Disparities found between non-profit and for-profit long-term care operators in BC

By Fran Yanor

Local Journalism Initiative Reporter


VICTORIA, BC –– Overall, for-profit long-term-care operators spend less money on their residents, pay lower wages to their employees, and reap higher profits than non-profit long-term providers, the BC Seniors Advocate revealed recently.

“There’s a big difference between the for-profit and the not-for-profit sector,” said Seniors Advocate Isobel Mackenzie last week in an telephone interview. “And we need to ask a lot of questions about why that is.” A Billion Reasons to Care, released Feb. 4, does just that.

A review of the 2017/18 financials of province’s contracted long term care operators, which collectively receive $1.3 billion in taxpayer funds to serve 27,000 seniors, revealed for-profit operators typically under-pay their workers despite being funded at industry standard wage levels. The review found, for instance, some health care aides were paid a little as $16.85 an hour while being funded at a rate of $23.48 an hour.

Funding for direct care hours is dispensed to each operator based on the number of estimated hours it will deliver to each resident. If an operator hires someone for less than the industry standard wage, the operator can pocket the difference. If an employee is paid more, the operator must absorb the extra cost. Mackenzie is concerned that gives operators incentive to pay the lowest wage possible.

Hiring permanent employees instead of contracted workers provides continuity and a sense of community. Long-term care home resident Patricia Lawson with her friend and companion care aide Lena Thompson. //LENA THOMPSON

“We effectively give a block of funding over to operators and we say, ‘You spend this money the way you want to spend it,’” she said. They are held accountable to deliver a particular number of care hours, but the system of declaring how many hours of direct care they’ve actually delivered is self-reported. Nor do the operators have to report how the direct care money was ultimately spent. “We don’t have a good system for making sure the operators are delivering those care hours that were funded.”

In Northern Health, 88 per cent of long term care beds are provided through the health authority itself, versus 11 per cent for-profit, and one per cent not-for-profit operators. In the Interior Health authority region, 45 per cent of long-term-care beds are run by the health authority, 42 per cent by for-profit providers and 13 per cent by non-profit operators.

Within the geographic areas of McBride, Prince George, Clearwater and Kamloops, eight long term care facilities are run by the health authorities and seven are operated by for-profit companies. Providers with fewer than 10 beds are not listed on health authority or Seniors Advocate databases.

The provincial care standard is 3.36 hours per person per day, which the provincial government committed to funding following a previous report by the Seniors Advocate that found many issues of poor care quality could be corrected with higher levels of staffing.

Provincially, for-profit operators failed to deliver 207,000 hours of direct care they were paid to deliver, whereas, non-profit providers over-delivered 80,000 hours beyond what they were funded.

“Funding them is only half the equation,” she says. “The care’s not going to improve if we fund more hours but the operator doesn’t deliver them.” The report recommends a verification process be implemented to third-party authenticate the hours of care claimed as delivered, are actually delivered.

According to data from the Seniors Advocate, nearly half of facilities in Prince George, Kamloops, Clearwater and McBride are funded slightly less than the 3.36 hours per resident per day, and the rest are funded at exactly 3.36 hours, or higher. Delivered care hours are not listed. The mix of complex nursing care, dementia-centred care, assisted living, respite care and palliative care offered at different facilities makes it difficult to understand the funding differences without further investigation.

Another recommendation in the report is that financial statements and expense reports of each operator be made public.

Overall, the report found for-profit homes spent $10,000 less than non-profits on each resident in their care, while at the same time, claiming higher expenses in areas such as management fees, head office allocation, and mortgage and building costs. As a group, the for-profit operators made 12 times more profit, compared to the not-for-profit operators. Seventeen of the 18 care providers that made more than $1 million in annual profit were private operators.

“What is really the big driver of the difference (in profit margins), despite the fact they’re all funded to pay the industry standard wage, most (for-profit operators) don’t pay the industry-standard wage,” says Mackenzie. While shorting employee wages may improve the bottom line, it worsens the complaint of many operators about a lack of qualified candidates.

In markets already experiencing staff shortages, scrimping on wages doesn’t help. “Why are you not able to attract people? What if you paid higher wages?” says Mackenzie. “To turn around and say, ‘It wouldn’t matter how much we paid, we couldn’t get anybody,’ I think belies common sense.”

Mackenzie is quick to say that shortages in rural areas and Northern communities have additional pressures beyond wage rates. “In the rural areas… money, in and of itself, isn’t necessarily going to solve it,” she says.

Competing against high wages of the resource companies is beyond the budget of many small businesses, included health care providers. “Even in Northern Health where they pay the industry standard, there are pockets where it is very difficult to get the care aides. I’ve been up in the north and met with them and that is a big problem.”

But competition with resource companies is not the problem in urban areas. “That’s not what’s happening in Kamloops, that’s not what’s happening in Kelowna. It’s not really what’s happening in Prince George.”

Human resources shortages, particularly those related to ‘semi-skilled work’ such as care aides who require a six-months training course to do the job, should be more solvable, says Mackenzie.

Northern Health is currently recruiting for several care aides, and has been working to drum up interest from local governments and community groups, among others, to financially support candidates to attend care aide certification training in Thompson Rivers University.

“Lots of people would take a (27-week) certificate program if it was going to result in them getting a fulltime job for $45,000 a year, plus a pension plan, plus holidays, plus benefits,” says Mackenzie. “And the operators are being funded to do that. But they’re choosing, some of them, not to offer those wages and benefits. And then they’re saying they can’t attract anybody.”

Still, Mackenzie stresses, the for-profit operators aren’t doing anything wrong and are simply following the very broad guidelines about spending the money given them. “I think everybody has to be reasonable here. You don’t really know a problem until it’s identified. It’s not like there’s been other reports about this for years that everybody’s ignored. This is the first time really.”

While the Seniors Advocate mandate falls short of being able to direct changes to government, her reports do carry weight and have caused improvements. “My job is to point out the issues and recommend how they can be addressed,” says Seniors Advocate Isobel Mackenzie. “I don’t have the power to make them be implemented, that’s up to the provincial government and health authorities.”

Health Minister Dix did not respond to repeated requests for an interview.

Contracting with for-profit companies can work if more robust oversight and monitoring is put in place, says the Advocate. A key recommendation of the report is to change the funding terms so that all direct care funding must be spent on direct care, or returned. “We need to have a trust, but verified relationship with our contractors,” she says. “Right now we just trust them. And there’s nothing wrong with that, but we need to verify them, and we’re not doing that.”

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