Three years after the first wave of the COVID pandemic ravaged Ontario’s long-term care homes—prompting a damning provincial investigation and multiple lawsuits—the industry is being transformed. But not by government, and not in response to the concerns of residents or their families, but through a series of acquisitions and market manoeuvres that are awaiting approval by the Ministry of Long-Term Care, with little transparency and next to no public input.
In a province whose long-term care stock is 57 percent for-profit—the highest proportion of any province in the country—the recent moves will further consolidate the elder care industry into the hands of a few private companies with some of the worst COVID death rates in the country.
In March 2022, the publicly traded long-term care provider Extendicare announced an agreement to buy competitor Revera’s shares in 18 long-term care homes, and manage the remaining 31 Revera-owned homes. Extendicare also announced that it would partner with Axium Infrastructure Inc., a Montreal-based investment management company that owns 85 percent of the remaining interest, to redevelop the Revera homes in question.
In 2021, The Local reported on rates of COVID death in Extendicare-operated homes. The company’s outsourcing operation, Extendicare Assist, had a COVID death rate 81 percent higher than the industry average. Residents’ families reported that the homes were short-staffed, had high turnover rates, and that residents weren’t being fed, cleaned, or having their healthcare needs attended to adequately. Conditions in the homes didn’t affect Extendicare’s bottom-line, with the company making $1.2 billion in revenue by the end of the most recent financial year. After the Revera deal, Extendicare will own or manage 134 LTC homes in the province, or around one in every five Ontario LTC homes.
The agreement is pending approval by the Ministry of Long-Term Care, and Extendicare investors anticipate approval later this year. Almost all significant transactions in the LTC sector go through this approval process. Companies submit their plans to the Ministry, who reviews the process, its effects, and the broader economic, social, and logistical contexts.
For smaller, individual proposals the Ministry holds consultations with the public during its approval process. If a home wants to expand the number of residents it houses, or if a home with an expiring license is applying for a new one, the Ministry will hold public consultations. It seems, however, that they don’t do the same for financial transactions that will shift the care of thousands of residents like the Extendicare-Revera agreement. None has been announced on their website, despite the deal being proposed a year ago. The process has been described by advocates as opaque and frustrating: the Ministry reveals little detail about their internal discussions or processes around approvals, and rarely denies companies the chance to pursue their plans. When asked whether a public consultation would be held, the Ministry declined to answer the question, instead saying, “Our government introduced the Fixing Long-Term Care Act, 2021, to provide a legislative framework that supports accountability in the long-term care sector. The legislation grants the Ministry of Long-Term Care the authority to carry out licensing due diligence reviews.” Extendicare did not respond to The Local’s request for comment.
“It’s among the most egregious things that I’ve ever seen in my three decades of doing health care advocacy in Ontario,” says Natalie Mehra, executive director of the Ontario Health Coalition. “Clearly, these companies, the big winner companies, the ones that are getting the most licenses, have the most hideous records for non-compliance with the existing standards, and really terrible health and safety for their residents. They are in breach of many of those conditions. So how could they possibly be giving them new licenses and expansions?”
“It’s among the most egregious things that I’ve ever seen in my three decades of doing health care advocacy in Ontario”
The Extendicare/Revera/Axium deal isn’t the only one transforming the industry. Just a month before announcing its Revera deal, Extendicare sold off its retirement living portfolio of more than 1,000 suites in 11 residence communities to long-term care and retirement home company Sienna Senior Living and SABRA healthcare, a real estate investment company, or REIT, focused on healthcare. Extendicare is slated to make $115 million from the transaction. Around the same time, Chartwell Retirement Residences sold off 16 long-term care homes to Axium and AgeCare, an elder care company based in western Canada. Together, the Chartwell/Axium/AgeCare and Extendicare/Revera/Axium deals mean nearly 10,000 LTC beds are changing hands. U.S-based investment firms like Blackstone are also spending hundreds of millions to join the Canadian LTC industry. None of this is led by government-enforced accountability measures following the pandemic—it’s all just business.
“It’s helpful to look at sales and acquisitions of this nature as indicative of the extent to which they treat these care facilities and retirement homes as investments,” says Jackie Brown, an urban planner and researcher specializing in long-term care. “They’re just so heavily focused on building a strong investment strategy. Rather than, say, a nonprofit tied to a particular cultural community or something like that, where their motivation is to provide a specific service for a specific community.”
LTC homes have capped fees, which regulate how much they receive in revenue from residents, but they also have massive financial support from the provincial government for both capital and operations spending. It’s part of what makes them such a valuable asset for investment companies: LTC homes are a decades-long, guaranteed income stream supported by significant government funding at little cost to LTC owners, and on which a massive portion of the province’s aging population is reliant.
