CBC Supplementary Response - June 17, 2020

Wednesday, June 17, 2020

(Delivered by e-mail)

Catherine Tait, President & CEO, CBC

Michael Goldbloom, Chairman of the Board, CBC

Ms. Tait and Mr. Goldbloom

The National’s June 13th story by Terence McKenna was a highly subjective portrayal of the COVID-19 situation in Canadian long term care (LTC) and included many unsubstantiated and misleading comparisons, conclusions and comments, and omissions of important facts. Attached again, is our May 28, 2020, statement that was shared as an attempt to help supplement Mr. McKenna’s background on LTC in Ontario, including how it is funded. It is unclear from his reporting what additional sources he sought information from to fully understand the inspection, funding or staffing levels of Ontario LTC homes.

As explained in our statement, 100% of revenue in Ontario LTC is controlled by the government. Funding for resident care varies based on the resident care needs as determined through the Case Mix Index (CMI). Funding for resident care, programs and food is done through a system of flow-through envelopes, and funds that are not spent for these defined purposes are returned to the government. No profit can be made from this funding. There is a system of annual reconciliations and third-party audits for each LTC facility in Ontario that ensures that these funds are spent for the intended purposes. The last funding envelope, known as the accommodation envelope, is designed to cover accommodation expenses like maintenance, administration, utilities, etc., and to provide funds to pay back lenders and equity investors. All this funding is the same for private, municipal and not-for-profit homes.

Inspections are based on government-set policy using a risk-based approach. There is an inspection every time a home has a critical incident or receives a complaint. All inspections are unannounced. According to the Government of Ontario’s public disclosure, there were over 2,800 unannounced inspections in 2019. Not nine.

The LTC sector has been vocal for some time now with all levels of government including those in the health, labour, education and immigration ministries, that it was facing staffing issues well before COVID-19. This included personal support workers; an issue heighted in certain rural areas of the province and, in fact, across the country. I would reference this challenge in the labour market of Windsor, including the Kingsville area which is where the home cited in Mr. McKenna’s report is located.

Furthermore, we are left wondering how Mr. McKenna is able to substantiate the claim that a drop in care levels dates back to when Mike Harris was Premier? What Mr. Harris’ government did was to move from mandatory minimum staffing levels to the envelope system. Within this funding system the average number of care hours has increased. There is no doubt that there is more funding required to add staff to keep up with the increasing acuity levels of our residents; however, this can be accomplished in a pass-through funding envelope that adjusts for home-level acuity.

In addition, Mr. McKenna chose to ignore the fact that during Mr. Harris’ tenure as the Premier of Ontario, the capacity of the Ontario LTC sector was expanded by 20,000 new beds and 16,000 old beds have been renovated and in doing so, eliminated four-bed wards in these homes. This represents over 45% of the current sector’s 79,000 bed capacity. There have been no meaningful investments in capacity expansion or renovation programs in the Ontario LTC sector ever since.

Despite numerous governments announcing LTC redevelopment programs since 2007, there are still over 30,000 beds operating in the province that were built to 1972 design standards that predominately consist of four-bed wards. Due to this physical plant limitation, it makes it much more challenging to implement cohorting and isolation procedures in these older homes, which, as a result, have been disproportionately impacted by COVID-19 outbreaks.

As was also disclosed to Mr. McKenna, Chartwell has approximately 10% of its portfolio in government-funded LTC. The remainder of Chartwell’s business is in the mostly private-pay retirement segment, where the company generates most of its cash flow that is used, after funding operating expenses, for capital investment in our properties, mortgage principal and interest payments, and distributions to unitholders. These unitholders provide capital to the company to invest in its operation and rightfully expect a reasonable return. This distribution return averaged around 4% in recent years. As a publicly-traded company, our financial and operating information, including compensation information for our Directors and Executive Officers is publicly available. For example, if Mr. McKenna examined our Management Information Circular, he would have found that our Chair receives substantially all of his compensation in the form of Deferred Trust Units, which fluctuate in value based on the trading prices of Chartwell units and can only be redeemed upon his retirement.

To further indicate the weak investigative work of this story, I reference Mr. McKenna’s argument that since Mike Harris became the Chairman of Chartwell, “Chartwell has had staffing-level issues.” Given that Mr. Harris has been our Chairman since our Initial Public Offering in 2003, when does Mr. McKenna either credit the timeline of “since” or substantiate that we have had “staffing-level challenges” in our company of over 200 homes, of which only 23 are LTC in Ontario, and as an employer of over 15,000 people?

At Chartwell, our goal is to be as transparent as possible under the current circumstances with our residents, their families and our valued employees. Misinformation such as this story published by the CBC is not assisting the public understanding of the facts nor is it contributing to the necessary discussion as to what needs to be done by government, operators and as a society to learn from our experiences and continuously adapt to improve our collective fight against COVID-19.

Sincerely,

Vlad Volodarski
Chief Executive Officer

cc. Terrance McKenna