Big for-profit long-term-care companies paid out more than $170 million to investors through Ontario’s deadly first wave

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In the first nine months of 2020 as the COVID-19 catastrophe unfolded across Ontario, the three largest publicly traded long-term-care operators in the province made huge payouts to investors while taking millions in government funds, data shows.

A Star analysis of the financial statements of Extendicare, Sienna Senior Living and Chartwell Retirement Residences shows that in the first three quarters of 2020 (ending Sept. 30), these for-profit companies collectively paid out nearly $171 million to shareholders at the same time they received $138.5 million through provincial pandemic pay for front-line workers, the Canada Emergency Wage Subsidy (CEWS) program or other pandemic funding.

“I am disgusted,” said Suzanne Zagallai, whose mother Peggy Hannon, 74, contracted COVID-19 at West End Villa, an Ottawa long-term-care home owned by Extendicare where 18 residents have died of the virus. “It’s a definite slap in the face to all the people suffering inside.”

The new financial figures come at a time when record numbers of COVID-19 infections in Ontario are sparking fears that community cases will spill over into nursing homes in ever greater numbers. Critics say long-term-care operators in whose homes hundreds of residents have died of the virus should be using money that would otherwise go to shareholders to improve areas around quality of care, such as staffing levels, wages and training.

During the first three quarters of 2020, all three operators saw disproportionately more deaths among residents than the average for Ontario non-profit or municipal long-term care facilities.

In an emailed statement to the Star, Extendicare stressed that “not one penny of this wage subsidy has been used to fund our dividend payment,” noting the CEWS funds went to ParaMed Inc., its home-care subsidiary, and is “in compliance with policy established by the federal government for eligible recipients.”

Extendicare’s public financial records show that the company paid out dividends totalling $29 million from quarters 1 through 3 this year. The records also show that ParaMed received $82.2 million in federal wage subsidies as of Sept. 30.

The company said it has spent $29.5 million in “COVID defence costs in excess of government funding,” which includes the introduction of a “rapid response team” to assist homes with outbreaks, additional PPE and supports for staff required to isolate, such as meals and hotel stays.

According to provincial data, from the beginning of the pandemic to the end of September, Extendicare owned and managed homes reported 309 resident deaths. This represents 16.5 per cent of all COVID-related resident deaths in long-term-care homes in Ontario (1,869) during this time even though the company’s owned or managed homes have 12.4 per cent of all long-term-care beds in the province.

“A long-term-care home’s age, size and proximity to community spread are the causative factors in a severe outbreak, not who owns the home,” the company said. “We are absolutely determined to provide our residents with the highest quality of care and will continue to pursue every available option to better enable us to protect them from the threat of this virus.”

In Sienna’s case, public financial documents show that during the first three quarters of 2020, the company paid $43.6 million in dividends. Company spokesperson Nadia Daniell-Colarossi stressed no government pandemic funding was used to pay dividends.

“Dividends are similar to interest costs on loans and are paid to shareholders who have provided the capital necessary to invest in the maintenance, upgrading and building of new long-term-care residences,” she said.

She noted the company could maintain its dividends during the current climate largely for two reasons: “Firstly, we have historically taken a conservative approach to dividends. Secondly, we continue to generate revenue from retirement residences, which are paid for privately and comprise half of the company’s model.”

Of the $53.2 million in provincial funding Sienna received, the company says $26 million flowed to front-line workers under Ontario’s pandemic pay program and $27.2 went to the hiring of additional staff and the procurement of PPE, sanitizing and cleaning supplies, infection prevention and control experts and training.

Daniell-Colarossi said COVID-19 has disproportionately impacted older long-term-care homes and those located in Ontario’s hot zones of Toronto, Peel, Ottawa and York.

“The majority of our long-term-care communities in the province are affected by both categories,” she said, adding that approximately 88 per cent of positive cases and 82 per cent of deaths in the company’s residences occurred before government protocols were mandated and implemented early in the pandemic, including universal masking, mass swabbing and limiting work to a single long-term-care site.

