Seniors Advocate’s report makes 5 recommendations for contracted long-term care sector

Isobel Mackenzie

B.C.’S Seniors Advocate Isobel Mackenzie on Tuesday released her latest report titled A Billion Reasons to Care. The report is the first provincial review of the $1.4 billion-dollar contracted long-term care sector in British Columbia. The review examined industry contracts, annual audited financial statements and detailed reporting on revenue and expenditures for the years 2016/17 and 2017/18.

“Contracted long-term care homes costs taxpayers almost $1.3 billion a year, and it is important to examine the levels of accountability, monitoring, and financial oversight in one of the largest contracted sectors within government. The public needs to know whether contracted long-term care homes are meeting the needs of both residents and taxpayers” said Mackenzie.

The review found:

• Financial reporting systems were inconsistent between health authorities and they lacked openness and transparency

• There was insufficient detail for significant expenditures related to management fees, head office allocation and some administrative costs

• The method to report direct care hours was based on self-reported unaudited expense reports prepared by the care home operators with no ability to verify the reported worked hours

• Less than half of care home operators are required to make their audited financial statements available to the public and no care homes publicly report their expense statements

Overall the contracted long-term care sector:

• Generated $1.4 billion in revenue of which $1.3 billion came from public funding

• Spent 54% of revenue for direct care staff, the single largest expenditure

• Spent 15% of revenue on building costs

• Generated a net profit of $37 million

The review found that expenditures and profits were not evenly distributed between care homes and there was a distinct difference based on type of ownership:

• Care homes in the not-for profit sector spent 59% of revenues on direct care versus 49% in the for-profit sector

• Not-for-profit care homes spent 9% of revenue on building expenses versus 20% in the for-profit sector

• For-profit care homes generated 12 times the amount of profit generated in the not-for-profit sector, $34.4 million versus $2.8 million

The report found that while receiving, on average, the same level of public funding:

• Not-for-profit care homes spend $10,000 or 24% more per year on care for each resident

• For-profit care homes failed to deliver 207,000 funded direct care hours

• Not-for-profit care homes exceeded direct care hour targets by delivering an additional 80,000 hours of direct care beyond what they were publicly funded to deliver

The review found that for-profit care homes have lower costs than not-for-profit care homes for each worked hour of direct care across all direct care classifications and care aide wages in for-profit care homes can be paid as much as 28% or $6.63 less per hour than the industry standard.

“There is a pattern of for-profit operators paying lower wages, the degree to which this is impacting their ability to recruit and retain staff is unclear,” said Mackenzie.

The review also found problems with building costs, particularly capital building costs that are publicly funded through payments to the operator.

“We fund over $200 million a year for building costs across the sector but we do not attempt to determine if the taxpayer is receiving good value for money and paying fair market rates,” said Mackenzie.

The review found a lack of detail for how operators engage with related businesses as there was no requirement for them to declare if they have a financial interest in a company they contract with to supply goods or services to their publicly funded care home. There was no requirement for operators to declare if they were receiving executive compensation in addition to reported profits.

The report produced five recommendations.

1. Funding for direct care must be spent on direct care:

We must remove the financial incentive for operators to do anything other than provide as many care hours as possible with the public money they receive to deliver direct care. If an operator can find staff who will work for lower wages than their funded rate, they should use their surplus funds to provide more hours of care or return the funding. Anything short of this will not provide operators with the incentives we need in today’s labour market to ensure residents have consistent and sufficient care staff to meet their needs.

2. Monitoring for compliance with funded care hours must be more accurate:

We need tighter standardized reporting for direct care hours. All beds need to be counted at 100% occupancy and we need to verify self-reported worked hours. Consideration needs to be given to regulation changes that will empower licensing to monitor staffing levels similar to the current regulatory and licensing practices in licensed day care.

3. Define profit:

There are a number reported expenses that may or may not be fair and appropriate. There needs to be a decision about how to treat building capital along with management fees, head office allocations, administrative expenses, and subcontracts with related parties. The decisions made need to be uniformly applied to all care homes in the province and need to transparently demonstrate value for money to the taxpayer.

4. Standardize reporting for all care homes throughout B.C.:

We need to be collecting the same information, using the same calculations and the same measurements, for all care homes regardless of health authority and we should report this at the provincial level.

5. Revenues and expenditures for publicly funded care homes should be available to the public:

The public is entitled to know how their money is spent, in detail, and residents and families are entitled to know how many care hours are delivered by their care home.

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