QUESTION: Is it important to consider how the “profit motive” of private owners and operators may influence the quality and affordability of care services and settings?

ANSWER: Yes. Here is an example commonly used to illustrate this point.

Extendicare Inc. is a private for-profit company based in Markham, Ontario. 1 It operates 440 long-term care facilities throughout North America with capacity for more than 34,000 residents.

Extendicare’s Canadian holdings include 81 long-term care and assisted living facilities. 2 These include 14 long-term care facilities in Alberta providing services to approximately 1200 elderly and disabled residents.

The company’s profit for 2003 soared to $60.7 million - more than triple its $18.8 million profit the previous year. 3 The Company credited the sharp increase, in part, to “the governments of Ontario and Alberta’s improved funding for long-term care services.” This reference to improved funding in Alberta relates to the 40-50% percent hike in resident accommodation fees effective August 1, 2003

While the Alberta government claimed, “the increase will give operators an additional $58 million to improve the living environment for residents,” residents and their families are saying there has been no improvement.4

Many facilities in Alberta, including 12 Extendicare facilities, were built in the 1960’s and require major renovations to bring them in line with current structural and core design standards. 5 Unlike Ontario, Alberta has no known system that classifies facilities according to the regulated standards applicable at the time of their construction. Nor is there a discernible program in place to encourage operators of substandard facilities to commit to renovation. As a result, unknown numbers of residents in Alberta long-term care facilities are living in rundown over-crowded conditions such as those at an Extendicare facility in Edmonton (click here for photographs).

Resident accommodation fees in Alberta reportedly account for approximately one-third of the estimated $750 million in funding to the province’s long term care industry. The remaining two-thirds are in the form of government subsidy (taxpayer dollars) allocated to health care services.

However, due to insufficient or non-existent information, the Auditor General couldn’t determine how the $750 million was actually being spent. Nor is it clear which of the two recently redefined funding envelopes (accommodation fees paid by residents / health care services paid by regional health authorities) private owners/operators take their profits from. In addition, there is no readily accessible information on the profits earned from each facility.

If private owners and operators of nursing homes or assisted living facilities are funded in part by regional health authorities or the provincial government either for capital or operating expenses or care services, shouldn’t we be able to see where that public money is going and where the profits are coming from?

If you would like to offer your views, please contact us.

1 May 5, 2005 Press Release: Extendicare Inc. Announces Election of Malen Ng to Board of Directors

2 Globe and Mail June 2004: CEO takes hands-on approach

3 Canadian Press, November 2003: Extendicare Q3 profits rise to $13.8M from $7.9M

4 Alberta Government News Release, June 17, 2003

5 Miniguide to Canadian Healthcare Facilities, Canadian Health Association 2000-2001

MORE

Extendicare Board of Directors @ http://www.extendicare.com/governance/trustees.html

Extendicare (Canada) Inc. @ http://www.extendicare.com/governance/trustees.html

Extendicare – Problems Overview @ http://www.uow.edu.au/arts/sts/bmartin/dissent/documents/health/extendicare.html

Extendicare Deferred Taxes Outstanding @ http://ofl.ca/uploads/library/economy/98unfair.pdf

Political Contributions from the Long-Term Care Sector @ http://www.cbc.ca/consumers/market/files/health/nursinghomes/index2.html