Funding long-term care

Spending on long-term care in Canada totalled an estimated $8.9 billion and represented nine per cent of total health expenditures in 2000. Governments paid $6.3 billion, or 70 per cent, of this total, down from a 75-per cent contribution in the late 1980s, according to a report by the Canadian Union of Public Employees (CUPE). Individuals and the private sector paid the remainder of costs.

More meaningful than the dollar amounts is how this funding translates into levels of service. “Intuitively, we felt we weren’t receiving enough funding to provide the level of service that was appropriate,” says Karen Sullivan, executive director of the Ontario Long Term Care Association (OLTCA). This hunch led OLTCA to urge the Ontario government to conduct a survey of levels of care in 11 North American and European jurisdictions, says Sullivan.

The study, conducted in 2001 by PriceWaterhouse Coopers, proved her correct: Ontario, by providing 2.04 hours of nursing and personal care per resident per day, ranked last in this respect. Comparable figures for Saskatchewan and Manitoba, the other Canadian provinces in the study, were 3.06 and 2.44 hours respectively. Meanwhile, iNova Scotia, long-term care residents receive an estimated 2.5 hours of nursing and personal care each day. (For more on hours of care, see table on page TK). To help put these numbers in perspective, consider that the Older Woman’s Network estimates 60 per cent of long-term care residents in Ontario are “acute,” requiring at least 3.5 hours of heavy care a day. According to facility operators surveyed in 2002, in addition to insufficient nursing care, funding deficiencies can translate into very basic problems, such as inadequate bathing services and even not enough incontinence supplies.

According to the OLTCA, despite increased funding of $330 million in just over two years (to the end of 2003), much more money is needed in this province. “By our math, we’re still $420 million shy of where we need to be to get those levels of care that are provided in Saskatchewan,” says OLTCA’s Sullivan. The $210 million portion requested in the upcoming provincial budget, she adds, represents an additional $7 per day per resident.

The business of long-term care
But while it’s clear improved government funding would have the most direct and powerful impact on levels of long-term care, there are more subtle variables. Some advocates claim the funding problems—and indeed, deficiencies—can be tied to ownership issues as much as to the levels of funding.

Again, prevailing ownership structures vary across the country. In Ontario, approximately half of the province’s long-term care facilities are run for-profit, owned by either corporations or individuals. The rest are not-for-profit run by either charitable or municipal organizations. In Nova Scotia, nursing homes are owned privately, operated independently and licensed by the Department of Health. In Saskatchewan, the majority of nursing homes are publicly owned and run by the government.

Next page: Does the business model mean poor quality?

With seniors the heaviest users of health care and the number of Canadians older than 65 set to hit all-time highs, the potential for profit in what is essentially a growth industry hasn’t gone unnoticed by big business. Extendicare, one of the largest operators of long-term care facilities in North America, reported a jump of $3 million in third-quarter revenues from Canadian operations in 2003. The company, which opened four nursing homes in Ontario last year, says these new facilities added $6.3 million in total revenue to its bottom line in the third quarter. The OLTCA estimates that, by the end of 2004, there will be 77,000 residents living in about 620 long-term care facilities across the province. Not surprisingly, Extendicare has plans to expand further in that province.

Business model equals poor quality?
Proponents of the not-for-profit model say business-friendly policies set the stage for sub-standard care and make for poor overall quality when applied to the long-term care sector. For example, while all long-term care facilities in Ontario fall under the same Ministry of Health regulations, classification and programs standards and receive the same funding, critics of private ownership say government benchmarks don’t mean a lot to some operators. “Those are just minimum standards, and there are some organizations that worry that improving standards would mean increasing costs,” says Donna Rubin, chief executive officer of the Ontario Association of Non-profit Homes and Services for Seniors (OANHSS).

OANHSS is also critical of implicit funding advantages, including property tax breaks and subsidies for borrowing and construction costs which, it says, serve as indirect sources of extra money to Ontario’s private long-term care facilities. “If you’ve got two homes – one’s for profit and the other’s not for profit – they both receive the same funding. In both cases, there’s not enough money to deliver the care we should be delivering; however, one is looking to take out money and make a profit. The other one is typically topping up,” says Rubin.

In reality, argues OLTCA’s Karen Sullivan, ownership has little to do with the level of care residents receive in most Ontario long-term care facilities. Of the 400 long-term care homes represented by OLTCA, 85 per cent are private operators. “There are no other sources of revenue. Most charitable homes are not Baycrest or Providence or Villa Columbus,” says Sullivan, citing three large, charitable facilities in Toronto known for their impressive fundraising initiatives. “They are small ethnic or religious organizations, and they don’t have huge fundraising dollars, so they get by just like private-sector homes do – on the funding that’s provided from two sources, the government and the residents.”

