Homes facing suits being rewarded
When the Ontario Superior Court recently green-lit six class-action lawsuits against long-term-care providers in the province for alleged gross negligence during the pandemic, it shone a glaring light on the alarming connections between then and now.
Most of the companies named ran long-term-care homes that had unusually high rates of COVID-19 infection and related deaths, in some cases leading the province to call in the military to provide assistance and medical support. But instead of being punished, the province is now rewarding many of these same companies with even more of your tax dollars, expanding their presence in the long-term-care sector in Ontario.
The corporations named in the lawsuits include Chartwell Retirement Residences, Extendicare, Responsive Group, Revera, Schlegel Villages and Sienna Senior Living, which together owned or operated 200 long-term-care facilities. All but one have become the major beneficiaries of government funding to expand access to long-term care.
You would think that if a company is so bad at doing its job that you have to call in the military to take over, you wouldn’t renew its licence to operate a care home, let alone entrust it with even bigger projects. But that’s exactly what’s happening.
Private equity plays an outsized role in this story, and is poised to play an increasing role in the “fix” for long-term care, at the government’s invitation or indifference. These decisions, taken on our behalf, need much more scrutiny. But it’s getting harder to scrutinize what’s happening because the Ford government itself is sharing less and less information about who owns what, who’s getting funded and what kind of progress the province is making on its pledge to create 31,000 new and 28,000 upgraded long-term-care beds by 2028.
In May 2022, the Star was provided a list from the government showing most new provincial funding for long-term care was going to for-profit providers. When asked for an update, the provincial government didn’t respond. Data that was once public is no longer available.
The only way to piece together what’s happening now is by using piecemeal government press releases. Those releases indicate that since March 2022, more than twothirds (67 per cent) of the new provincial funding to bring beds up to acceptable standards has gone to for-profit firms.
Excluding developments on hospital grounds on the outskirts of Toronto, for-profit firms also received almost half (47 per cent) of the funds allocated to creating new long-term-care beds.
What kind of companies are getting that support? More than threequarters (78 per cent) of the money directed to expanding capacity through for-profit facilities is going to the same corporations that have been named in the lawsuits, including five of the six companies named in the class action certified in midMarch by the Ontario Superior Court.
We are fed a steady diet of announcements about how the government of Ontario is spending a fortune on fixing long-term care. While beds are being added, beds are also being lost — but if you want to know whether the total number is growing or shrinking, tough luck. The province no longer publishes that information, and it didn’t respond to my requests about it, either.
Announcements are the new accountability. Every day the government acts more like the private equity corporations it supports: they’ll tell us what they want us to know, and nothing more.
What do they want us to know? Every ribbon-cutting ceremony and response to public inquiry dutifully re-announces the $6.4 billion in new funding the province says will deliver 31,000 new and 28,000 upgraded long-term-care beds by 2028. But the lion’s share of that funding doesn’t start flowing until this month.
“The government is making real progress under this pillar,” the government reports. Really? According to that same report, the Ministry of Long-Term Care’s annual planning report, by March 2023 the province had only added 1,228 net new beds and upgraded 1,154 older beds to modern standards.
According to government press releases, since that report was published only 74 new beds have been announced to be added to the system by the end of 2024 across all of Ontario. This doesn’t count the beds that will be lost when some long-term-care operators in Toronto and elsewhere opt not to renew their 30-year licences when they come due between now and June 2025.
The ministry’s latest press release says “as of December 2023, more than 44,000 people were on the wait-list to access a long-term-care bed in Ontario.” That’s up 5,000 people since a June 2023 press release.
By December 2023, there were almost 30,949 people waiting for a long-term-care bed in Toronto alone, based on a facility-by-facility count of official government information.
The province has indeed increased efforts to address this issue regularly since 2019, adding money every few years and crafting legislation like the Fixing Long-Term Care Act in 2021. Yes, thousands more beds are “in the pipeline,” but there is no centralized list of where they’ll arrive or when, or who will provide them.
The government tried to shield businesses, and itself, from liability for COVID-19 transmission by passing the Supporting Ontario’s Recovery Act of 2020. The legislation limited the types of litigation that could be brought forward but, as Thomson Rogers Law, one of the class-action counsels, dryly notes, the legislation “does not apply to gross negligence.”
A quick look at the companies involved in the class action show an important trend: as private equity expands into long-term care, the focus is increasingly on growing profits through buying, selling and leasing back real estate, not through providing care.
Extendicare became a real estate investment trust (REIT) in 2006 and started trading on the Toronto Stock Exchange. Publicly traded corporations must file public reports on what they’re doing, which is the reason we know Extendicare sold over $300 million worth of long-term-care facilities to a partnership of publicly traded Sienna and Sabra Health REIT in 2022.
Revera faced 85 lawsuits across Canada for neglect contributing to death in 2019, well before COVID struck. Once publicly traded, it was bought by the Public Sector Pension Investment Board in 2005. It went private in 2008. In 2023 it announced it would “focus primarily on managing property/real estate and will no longer manage retirement residence operations in Canada.” The main buyer of Revera’s assets is Cogir, one of Canada’s biggest and fastest-growing landlords. Revera has an ownership interest in Cogir too.
