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One of the more interesting things about long-term care as a business in Ontario is that is effectively isolated from a lot of the market forces that you might expect would drive up standards or improve care. https://www.thestar.com/business/2021/01/26/the-problem-with-profits-as-ontarios-long-term-care-homes-stagger-under-a-covid-death-toll-of-more-than-3000-some-say-its-time-to-shut-down-for-profit-homes-for-good.html?cq_ck=1611630358413&utm_source=Twitter&utm_medium=SocialMedia&utm_campaign=Business&utm_content=forprofitltc
Before the pandemic, there were about 77,000 long-term care beds in Ontario, virtually all of them occupied, and more than 30,000 people waiting to get a room.
That's a big part of the pitch LTC companies make to investors: if we have a bed, it will always be full. Our cash flow is effectively government guaranteed. What that means is that there's no market incentive to compete for residents on quality.
What I didn't know, going in, was that the Ontario government is backstopping that cash flow even now when for this first time in memory a lot of LTC beds are sitting empty.
At the end of last year, 63,000 LTC beds were occupied in the province, according to the ministry, leaving about 14,000 spaces open. But the government agreed to pay out all LTC operators as if they'd 100% full for the entire year, including topping up their resident co-pays.
There were some undeniably good reasons to do that. They suspended new entries into ward-style rooms, for one thing, and ordered homes to make space for quarantining.
But it also means that the worst performing homes, the homes with the highest death rates, are still getting paid, with public money, as if all those people were still alive.