“The delay in provincial infection prevention and control protocols and changes to public health protocols during wave 1 influenced the trajectory of the virus within Sienna and the LTC sector more broadly,” Daniell-Colarossi said, adding that older bedroom designs make up close to 25 per cent of Sienna’s long-term-care beds in Ontario.

The 311 resident deaths from COVID-19 at Sienna facilities represents 16.6 per cent of COVID-related resident deaths in long-term-care homes in Ontario during this time even though Sienna has 7.5 per cent of all long-term-care beds in the province.

Chartwell spokesperson Sharon Ranalli said, in an emailed statement to the Star, that over half of the company’s long-term-care homes that experienced COVID-19 outbreaks have not had any fatalities related to the virus.

She noted that two of the company’s homes located in the GTA, which experienced the highest community transmission rates in the province, had older design standards and “faced the extreme heartbreak of prolonged outbreaks and as a result experienced higher rates of fatalities.” (In total, 34 per cent of Ontario’s long-term-care beds are classified as having older design standards, which researchers have linked with worse average outcomes.)

Chartwell operates 23 long-term-care homes in Ontario with a total of 3,309 beds. The company says 70 per cent of its beds are located in the GTA.

From the beginning of the pandemic to Sept. 30, Chartwell owned and managed homes had 96 resident deaths, representing 5.1 per cent of all COVID-related resident deaths in Ontario long-term-care homes during this time even though Chartwell owned or managed homes have 4.2 per cent of all long-term-care beds in the province.

Ranalli noted that long-term care represents less than 10 per cent of Chartwell’s portfolio.

Chartwell’s public financial records show that the company paid out $98.3 million to unitholders in 2020 through Sept. 30. The company says it received more than $3 million from provincial governments across Canada in pandemic pay for front-line workers up to Sept. 30.

Ranalli said the $98.3 million in payments to unitholders comprised a two per cent distribution increase from the year prior, a commitment that was made in Feb. 2020 before the pandemic.

Ranalli said the company appreciates the various programs governments have offered in response to the pandemic, “including the Canada Emergency Wage Subsidy that is designed to support employers in maintaining employment in the face of dramatic declines in revenues which would otherwise normally result in layoffs.”

Dr. Amit Arya, a palliative care physician who works in western GTA long-term-care facilities where dozens of residents have died of COVID-19, questioned why the companies continued to pay shareholders “given that people were suffering and dying en masse on the front lines?”

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“You should have said this year we’re going to go for a loss because of what’s happening and we’re going to pour all that money into hiring staff, infection control, oversight and all of this because we have a humanitarian crisis on our hands,” he said.

“It speaks to a bigger problem with a lack of transparency and accountability in the long-term care sector, especially when it comes to private, for-profit long-term-care homes,” Arya added.

Ranalli said that in Chartwell’s case, the company had to absorb $10 million in costs for pandemic-related expenses including increased staffing levels and protective equipment up to Sept. 30.

“Across our portfolio in Canada, we have maintained or increased staffing levels during the pandemic and provided quality jobs for over 16,000 individuals to support our residents and their families during the pandemic, despite additional costs in all of our residences as well as significantly reduced occupancies and revenues in our residences,” she said.

As the Star initially found in an analysis in May, Ontario’s for-profit long-term-care homes have generally been hit by the virus at about the same rate as any other facilities, but have had more severe outbreaks on average once the virus arrives.

The Star’s analysis shows Chartwell’s homes have on average fared slightly better than a typical for-profit facility; Extendicare’s have seen outcomes in line with the for-profit average; and Sienna’s have fared worse.

Through the end of the third quarter on Sept. 30, Ontario reported an average of 3.4 deaths for every 100 beds in long-term-care homes with a reported COVID-19 outbreak. That rate falls to 2.9 deaths per 100 beds among non-profit homes with an outbreak, and 0.9 deaths per 100 beds in municipal homes.

