Profiting off seniors?

Public Interest Alberta wants to know why companies that will be operating seniors care facilities in Red Deer will make a profit from their contracts with Alberta Health Services.

Public Interest Alberta wants to know why companies that will be operating seniors care facilities in Red Deer will make a profit from their contracts with Alberta Health Services.

Bill Moore Kilgannon, PIA executive director, said documents obtained through the freedom of information act show Christenson Communities will make $62,000 annually and Points West Living will make $57,000 to care for seniors.

“If you look at the regulations in Ontario, they don’t allow companies to make money off the care contracts. In Alberta — it’s right here in these applications — they don’t seem to mind there’s a profit being made off the AHS contracts,” Kilgannon said.

The 30-year contracts are renewed every five years so imagine the negotiation power of these companies, he said.

“What is the government going to say if Christenson or Points West says we really need a lot more money on this contract or we’ll convert these all to private homes.”

In 2013, Christenson received a $4.7 million Affordable Supportive Living Initiative (ASLI) grant to build a facility with 60 continuing care beds to be provided to seniors at government established rates. Those beds will be part of the 122-unit facility Timberstone Mews currently under construction.

At the same time, Points West Living received a $5.5 million ASLI grant to build a facility with 60 continuing care beds that will be part of its 139-unit project under construction on Taylor Drive.

Moore Kilgannon said thanks to taxpayers dollars, Christenson projected a 29 per cent annual rate of return on the 60 beds and Points West Living was looking at a 25 per cent profit.

He said annual profits for Christenson will be $5,731 per bed taking into account the grant and AHS contract. Points West Living will make $5,483 per bed.

According to the documents, Christenson’s six-year profit projection was over $2 million.

“Since ALSI came into being in 2007, there has been a total of 3,780 spaces funded by the provincial government for corporations. If they are all averaging what we have here, $5,500 bed in profits, that’s over $20 million a year going into corporate profits rather than providing important care for seniors.”

Meanwhile, there are complaints about low staffing levels and the need for staff with more training in publicly-funded, privately-operated seniors facilities, he said.

Moore Kilgannon said companies stand to make the most money by owning the seniors’ facilities.

“Throughout this process, they are paying down the mortgage on this building. Whenever they decide, they can sell those assets and that’s their profit. So businesses can look like they’re actually not making any money because they’re too busy paying down their mortgage. Meanwhile they are getting the value of the real estate increasing.

“It’s a business model and I don’t blame the companies for having their hands out and getting all this public money. I question the government for having this explicit policy in putting tens of millions of taxpayers dollars into these companies and not being open and transparent and analyzing whether this really is the best use of taxpayers money and the best way of providing services to seniors.”

Doug Mills, Points West Living CEO, said he would not discuss details of the Red Deer project’s proposed budget, except to say it was an estimate that did not include costs such as building amortization and repayment of the mortgage principal.

He said the reference to 25 per cent profit in the documents obtained by PIA was likely before mortgage financing.

“Mortgages are necessary to develop these businesses,” Mills said in an e-mail.

He also said operational care funding is set by AHS and capped rents are set by government.

“This is the same for all private sector, not-for-profit sector and public sector care providers,” said Mills who is also the president of Alberta Senior Citizens’ Housing Association (ASCHA).

Moore Kilgannon said the fact that the public sector can borrow money way cheaper than the private sector is another reason to question public-private partnerships.

Irene Martin-Lindsay, ASCHA executive director, said the majority of companies build larger facilities so they can subsidize publicly-funded beds from the higher rents charged for private beds.

“There is nobody making a ton of money off of anything in this industry,” Martin-Lindsay said.

All companies want to do is provide seniors care because it’s the right thing to do, she said.

“I know that sounds crazy. It’s really the way it is,” Martin-Lindsay said.

Steve Buick, spokesperson with Alberta Health, said it’s absolutely wrong for PIA to pick on individual operators because funding terms are consistent among all operators, both public and private.

“PIA seems to object to a private for-profit operator being part of the system at all and I’m sorry we just don’t agree. They have a long history of giving good service. There is no evidence that they’re generally deficient in any way that we should change how we view them,” Buick said.

“Our concern is to fund operators on consistent terms and hold them accountable on consistent terms for providing services to their residents. We should not and do not discriminate.”

He said the latest survey of residents and family by Health Quality Council of Alberta showed facility ownership did not have any influence on resident and family experiences.

In a press release, Tammy Leach, CEO of Alberta Continuing Care Association, said the conversation should be focused on how the continuing care sector in Alberta has long been neglected. Alberta’s continuing care sector is funded 19 per cent less than the national average, while Alberta’s acute care system is funded 33 per cent higher than the national average.