Sienna-owned Altamont Care Community in Scarborough was one of the first Ontario nursing homes the premier asked the military to help during the peak of the outbreak. A month later the provincial government asked the military to help Sienna-owned Woodbridge Vista Care in Vaughan due to its inability to contain the spread of COVID.
A third Sienna-owned home, Camilla Care, saw its management temporarily taken over by the province for the same reasons. Camilla Care was sold to Trillium Health in 2022, and the 236-bed home was closed in December 2023. Altamont Care Community was renamed Altamont Scarborough in December 2021 and awarded an expansion to 448 beds by the province.
Despite its troubled history, Sienna keeps expanding its footprint, partly financed by taxpayers to develop new beds in new or existing facilities. By the end of 2023, Sienna saw a 21 per cent increase in profits in its long-term-care sector, by both acquiring more properties and cutting operation costs.
Chartwell, the publicly traded company whose board was chaired by ex-premier Mike Harris from 2003 to 2022, was oddly absent from the list of companies whose long-term licences were renewed for 30 years in 2022. That’s because in 2022, Chartwell, which had been a major player in Ontario’s longterm care, had decided to get out of that line of business. In 2023 it sold its assets to AgeCare and Axiom Infrastructure, two interconnected private equity companies, for almost $450 million.
Southbridge has three separate entities named as defendants in the action against Extendicare because, as co-lead counsel of the class-action suit Joel Rochon points out, while Extendicare manages the homes and oversees their day-to-day operations, Southbridge owns them. Southbridge owned Orchard Villa in Pickering. Almost all of its 233 residents got COVID in 2020, and 71 died. The situation became so dire that the military was called in there as well.
Nonetheless, the Ontario government renewed Orchard Villa’s 30year licence to operate, taking a different approach to the government of Saskatchewan, which took over ownership of five facilities facing similar issues. The Ontario government then supported Southbridge’s application to expand Orchard Villa, despite that application being unanimously denied by Pickering city council, a decision the province overrode with a Ministerial Zoning Order.
Recently the province permitted transfer of dozens of Southbridge’s long-term-care licences to a new corporate structure, for unknown reasons. Southbridge did not reply to my request for clarification.
“It could be a bit of a red flag,” says a very careful Rochon.
Responsive Group is a private equity company encompassing several entities. Two of them, Responsive Management Inc. and Responsive Health Management Inc., manage 22 long-term-care facilities, according to emails from spokesperson Nicola Major, of which 14 are co-owned with Rykka under various iterations of their corporate names.
Remember William and Vera? They’re the residents of Cedarvale Terrace, a long-term-care home in Toronto’s Forest Hill, that I wrote about in my last column.
William, Vera and other residents of the home were told they’d have to get out by March, as the home is being closed to make way for a new condo development — but they have no idea where they’ll end up. They’re still there.
It turns out the company that owns Cedarvale, Rykka, is named in the class-action suit. It has shut down three long-term-care homes, but maintains others.
Rykka sold Vermont Square (914 Bathurst) in 2021 and Cedarvale Terrace (429 Walmer) in 2022 to Stafford Homes to build condos, both in sought-after Toronto locations. The licence to operate a 162bed facility at The O’Neill Centre (33 Christie, another highly valuable property) expires in June 2025. There is no public information as to whether they will renew their licence or close, sell and build condos.
In 2023, The O’Neill Centre was taken over by a numbered company. Its president is William Dillane, who is also president of Responsive Group, Rykka’s partner.
Rykka’s founder, Ben Friedman, is a managing partner of real estate developer Ranee Management, which owns 35 properties in Ontario.
Capeesh? Of course not.
It’s a deliberately incomprehensible tangle of small but legally significant name changes and corporate structures that appear designed to shield owners from risks, liabilities and responsibilities.
As private equity companies expand their market share in the care economy, the problems will increase too. They’ll only tell us what they want us to know, and they don’t want us to know much. Not how much money they make. Not how they move that money around, to what end. And especially not who the humans are who are responsible for making these decisions.
We’ve been told for decades the business sector does a better, faster, more efficient job of everything than the public sector because it responds to financial incentives. But financial incentives are the wrong incentives in the provision of care.
For the provincial government and the businesses it chooses to support, the punchline of this story seems to be: We’ll indemnify you if you indemnify us. At the end of the day, it’s about announcements they both can make about how much they’re spending, and how much bigger they’re getting. The purpose of these enterprises is shifting from care to building, for both the government and companies.
Bankrolled by 30-year government contracts, private equity is invited to shield their liabilities and visibility with Byzantine corporate structures that make it all but impossible to follow the money. Our money. Taxpayer money. Money used to turn a profit on the backs of people who need care, and people who provide care.
It’s a more ruthless type of privatization than we’ve yet seen, by increasingly ruthless players; and it’s coming to a neighbourhood near you.
Unlike publicly traded companies, private equity isn’t required to report to us, by law.
There’s nothing illegal about private equity not telling us what it’s doing. The law has to change, or private equity has to get out of care.
That’s exactly the type of legislation currently being advanced in California and in other states, because the rise of private equity in the care economy isn’t your garden-variety type of privatization. It’s a global phenomenon that has caught the attention and the ire of regulators in the U.S., the U.K. and Europe, and the pace of change is breathtaking.
In Canada we are snoozing our way into a potential disaster, for taxpayers and for those who need help.
What we know so far about private equity in long-term care raises serious concerns. What we don’t know is even more troubling.