As privatization creeps further into Canada’s health system it’s fair to ask whether decisions are being made based on private profit or health care needs?
As contract health providers become multinational, the interests of Canadian patients may also take a back seat to corporate priorities in other countries.
Extendicare is a Markham-based for-profit company that operates on both sides of the Canada-U.S. border. About 37 per cent of its revenue comes from the company’s operations in Ontario, Manitoba, Saskatchewan and Alberta. CEO Timothy Lukenda lives in Pewaukee, Wisconsin, not far from the company’s U.S. headquarters in Milwaukee. His father is a well-known dentist in the Sault and owns the junior hockey franchise in that city. Prior to getting the top job at Extendicare, Lukenda was an investment banker.
Extendicare’s business involves assisted living centers, nursing homes, health technology services, outpatient therapy and home health care. Overall they have 35,000 employees, making them one of the largest private long-term care providers in North America.
Extendicare’s home care subsidiary, ParaMed Home Health Care, is presently involved in a bitter strike in Renfrew County, northwest of Ottawa.
It’s fair to ask whether the hard-line ParaMed is taking at the bargaining table is motivated by priorities on the other side of the border?
2013 was not a great year for Extendicare. In free-enterprise USA they lost $11.1 million while earning a net after-tax profit of $16.4 million in the more socialized Canadian health care environment.
In its 2013 Annual Report, Extendicare blames its difficult year on “reductions in Medicaid, Medicare and provincial funding for long term care due to the economic downturn.” In other words, Extendicare relies heavily on public funding to maintain its profit margin and large executive salaries. Seventy-seven per cent of its U.S. revenues are provided under federal (Medicare) and state (Medicaid) programs.
Extendicare has also been dogged by U.S. legal proceedings and regulatory actions that were recently settled for $42.2 million. Extendicare has been repeatedly accused of substandard care as a result of understaffing its homes in both Canada and the U.S. In 2006, for example, Extendicare agreed to pay $2.75 million to Donald Burdick after he developed bedsores at Extendicare’s Chippewa Falls nursing home in Wisconsin, the company’s U.S. base of operations. Extendicare also has a history of divesting itself of long-term care homes in States following civil litigation. That includes both Florida and Kentucky.
That reputation may be why Extendicare is losing money in the U.S. compared to Canada. Occupancy rates for Extendicare’s U.S. long-term care homes are much lower (82.9%) than Ontario (97.7%).
Despite the recent financial problems, Lukenda received a $16,000 increase in compensation in 2013, his total package rising from $1.129 million in 2012 to $1.145 million in 2013 (Business Week).
That $16,000 increase is about an entire year’s income for the striking workers in Renfrew County. Unlike Lukenda, it’s been almost four years since these workers last had a raise. That means the gap between the CEO and the people who do the difficult front line work is growing.
While remaining inflexible in bargaining with front line staff, Extendicare is mostly silent about the unfunded liability that exists for its executives’ defined benefit pension plan. The expected contribution to these executive benefits is $2.3 million this year.
Lukenda is showing no compassion for the Renfrew County workers, instead insisting their wage freeze be extended to at least five years. That’s a long time to wait for a raise when your hourly wage places you squarely among Ontario’s working poor. Wages at ParaMed start at $12.88 an hour in Renfrew County for a home support worker.
Extendicare appears largely indifferent to the strike. It is not their company, after all, which has to scramble to find care for Renfrew County’s frail and elderly. The media are already reporting of cancelled home care visits as other agencies employed by the Community Care Access Centre cannot raise the staff they need to cover the absence of 110 striking caregivers.
ParaMed walked away from the bargaining table last Friday despite the union having revised their position several times to find a deal.
ParaMed seems content to wait it out, assuming the low-wage workers will not be able to hold out very long. The employer may not be considering the possibility that these workers will simply leave for other opportunities.
Unfortunately that also leaves the patients to wait it out, including those in hospital who cannot be discharged without the commitment of home support.
In 2013 the Alberta government did intervene prior to strike action that threatened eight Extendicare residential facilities in that province, forcing the union and employer into a 45-day mediation period.
It is also telling that ParaMed no longer operates in Alberta. According to Extendicare’s Annual Report, it was as a result of the Alberta government reducing the number of service providers in their home care system.
Ontario’s health minister must be concerned about developments in Renfrew County. ParaMed provides about 15 per cent of the province’s home care visits, a situation Dr. Eric Hoskins may find concerning should ParaMed take the same attitude towards bargaining in other communities. That represents close to five million hours of service.
If Extendicare is intent on protecting its profits over ensuring quality care to Ontario’s most vulnerable residents, then the government should ask what benefit comes from contracting home care? Is it not time to hedge its bets and start expanding its publicly delivered capacity? Ontario remains an outlier among Canadian provinces for the amount of home care delivered by for-profit agencies.
That percentage just grew recently with the acquisition of the non-profit Red Cross home care agency by the for-profit CarePartners.
The idea that what happens at the bargaining table in Renfrew County could be influenced by business decisions in another country is disturbing.
If Extendicare’s public revenues in Canada are keeping the company in the black, doesn’t that essentially mean that governments like Ontario are making up for shortfalls in funding coming from U.S. jurisdictions? That’s an idea worth thinking about as Ontario’s austerity budgets continue to bite.
Workers from Renfrew County are coming to Toronto next Tuesday to picket in front of Extendicare’s Markham head office. The executives who are determining their fate can at least see their faces.
If you’d like to show your support, the picket will be taking place in front of Extendicare’s head office (3000 Steeles Ave. E. at Woodbine in Markham) at noon on Tuesday, September 16th.