LTC homes receive per diems from the government for nursing, programming, and food. The advocacy group Canadians for Tax Fairness estimates $3.8 billion has been diverted from these funds to company own profits in the last decade. A factor especially important to Extendicare’s expansion of its LTC portfolio is that new and redeveloped homes also receive retroactive capital funding from the provincial government to pay back the capital investments made in prior years. Those per diems have more than doubled between 1998 and today, from $10.35 per bed per day for capital costs at the start of the policy, to a maximum of $23.03 per bed per day as of 2019. At the end of the stipend period, which spans around 20-25 years, the LTC company retains the home as their own asset.
“We are underwriting those homes,” says Tamara Daly, director of the York University Center for Aging Research and Education. “The public system is, in effect, helping to pay for the building of these long-term care facilities…For 30 years, we’ll be paying for their buildings, and the cost of care, and we’ll have nothing to show for it on the public side.”
The shift in the eldercare sector, academics and advocates argue, is fuelled in part by this growth in funding, and pivotal changes in the LTC industry. The provincial government is issuing new 30-year licenses to replace the licenses covering 31,000 beds expiring in 2025, and approving the development of tens of thousands more beds in the next decade, to keep up with the province’s rapidly aging population. In order to receive a new license, a LTC home has to be up to date with 2015 LTC home design standards, meaning older homes in poorer condition require additional investment to bring them up to par. The per-diems mean LTC companies get to recoup those expenses; but paired with the complexities of regulation, the up-front costs make it more challenging for non-profit and independently-owned LTC homes to survive in the industry. “It makes sense to me that we’re seeing this kind of consolidation,” Daly says.
The Ford government has issued the majority of its 60,000 new or redeveloped bed licenses to for-profit companies, with only six percent of licenses going to municipal homes, which had the lowest rates of death during the pandemic. Extendicare was awarded the second-highest number of licenses after Revera.
Within the LTC sector, the arguments for private, for-profit ownership have often been that they would reduce public spending, improve efficiency, and inspire innovation through competition and consumer choice. The reality is more complicated. 40,000 people are waiting for a LTC bed in Ontario, as of January of this year, and that figure is expected to rise to 48,000 by the end of the decade. “There’s this captive [market],” says Brown. “This idea that a resident who’s not getting a good quality of care can just exit and move to another home is extremely flawed, obviously, with the overwhelming difficulty of relocating a senior to a new institution, and the bed shortages that we have.”
For LTC home residents and families, the pool of available options is shrinking. Now more than ever before, entering into long-term care means dealing with one of a handful of major corporate owners, all with similarly poor records during the pandemic. As The Local reported in 2021, care within LTC homes is now often outsourced: families think they’re entering their loved ones into mom-and-pop LTC homes, or non-profit homes, only to find out that the homes are managed by Extendicare, or another for-profit.
“We are underwriting those homes… For 30 years, we’ll be paying for their buildings, and the cost of care, and we’ll have nothing to show for it on the public side.”
The pandemic should have been a turning point for long-term care—a wake-up call that the way homes are run doesn’t serve anyone except the people that own them. From the start of the pandemic until last July, more than 5,000 LTC residents died from COVID in Ontario. Countless more have suffered through the inhumane conditions within the homes: understaffing and neglect, poor hygiene and inadequate nutrition, and isolation for hours on end.
In 2021, the province’s new Fixing Long-Term Care Act replaced the Liberal government’s 2007 Long-Term Care Homes Act, claiming to introduce new regulatory guidelines that would improve the state of the industry. According to the Act, “a person is only eligible to be issued a licence for a long-term care home if, in the Director’s opinion…the past conduct relating to the operation of a long-term care home…affords reasonable grounds to believe that the home will be operated in accordance with the law and with honesty and integrity.”
Despite this, there’s no record of the Ministry of Long-Term Care denying licenses to the homes with the worst rates of COVID death during the pandemic.
In October of last year, the Ministry was deliberating a new license for Orchard Villa, a Southbridge-owned, Extendicare-operated LTC home in Pickering, and one of the five Ontario LTC homes that was taken over by the Canadian Armed Forces when conditions at the home reached a breaking point. Natalie Mehra and the Ontario Health Coalition protested the 30-year licensing and expansion of Orchard Villa, as well as other homes, and are now waiting to hear the Ministry’s decision. But the province has already allocated more than 1,700 beds, both new and redeveloped, to owner Southbridge. If the decision regarding Orchard Villa comes back in the home’s favour, Mehra says, she and her team are ready to fight it.
According to the 2021 Act, the province has a duty to consider the repercussions of a transaction this massive on the landscape of the industry. “The Minister may restrict who may be issued a licence based on what the Minister considers to be in the public interest, having taken into account…the effect that issuing the licence would have on the balance between non-profit and for-profit long-term care homes,” it reads. There’s no indication that this factor is being considered in any of the closed-door approval conversations taking place at the Ministry.
In fact, the Ministry refuses to shed any light on their approval process for a transaction of this nature—who makes the decision, what factors they take into consideration, whether they invite any affected parties to share their insights. These are all the right questions, Daly says. “The fact that neither you nor I know what is happening in terms of these licensing agreements is the problem.”