Thread by @jackiebrownTO

1. Just finished my master’s thesis on the role of financialization in abysmal #LongTermCare (#LTC) outcomes, where I exposed the web of perverse incentives that led to this mess. Here's what I learned 👇

https://twitter.com/TorontoStar/status/1342973306413182976

2. Long-term care homes have been hit disproportionately hard by the pandemic, suffering widespread outbreaks and far too many deaths. This has devastated residents, families, and care providers

3. In Canada, a lot of discussion has focused on the failures of the for-profit LTC industry, which fared significantly worse than municipal and non-profit homes

4. But not all for-profits are equal. Many of them are actually “financialized”, where LTC facilities are treated more like commodities than care homes. And guess what? The financialized homes did much worse

5. I analyzed COVID-19 mortality rates in Ontario’s LTC homes from January 15-July 14, 2020. As this figure indicates, financialized homes had far and away the highest death rate (1.55 times greater than even other for-profit homes)

6. The detrimental effects of financialization on the Canadian housing market have been described by brilliant folks like @leilanifarha, @Martine_August, and more. Many of the country’s largest rental landlords are private equity firms and real estate investment trusts (REITs)

7. Their mandate is to generate returns for investors, and they’ll do whatever it takes to squeeze out profits: rent hikes, renovictions, etc. But REITs are spreading into other areas of real estate besides housing: retail, farmland, data centres, and LTC

8. In LTC homes, private equity firms and REITs are balancing two entirely incompatible objectives: maximizing shareholder returns and providing quality care to elderly residents

https://twitter.com/NaheedD/status/1342989025704087552

9. I classified five companies as financialized. Of these, three are REITs publicly traded on the TSX and were the focus of the @TorontoStar investigation: Chartwell, Extendicare, and Sienna Senior Living

10. REITs offer investors a liquid, tax-efficient piece of the real estate market without the responsibilities of direct ownership. Shares are easily bought and sold, accelerating the timescale for profit

11. Investors evaluate these corps according to factors like growth, profits, and risk. This means that an LTC company can be directly compared to a chain of hotels or office buildings, for example

12. Southbridge, the fourth company included in my analysis, is owned by a private equity firm. @_AmyHorton’s excellent work on the financialization of care expands on the horrors of private equity buyouts of LTC homes

13. The final company is Revera, which was traded on the TSX until it was purchased by the Public Sector Pension Investment Board in 2006. Pension funds are some of the world’s most powerful institutional investors and Canada’s are particularly massive

14. Prior to COVID-19, Revera was already facing ~85 lawsuits across the country, which allege that inadequate care and outright negligence contributed to premature deaths. Many now call for the pension fund to divest from Revera and transfer ownership to the public sector

15. Think about it this way – it is entirely likely that the retirement savings of some federal civil servants are grown in part by extracting money from the company that houses and cares for their parents, and that may one day house them...

16. Previously most LTC homes in the province were independently owned, often by a single individual or family. However, big chains expanded significantly over the past few decades, helped along by the Mike Harris government’s competitive bidding process in the 1990s

17. This saw two thirds of the 20,000 new LTC beds awarded to for-profit chains, three of which evolved into the financialized companies that now dominate the market (Sienna, Revera, and Extendicare). They were given an early advantage

18. These companies aren’t limited to LTC homes. Many are also in the business of retirement residences, home care services, and management and consulting, which extends their influence

19. In Ontario, residents pay for room and board while the province covers care-related expenses at all homes, regardless of ownership type. Financialized LTC companies rely on this funding, as well as construction subsidies for new development

20. They receive additional public support in the form of mortgage insurance from Canada Mortgage and Housing Corporation, which adds to the socialization of risk and privatization of rewards embedded in the sector

21. Because fees for room and board are set by the province, LTC companies have to generate profits by cutting back on "expenses" like direct care and sanitation: pubmed.ncbi.nlm.nih.gov/27223577/

22. I listened to the quarterly conference calls for Chartwell, Extendicare, and Sienna investors (these are available on their respective websites – I highly recommend tuning in for a “behind-the-scenes” look at these companies)

23. Each call ends with a Q&A period. A full 100% of investor questions on the dozen or so calls I listened to were posed by men, typically representing financial institutions (contrast this with personal support workers, 90% of whom are women)

24. I learned a lot of important financial jargon from these calls – for example, “thank you, gentlemen” and “I’d appreciate if you could add some colour to this”

25. Or “How is the product being received by the market?” where the “product” is a retirement residence and the “market” constitutes aging seniors in search of supportive housing. This was particularly telling of the distance between investors and the provision of care

26. As the pandemic wore on, questions became particularly concerned with securing government funding for added expenses. One investor inquired about the likelihood of legislation to protect the company from legal action for COVID-19 outbreaks and deaths

27. So beyond financialized and independent for-profit homes, what other ownership models are out there?

28. In Ontario, the Homes for the Aged and Rest Homes Act of 1949 formally obligated each municipality to establish an LTC home. This requirement continues to exist today (and can perhaps be viewed as recognition that long-term care is in many ways a public good)

29. There are also many non-profit homes. The disproportionately long wait for beds at non-profit homes that cater to specific ethnic groups indicates that there is a high demand for services tailored to the cultural and linguistic needs of local communities

30. Where do we go from here? Ideally, the province would increase funding and licenses to capable non-profits, as opposed to concentrating public resources in a few financialized LTC chains

31. Legislation requiring homes to provide a minimum number of direct care hours per resident can guarantee a baseline standard of care

32. A successful pension divestment campaign may help to eliminate the specific conflict of interest facing Revera

33. But of course, all of these suggestions are based on the assumption that LTC homes are the best solution for elder care, which is not the case for many

34. There should be increased support for alternative models. These include cooperative ownership, as well as opportunities for “aging in place” like day programs, home care services, and cohousing that allow for more autonomy and sustained community life

35. What I found is that many people in the system are simply “doing their job” – the problem is that their job is to generate financial returns for shareholders and clients far removed from the realities of day-to-day care

36. One last thing - I’m currently raising money for @KensingtonHlth, the local non-profit LTC home in my neighbourhood. Feel free to donate here if you’re able! kensington.akaraisin.com/diyevent/commu…