Good afternoon. Thank you so much for inviting me to speak before the committee today.
My name is Jackie Brown. I am a researcher with a master's degree in urban planning from York University. I have spent the last several years studying financialization, with a particular focus on seniors housing and long-term care homes.
The COVID-19 pandemic exposed deep systemic issues in long-term care. Significant change is needed, and I would argue that mitigating financialization is a key avenue of reform. Long-term care is positioned at the intersection of health care and housing, serving one of Canada's most vulnerable populations. It is thus a critical locus of financialization and poses a distinct set of risks and challenges.
I take the financialization of long-term care to refer to long-term care homes that are owned by investment vehicles such as publicly traded companies, private equity firms and pension funds, and that are treated as an asset class to maximize profits for investors.
The rise of financialized long-term care has been facilitated by a broader trend towards privatization over the last several decades. As of 2020, approximately 22% of long-term care beds in Canada were owned by financialized companies. In Ontario, the percentage of financialized beds is as high as 32%. For retirement homes, the proportion of financialized beds is even more significant.
The interests of investors are uniquely at odds with the provision of quality care and decent work in long-term care homes. In particular, financialized companies are heavily reliant on public subsidies for both day-to-day care and new home construction, yet they divert as much as they can into profits to pay their shareholders and investors. This occurs at the expense of resident and staff well-being.
A recent report showed that between 2010 and 2021, publicly traded companies Chartwell, Extendicare and Sienna Senior Living paid out a combined $2.3 billion to their shareholders. Dividend totals reached record highs in the first two years of the pandemic, even as the aforementioned companies received millions of dollars in emergency government aid. Meanwhile, several of these companies had the worst outcomes for residents.
Of the five long-term care providers in Ontario with the highest mortality rates in the first nine months of the pandemic, four were financialized. I have heard executives of these companies maintain that these dividends were paid out of resident accommodation copayment fees and revenue from other business segments. However, beyond the fact that additional government support presumably enabled companies to circumvent a drop in dividends, the funnelling of copayment fees to shareholders points to a fundamental distinction between financialized companies and other long-term care providers.
Municipal and non-profit providers reinvest all profits in their homes, and in fact often supplement government subsidies with other funding sources to raise the standard of care. The evidence shows that seniors themselves have a clear preference for non-profit homes where available. However, massive wait-lists mean that financialized companies are not forced to compete on quality of care.
It is important to examine the ways in which government policies and programs privilege financialized companies. For example, subsidies for the construction of new long-term care homes in Ontario are typically paid out retroactively over a period of 25 years after a home is built. This poses much more of a barrier to small non-profit providers, as financialized companies tend to have greater access to capital and can leverage existing real estate assets to secure financing with favourable terms.
Financialized companies are premised on expansion. Even as the pandemic tore through long-term care homes in 2020, investors and analysts were asking executives how they could still ensure annual growth that year. As these companies grow by acquiring and developing more homes, they come to dominate the sector even further.
I would like to highlight several opportunities for addressing this pressing issue.
First, seniors long-term care homes must be provincially licensed. Provinces are in a position to restrict the proportion of licences awarded to financialized companies. Saskatchewan has already made strides in this direction. After devastating COVID outbreaks at Extendicare's long-term care homes, including one in which 42 residents died, Saskatchewan took over all five of the company's homes in the province.
Second, there is a need for greater capacity among public and non-profit providers to make up for a reduction in financialized homes. There may be opportunities for provinces to provide planning, development and financial support so that non-profits can focus on delivering quality care in their communities.
Third, a spectrum of housing options and adequate home care services should be available to better enable seniors to age in place. This is an important area of intersection between elder care and the financialization of housing more broadly, as providing alternatives to long-term care require accessible, affordable and secure housing.
While the provision of long-term care generally falls to individual provinces and territories, the federal government can play a role, through funding agreements and financial support that are conditional on non-profit care. The federal government should also take steps to bring Revera, currently owned by the Public Sector Pension Investment Board and one of Canada's largest long-term care chains, under public ownership.
The consequences of financialization are particularly dire in the context of long-term care homes that serve some of our vulnerable seniors. We must do everything in our power to guarantee them the highest quality of care.
Thank you for your time.