Topping up government dollars
Administrators at the Yee Hong Centre for Geriatric Care in Markham, Ont., one of the best-known fundraisers in the long-term care industry, know a lot about “topping up.” Since its inception in 1994, the not-for-profit facility has been lauded for its success in serving the Asian community. Indeed, a large part of the centre’s success, says Yee Hong’s executive director Amy Go, is based on the ability of the organization’s charitable foundation to raise money for a wide range of services. “A lot of our dollars from fundraising are spent on [rehab services, medical specialists and palliative care] because those are worse-funded. In fact, for palliative care, we do not receive one single dime from the government,” says Go. She stresses that fundraising efforts are directed at both capital improvements and meeting critical daily needs.
Next page: The approach counts too

As anyone who’s ever visited a nursing home knows, the resources required to run a long-term care facility are daunting. And with limited resources at the centre of the discussion swirling around health-care reform, the debate over ownership in long-term care will no doubt continue to be an important one. But we can be certain there are happy stories and dismal tales coming from nursing homes in both sectors. More important than whether a facility is being operated for-profit or not—especially for friends and relatives whose loved ones benefit from long-term care—is what personnel do with the money at hand.

Exemplary long-term care facilities share more than an ability to raise additional funds: they have in place philosophies that stress their clients’ place in the community as well as integrated approaches that, in the end, may result in cost-efficiencies. At Yee Hong, says executive director Amy Go, community services range from congregate dining and day programs to specialized medical clinics, a rehab centre and a palliative care program—all addressing population growth issues. “This is so critical not just to the clients that we serve but also to the community as a whole,” says Go.

Similarly, Sherbrooke Community Centre in Saskatchewan uses a resident-centred approach, stressing individual needs and a whole-life perspective. The best part is even the most dedicated number crunchers would be pleased by the end result: cost-efficiency seems to be a long-run by-product of this approach. For example, with Yee Hong’s four physicians on call 24 hours a day for palliative care clients, “we save hospitals a huge amount of money.”

The components of long-term care
Provinces and territories are the direct source of funding as well as being the standard-setters and regulators of the long-term care industry. This means Canadians deal with a province-by-province set of formulas when it comes to minimum standards, costs, funding and assessment for subsidies and co-payments. Here’s what you need to know about the costs of long-term care.

For funding purposes, long-term care comprises various cost components. Categories generally include nursing and personal care, programming and support services (which covers everything from therapies and recreational programs to wages for non-nursing and personal care staff), administrative, housekeeping, laundry and maintenance services, equipment and supplies, accommodation and food. Each provincial government uses its own formula for calculating funding.

In Ontario, the government funds each long-term care facility according to the number of residents and the levels of care required by its residents, the so-called “case-mix index.” Meanwhile, the Saskatchewan government funds each of 12 provincial health regions for continuing care (along with funding envelopes for acute care and home care); regional health authorities are charged with allocating this money to the long-term care facilities within their jurisdictions. In Nova Scotia, nursing homes submit their operating and capital budgets to the government and are assigned one or more per diem rates. Though level of care is a factor in the allocation of funds, critics say the assessment of care levels is largely subjective, and the flat rate received by most institutions may not reflect the level of care required by some residents. 

What the client pays
What long-term care residents are expected to pay for care varies also from province to province. Ontario residents, for example, are responsible for accommodation costs while the government picks up health-care costs. The province sets the accommodation fee, and a resident may be eligible for a subsidy if he or she falls into the “low-income” category. Low-income seniors generally receive little more income above Old Age Security benefits and the Guaranteed Income Supplement.

The Ontario Long Term Care Association estimates residents pay roughly 35 per cent of total costs on average, with government subsidies contributing significantly to the final bill for roughly 52 per cent of residents, thanks to the income test. In Saskatchewan, the province covers a portion of long-term care with clients paying for an income-related supplement; the amount of this supplement is based on the previous year’s income. On average, this top-up from residents accounts for approximately 30 per cent of the total cost of care, by government estimates. Meanwhile, long-term care residents in Nova Scotia are responsible for the costs of both accommodation and hands-on care, with the government helping “those who need the financial assistance the most.” Here, public funds covered an estimated 61 per cent of overall nursing home budgets in 1999 while resident contributions made up the remaining 39 per cent. Notably, along with New Brunswick and Prince Edward Island, Nova Scotia also has some of toughest criteria when it comes to eligibility for assistance, taking most assets as well as income into account.

Nova Scotia’s government acknowledges its residents shoulder more responsibility for long-term care costs than do residents of other provinces, especially those “west of New Brunswick,” but says the additional $30 million or more needed to copy better-off jurisdictions is simply not available. Regulators say they’re working toward paying total health-care costs of nursing home residents by 2007; P.E.I. also is reviewing its policy.

with files from Peter Muggeridge