deficiencies and 41 per cent higher serious deficiencies than government facilities, [with] [o]ther for-profit facilities also [having] lower staffing and higher deficiencies than government facilities.” Studies show that staffing levels—a key predictor of care quality—were already falling before the takeover by private equity investors. Another US study found that there were no significant changes in staffing levels following private equity purchase “in part because staffing levels in large chains were already lower than staffing in other ownership groups.”

Corporate chains pose risks to quality of care.

Corporate chain consolidation in seniors’ care is a reflection of financialization in the health care and housing sectors. Financialization occurs when traditionally non-financial firms become dominated by, or increasingly engage in, practices that have been common to the financial sector. Globally, there is growing interest among investors in seniors’ care because the business is real estate focused. Seniors’ care facilities are increasingly being treated as financial commodities that are attractive to global capital markets.

International experience—and the unfolding Retirement Concepts story in BC—tells us that financialized care chains tend to employ risky business practices. Chains are typically bought and sold frequently using debt-leveraged buyouts, inflating asset sales prices and leaving the chains loaded with ever more debt until the cash flow—dependent on government funding—cannot meet the debt-servicing costs. This situation can result in financial crisis, bankruptcy, and chain failure.15 The United Kingdom’s largest care chain—Southern Cross—collapsed in 2011 as a result of these risky financial practices and successive flips of the real estate assets to different investors. Southern Cross’s collapse created months of uncertainty for 31,000 residents and their families—as well as for 44,000 employees—until other buyers could be lined up. 

Seniors’ care facilities are increasingly being treated as financial commodities that are attractive to global capital markets.

The financialized business model is often structured around short-term real estate flipping where government and taxpayers assume the financial risk of failure.16 The disruption that can result from these business practices undermines the conditions necessary for stable “relational care” in which continuity in staff allows care workers to know their residents and the rest of the staff. The opposite of relational care is high staff turnover and workforce instability, which can have a negative effect on quality. This has been occurring at the four Retirement Concepts facilities that were put under health authority administration.

Rebuilding seniors’ care in BC

The COVID-19 crisis is exposing the long-term impacts of policies aimed at cutting costs and expanding the role of for-profit companies in the seniors’ care sector in BC. Reduced pay and benefits and understaffing are bad for workers; they are also bad for vulnerable older people who depend on those workers to meet their daily needs. The COVID-19 pandemic may be unprecedented in recent times, but its impacts are being felt in LCTFs because of the way seniors’ care has been undervalued, underfunded, and privatized.

Policy can be steered in a different direction, however. 

Over the medium and long-term, the BC government should end its reliance on contracting with for-profit companies and transition exclusively to non-profit and public delivery of seniors’ care. 

The evidence is in: profit-making does not belong in seniors care. The revelation from the Seniors Advocate that contracted for-profit LCTFs failed to deliver funded direct care hours should be reason enough to determine that the government is getting poor value for money by contracting with corporations. Public dollars are flowing into profits, not into frontline care as earmarked.

Moreover, the single-site public health order is largely a response to the erosion of wages and working conditions in long-term care that began in the early 2000s. In mere weeks, the BC government is trying to rectify workforce instabilities brought about over years of labour policy deregulation and business practices intended to drive profits. These policy decisions were championed by care companies and corporate chains. And once the current crisis is over, we simply cannot return to the status quo. 

The COVID-19 pandemic may be unprecedented in recent times, but its impacts are being felt in LCTFs because of the way seniors’ care has been undervalued, underfunded, and privatized.

The BC government needs to move boldly on a capital plan to start building new seniors’ care infrastructure and acquiring for-profit-owned facilities. BC’s longstanding policy approach has allowed corporations and their investors to build up large real estate portfolios on the public dime, while receiving generous public funding that assumes they are paying unionized wages when many in fact are not. 

The BC government said that it will cost about $10 million per month to provide “top-up” funding to increase wages to the unionized industry standard so that no worker loses income as a result of the single-site order. It appears these public dollars will flow to employers that, up to now, have not been paying the unionized industry standard rate. Structuring the wage top-up in this manner raises some concerns. 

The top-up will go to some employers who are already funded to pay the unionized rate. As noted above, the Seniors Advocate found that a significant number of long-term care operators have been funded using a formula that is based on the unionized industry standard rate but have failed to pay their workers commensurately. In practice, the top-up means these operators will be rewarded for over-charging the public. Instead, they should be compelled to pay the unionized wage rate—without additional funding—and to become part of the public sector labour relations structure (as was required of all publicly funded operators before the early 2000s).17

The BC government is trying to rectify workforce instabilities brought about over years of labour policy deregulation and business practices intended to drive profits.

Topping up operators who have underpaid their workers is not a cost-effective strategy now or beyond the current pandemic. But neither is it tenable to suggest that these workers will get a pay cut after the pandemic, or that they should return to cobbling together an income through multiple part-time jobs. All of which reinforces the need to move to consistent public and non-profit ownership and delivery of care. 

In the immediate term, there are a number of steps that the provincial government should take: 

  • First, require much greater transparency, public reporting and accountability in the seniors’ care sector. This should include implementation of the Seniors Advocate’s recommendation that public funding for direct care in contracted LTCFs must be spent on direct care only, and to require standardized reporting in all LTCFs (including public disclosure of audited revenues and expenditures). These recommendations align with a recent CCPA-BC report that looks at the growth of private for-profit seniors care. Over the longer term, moving exclusively to non-profit and public delivery of seniors’ care addresses this problem. Public institutions and non-profits don’t have investors; any excess revenue is reinvested into frontline care.