According to the Star analysis, Chartwell owned or managed homes saw 3.4 deaths per 100 beds in homes with outbreaks; homes owned or operated by Extendicare saw 4.5 deaths per 100 beds; and Sienna’s facilities saw 6.5 deaths per 100 beds.

In total, the three companies own or operate 24 per cent of Ontario’s nearly 80,000 registered long-term-care home beds, but were home to 37.5 per cent of the long-term-care resident deaths through Sept. 30.

Of the 34 Ontario homes that have reported 20 or more deaths through Sept. 30, 27 are for-profit. Of those, Sienna operates six, Extendicare three and Chartwell two. (Extendicare also manages two non-profit homes that reported more than 20 deaths.)

In total, nine of the 10 deadliest outbreaks in Ontario long-term-care homes through Sept. 30 were in for-profit facilities. The three companies maintain that it is not their ownership or business model that determines the severity of outbreaks, but other factors such as location, and the age and design of buildings.

The Star’s analysis is based on the province’s open database of outbreaks in registered long-term-care homes. We sorted the data on reported cases and deaths against public records on each facility’s capacity and ownership — for-profit, non-profit or municipal. From that, we calculated the peak rate of infection and mortality per 100 beds for each type of ownership. It’s the same method the Star used in May to first report that for-profit homes were seeing disproportionately severe outcomes.

Since Ontario’s first wave, the Star and others have confirmed the finding that for-profit homes have generally fared worse than municipal or non-profit homes. In July, research led by Dr. Nathan Stall, a geriatrician at Mount Sinai Hospital, found that worse outcomes are correlated with several factors in how a long-term-care home is run. Broadly, homes built to older design standards that allowed for smaller, multi-bed rooms, shared bathrooms and crowded common spaces have fared worse, as have chain-owned homes — factors that apply whether or not a home is for-profit.

According to a report, also led by Stall, presented this month by Ontario’s COVID-19 Science Advisory Table, the risk factors for COVID-19 outbreaks have remained unchanged in the second wave: The most important risk factors for whether a home will experience an outbreak is the rate of infections in the surrounding community, and the occurrence of staff infections, the research says.

“What we did show was for-profit status was a significant risk factor for larger outbreaks involving more infected residents and for more residents dying of COVID-19 in homes that had outbreaks,” Stall said. “But it’s a little more nuanced than that. If you look at the home’s characteristics, it turns out, that association is largely explained by homes with older design standards that meet or fall below the year 1972 and those homes have more shared rooms, smaller square footage and chain ownership.”

Zagallai, whose mother Peggy Hannon caught COVID-19 at Ottawa’s West End Villa, accused the companies of “lining their own pockets,” saying more money should be put toward paying staff.

“These personal support workers and nurses, they deserve so much more than what they get,” she said.

Zagallai and her mother, who suffers from Alzheimer’s and has recovered from the case of COVID-19 she caught at West End Villa, are the lead plaintiffs in a proposed $16-million class-action lawsuit against the home and its owner, Extendicare. The suit alleges Extendicare failed to protect residents of West End Villa, including Hannon, through inadequate preventive and responsive measures to the pandemic.

“As a result, there was a mass spread of COVID-19 at West End Villa and the Plaintiffs and the Class Members sustained serious and permanent personal injuries and damages, including death,” the statement of claim, filed Sept. 30, alleges. “The resident claimants and deceased victims were left with inadequate care in respect of basic necessities causing the resident claimants and deceased victims to suffer dehydration, malnutrition and other related physical ailments resulting in hospitalization and/or death.”

The suit also alleges that on May 14, Extendicare committed to pay $10.7 million in dividends to its shareholders for the first quarter of 2020, “while only spending approximately $300,000 of the company’s own money on its response to the COVID-19 pandemic.”

Extendicare said it was unable to comment on any active litigation, but would respond to the allegations “through the appropriate legal channels in due course.”

Ed Tubb is an assignment editor and a contributor focused on crime and justice for the Star. He is based in Toronto. Follow him on Twitter: @edtubb