by Terrance Hunsley
The Canadian Centre for Policy Alternatives has recently published a report entitled Assisted Living In British Columbia, by researcher Andrew Longhurst. It paints a sobering picture of the approach adopted several years ago by the provincial government to finance this kind of care. Assisted living is often considered a kind of interim phase for older people, between living independently in their homes, and being in a nursing or long term care home where medical services and ongoing personal care are required.
Seniors in assisted living normally have an independent apartment, but are able to take some or all of their meals in a common dining room. Beside two meals a day, they may receive support services such as cleaning and basic personal care assistance Other services such as outings and transportation are optional. Since the services are less intense and less costly than long term care/ nursing homes, they are encouraged by governments.
Problem is they’re expensive; lots of people need them; and governments want to keep public expenditures as low as possible.
So the provincial government devised an approach in the early 2000’s that encouraged public-private partnerships. In essence, private businesses were offered long term contracts to build the facilities and provide services to people who were being subsidized. The service fees paid by the government (often called per diems) were enough to permit the business to acquire properties, build the facilities, prepare them for the services, maintain them, and provide ongoing services.
The advantage to politicians was that they could announce new facilities and services without borrowing the capital to build them. The fact that they were undertaking long term obligations that were even more costly did not seem to be evident in public accounting. They were attracting “private investment” but only by paying for it over time and not owning the property.
The businesses were able to make a healthy profit. The report quotes financial services giant UBS, indicating that profits could be as high as 30% or more on assisted living businesses in BC.
The consequence, according to the research, was that the BC taxpayer paid, through the per diems, for the property at an interest rate that was higher than the BC government would have paid had it borrowed the money. Profits were also built into the per diems. And the business got to own the land and to reap the benefits of inflation of real estate prices over the years. Moreover, as some companies became major service providers, they were able to push the government to increase per diems by threatening closure.
Pointing out that the largest private provider of assisted living and longterm care in BC is now a company owned indirectly by the government of China, the author turns to a discussion of the “financialization” of seniors care. He expresses the concern that large corporations may be able to separate ownership of the property from the service provider, and treat the property as a tradable commodity, while simultaneously becoming able to demand higher fees.
Undoubtedly, the large per diem costs became a factor in subsequent decision making on the expansion of subsidized units. The report points out that the availability of subsidized assisted living facilities, given the growth of over-75 year olds in the population, has fallen over the 2008-2017 period, from 14.7 units per 1000 seniors 75+, to 12.2.
On the other hand, the companies who were subsidized into the business, are now expanding assisted living facilities for higher income people. A median income older couple in BC would have to pay 58% of their income for a one bedroom apartment with just the basic services in non-subsidized assistive living.
First, that full disclosure and transparency of costs, obligations and ownership should apply to all assisted living and long term care.
Second, that the BC government should develop a capital and operating budget directed at nonprofit organizations and health authorities “as part of a home and community care capital and operating funding plan.”
The report can be accessed at https://www.policyalternatives.ca/sites/default/files/uploads/publications/BC%20Office/2020/02/ccpa-bc_AssistedLivingInBC_full_web.pdf
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