Has it ever crossed your mind that the residential long-term care (LTC) industrial complex of death is fueling the Canadian housing crisis?
Well, it is.
I’ve often written about Extendicare, the publicly traded for profit health and residential care firm, and it’s never good news.
Turns out Extendicare is a major shareholder of Real Estate Investment Trusts (REITs).
REITs allow corporations to invest in real estate without needing to manage a property whether its residential, commercial or even healthcare buildings. Investors receive the rental income as a dividend.
Most REITs are publicly traded like stocks, yet the federal government helps underwrite these mortgages.
According to Megan Linton, PhD Candidate and Policy Lead at Disability Justice Network of Ontario, “Extendicare publicly trades under EXE REIT (and its debts under EXE.db.c), as it provides “beds”, and many are expected to pay some rendition of rent. The way in which this fuels the housing shortage is that there are substantive public funds going to create the long-term care homes, and as such shareholders are profiting from public contracts.”
Repayment to shareholders plays a significant role in the REIT system because shareholders on Extendicares’ board are also part of the wider REIT system.
“Samir Manji is the CEO of the Sandpiper Group, a private equity group geared towards real estate with connections with numerous REITs, and President, Chief Executive Officer & Trustee at Artis Real Estate Investment Trust, which operates numerous residential REITs globally. Al Mawani (has been CEO and/or board member of) Slate Office Real Estate Investment Trust, Boardwalk Real Estate Investment Trust, Calloway Real Estate Investment Trust, Amica Mature Lifestyles Inc., and IPC US Real Estate Investment Trust,” Linton told rabble.ca by email.
REITs own over 20 per cent of the private rental stock in Canada. From 2011 to 2016, a total of 320,000 rental units became unaffordable to tenants with incomes under $30,000 annually.
REITs and other financial models incentivize taking affordable units off of the market. That’s part of the reason affordable rental units continue to be lost at a rate 15 times faster than new affordable units are being created.
Government tax subsidies and mortgage guarantees are rewarding bad business behaviour that drives up the cost of housing. Instead, that money could be better spent building much needed deeply affordable housing.
Studies reviewed by the Association of Community Organizations for Reform Now (ACORN) indicate that if seven of the largest residential REITs had been taxed similar to non-REIT Canadian corporations since 2010, that would have generated an additional $1.2 billion in taxes to fund affordable housing, healthcare and provide other social benefits
The exemption from corporate income tax is contingent upon the REIT adhering to stringent requirements. For instance, a REIT must invest at least 75 per cent of its total assets in real estate, and its income must primarily come from real estate sources such as rent or mortgage interest.
At least 90 per cent of its taxable income must be distributed to shareholders in the form of dividends. That allows REITs to avoid paying corporate tax at the company level.
Extendicare generated $1.3 billion in revenue in 2023.
ParaMed is Ontario’s, and Canada’s, largest home care provider. Owned by Extendicare, ParaMed makes up almost half of Extendicare’s operations.
In 2023, ParaMed provided 9.9 million hours of home care with fully 94 per cent of those hours being delivered in Ontario. ParaMed generated $469 million in revenue in 2023.
Researchers for the Disability Justice Network of Ontario (DJNO) found that ParaMed provided inconsistent care and had high personal support worker (PSW) turnover. While Extendicare blames staffing shortages, ParaMed has recently been accused by care workers and care recipients of booking one worker for two appointments.
ParaMed is paid for the missed appointment but that leaves care recipients with minimal to no care forcing many into LTC rather than aging in place.
The Ontario government neither regulates nor addresses these issues. In fact, Sue VanderBent, CEO of Home Care Ontario, has stated that home care providers, including ParaMed, “are unable to effectively serve five out of every ten people who require nursing care.”
Peter Groves, a member of Hamilton Health Coalition, has decades of experience with home care.
Groves’ wife, Linda, was born with cerebral palsy that has been compounded by scoliosis and severe osteoporosis. The couple live in a wheelchair accessible townhouse.
Linda is now fully dependent on Groves for help with her daily activities. The couple also rely on the assistance of two PSWs and an electric patient lift to get Linda out of bed and into her chair in the morning and back into bed at night.
For insurance purposes, Grove’s wife requires two workers each visit because moving Linda requires the use of an electric lift.
Groves deals with two private companies – each of whom send one worker per shift – but the companies don’t communicate with each other.
These services are paid under Home and Community Care Support Services (HCCSS). However, when companies don’t fulfill contractual obligations, HCCSS has no means of enforcement.
Some PSWs are being pulled out of home care and reassigned to LTC by management compounding staffing and client issues within the home care system.
There have been several evenings when Groves has had to step up and be that second person, but his own health issues are making it increasingly difficult. That means Linda doesn’t get her full evening routine.
Only one of the companies provides PSWs with Groves’ phone number to let him know if they’re going to be late. When workers from the other company don’t show up, Groves contacts the main office but they usually have no idea where the worker is or if they’re going to show.
Groves has been told to find a family member or neighbour willing to help with Linda’s care.
In 2022, Extendicare president and Chief Executive Officer (CEO), Michael Guerriere, received a total compensation package of $1.9 million.
PSWs in Ontario have a starting wage of $16.50 per hour which is $7 an hour less than unionized PSWs working in Saskatchewan. Those PSWs working in home care have to cover transportation costs between clients and are not paid for travelling time.
Extendicare is also in the midst of three class action lawsuits filed over gross negligence of residents in their facilities during the COVID 19 pandemic. The most egregious case involves Orchard Park Villa in Pickering, ON. Yet, the Ford government thought it was prudent to issue an 87-bed extension and new 30-year licence to Orchard Villa, which is owned by Southbridge and operated by Extendicare, despite the army being deployed during COVID and revealing horrendous conditions of chronic understaffing, lack of sanitation and gross neglect of residents that resulted in 70 deaths.
Extendicare works with competitors to dominate the market through a system of mergers and acquisitions. In 2015, Extendicare acquired Revera’s home health portfolio in an $83 million sale.
Revera is a wholly owned subsidiary of the Public Sector Pension Investment Board that conducts asset management and operates retirement facilities through a subsidiary called Sunrise Senior Living.
Revera and Extendicare have also shared executives and directors. Extendicare took over operations of 56 Revera homes and partnered with Axium to acquire 15 per cent ownership of several Revera homes.
Axium is a private equity firm that solely invests in infrastructure projects like LTC facilities, private housing, highways and ports.
Axium has an 85 per cent interest in 32 LTC facilities including 4,718 beds in Ontario and Manitoba. Extendicare operates the homes and owns the balance of the shareholder equity ownership interest in the portfolio.
Currently, Extendicare dominates home care as well as LTC. At the same time, Revera and its subsidiaries dominate senior living communities. Chartwell primarily operates retirement homes with add-on care workers. By shuffling their portfolios, these corporations maximize their profits.
Corporations should never profit off of the health needs of disabled persons or elders whether it’s in the form of home care or LTC.
It’s long past time for the Ford government to put home care and LTC back under the umbrella of universal healthcare where beds and facilities remain part of the public commons and PSWs are paid a living wage as well as travel time and mileage.
And, the federal government has no business backing any type of REIT, because we know REITs are fueling Canada’s housing crisis and housing is a human right.
We need to return to robust public funding of healthcare and deeply affordable housing paid for by ensuring wealthy Canadians corporations pay their fair share of taxes.
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