  • Second, ban sub-contracting. The BC government rightly repealed Bills 29 and 94 in 2018, but subcontracting continues to undermine employment standards that are preconditions for quality care. COVID-19 has made this very clear. The industry-wide labour relations and bargaining model, established in the 1990s, provided standardized wages and working conditions. This structure needs to be put back together and, following the end of special COVID-19 measures, existing operators should be part of the public-sector master collective agreements if they are receiving public funding. This was the case before the early 2000s.
  • Third, in the assisted living sector, seniors in both publicly subsidized and private-pay units need much greater protections regarding tenancies, rents and fees as the incomes of seniors’ and their families may decline significantly during the pandemic. We know from CCPA research and CMHC data that assisted living costs continue to rise faster than the incomes of many low- and middle-income seniors.
  • Fourth, public funds should not be used to bail out over-leveraged corporations in the seniors’ care sector. The impact of COVID-19 on international financial markets will likely have knock-on effects and the provincial government should be prepared for the possible financial collapse of for-profit LTCFs. It should be prepared to take over these facilities and chains. 

When we emerge from this crisis, there should be a public consultation on the kind of seniors’ care system we want in our province and across Canada, drawing on lessons from the pandemic. This should inform a comprehensive planning approach to projecting demand and identifying appropriate transitions for seniors across the continuum of home and community based services. 

When we emerge from this crisis, there should be a public consultation on the kind of seniors’ care system we want in our province and across Canada, drawing on lessons from the pandemic.

This crisis is highlighting how the exclusion of seniors’ care from Canada’s universal Medicare system, and the inconsistencies across and within the provinces, lead to uneven conditions for seniors, their families and workers. This unevenness creates the vulnerabilities that we are seeing now, and the disproportionate impacts on older people in care and those struggling to look after them.

We have the evidence and tools to rebuild seniors’ care. COVID-19 has revealed the urgency of doing so.


Notes

1 In 2016, entirely private-pay assisted living units comprised 42% (3,196 units) of the total assisted living sector (publicly subsidized and private-pay). The vast majority of private-pay units were operated by for-profit companies. See Andrew Longhurst, Assisted Living in BC: Trends in Access, Affordability and Ownership (Vancouver: Canadian Centre for Policy Alternatives, BC Office), p. 23.

2 The first major COVID-19 outbreak in the USA was at the Life Care Center in Kirkland, northeast of Seattle. On March 25th the Washington Post reported that “On Monday, a news release from Centers for Medicare and Medicaid Services, the federal agency that regulates nursing homes, said 147 nursing homes had a resident with coronavirus, and that figure included only nursing homes, not elder care facilities.” 

3 Jane Stinson and others, Pains of Privatization: How Contracting out Hurts Health Support Workers, Their Families, and Health Care (Vancouver: Canadian Centre for Policy Alternatives, BC Office, 2005), p. 12.

4 Health Employers Association of BC (HEABC), Community Health Workers.

5 HEABC, Care Aides

6 Table 5 Functional status measures, HCRS/CCRS, 2011–2012 to 2015–2016, Home Care Reporting System/Continuing Care Reporting System, Canadian Institute for Health Information.

7 See Andrew Longhurst, Privatization and Declining Access to BC Seniors’ Care: An Urgent Call for Policy Change (Vancouver: Canadian Centre for Policy Alternatives, BC Office, 2017), pp. 12-15.

8 Office of the Seniors Advocate, A Billion Reasons to Care (Victoria: Office of the Seniors Advocate, 2020), pp. 1–51 (pp. 9–10). 

9 Office of the Seniors Advocate, p. 28.

10 For her report A Billion Reasons to Care, the Seniors Advocate reviewed contracts, audited financial statements, and expense reports (2017/18) for 174 contracted LTCFs in BC.

11 Table 5.1: Full-Time Equivalents (FTE) Reported by Selected Residential Long-Term Care Facilities, by Provinces and Territories, FY2013, Residential Long-Term Care Financial Data Tables 2013, Canadian Institute of Health Information. Figures for FTE equivalents by sector are for Canada rather than by province.

12 For discussion of the risks associated with Anbang Insurance Group and financialized corporate chains, see Andrew Longhurst, Assisted Living in BC: Trends in Access, Affordability and Ownership (Vancouver: Canadian Centre for Policy Alternatives, BC Office), pp. 34-36.

13 Longhurst, Assisted Living in BC, pp. 17-18.

14 Longhurst, Assisted Living in BC, p. 30.

15 Diane Burns and others, Where Does The Money Go? Financialised Chains and the Crisis in Residential Care (Manchester: University of Manchester Centre for Research on Socio-Cultural Change, 2016).

16 U.S. Government Accountability Office, Nursing Homes: Complexity of Private Investment Purchases Demonstrates Need for CMS to Improve the Usability and Completeness of Ownership Data (Washington: Report to Congressional Requesters, September 2010).

17 The provincial government also recently announced that the BC Care Providers Association, a long-term care industry group — will receive $10 million to administer an infection control program for LTCFs. Public dollars for a government program should be disbursed by government, not by private industry.

About the Authors:

Andrew Longhurst, BA (Hons), MA, is a research associate with the BC Office of the Canadian Centre for Policy Alternatives (CCPA–BC), a researcher and policy analyst with the Health Sciences Association of BC and served as senior advisor to the BC Ministry of Health’s Primary and Community Care Research Initiative. He is also a PhD student in the Department of Geography at Simon Fraser University, researching health care reform in Canada and internationally.

Kendra Strauss is Director of the Labour Studies Program and Associate Professor in the Department of Sociology & Anthropology at Simon Fraser University. She is also an Associate Member of the Department of Geography at SFU.