Time to End Profit-Making in Seniors' Care (Excerpts)
- Canadian Centre for Policy Alternatives -
Excerpts from the report by Andrew Longhurst and Kendra
Strauss writing for 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.
[...]
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. In our province (BC) 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.... 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 (LTCFs) 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.
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.
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).
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%. 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, 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. 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).
- 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.
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. 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.
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.
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. 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.
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 U.S. 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 U.S. 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 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.
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.
The financialized business model is often structured around
short-term real estate flipping where government and taxpayers
assume the financial risk of failure. 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 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).
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.
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.
Note
1. 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.
This article was published in
Volume 50 Number 19 - May 30, 2020
Article Link:
Time to End Profit-Making in Seniors' Care (Excerpts) - Canadian Centre for Policy Alternatives
Website: www.cpcml.ca
Email: editor@cpcml.ca
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