Ontario government ties more red tape around long-term care

No demographic group has been hit harder during the pandemic than senior citizens. To reform Ontario’s long-term care (LTC) system, the Ford government in December passed Bill 37, which aims to hold nursing homes to a higher quality standard and empower residents. But in reality, this bill won’t change much. In fact, it’s a missed opportunity to make the fundamental changes—that is, improving competition among providers and expanding patient choice—that our LTC system desperately needs.

First, it’s important to understand that the private sector is a key provider of seniors care in Ontario and is already tightly regulated and monitored by government. And despite the additional capacity provided by private LTC facilities, the province still struggles to provide institutional care for seniors in a timely fashion. The wait list to obtain a spot in a nursing home has almost doubled over the last 10 years to about 38,000 people in 2019-20, the latest year of available data.

Why? Simply put, excessive government regulation hurts the ability of new providers to enter the market and increase competition and choice.

For example, according to the new legislation, any new licence granted by the provincial government is generally restricted by the number of existing facilities and location, which limits the supply of facilities. For both private and government-run facilities, government funds dedicated to nursing and personal care must be used solely for this purpose and any unused surplus must be returned to the government, thereby restricting the ability of institutions to benefit from implementing innovative policies that could potentially improve care. And of course, the government controls all admissions to nursing homes.

As a result, most providers—whether public or private—operate at full capacity and their revenues do not depend on quality of service nor on their ability to attract clients. Again, this is where the problem lies—there’s no real competition between providers (regardless of ownership) and dissatisfied clients are unable to turn to other providers with available spots.

This approach looks antiquated when compared to LTC systems in other developed countries who also face growing senior populations. Instead of increasing restrictions and red tape, countries such as Germany, Japan, Sweden and the Netherlands have embraced a more collaborative approach between government and the private sector that encourages competition among providers and increases choice for patients.

In Germany, for instance, since 1995 most of the cost of LTC care has been financed by the individual senior’s insurance fund (in Germany, most residents purchase health insurance coverage from public and private insurers). LTC providers, 43 per cent of which are for-profit institutions, are relatively free to enter the market and seniors can choose the LTC facility that best suits their needs. Importantly, admission to care homes is determined by medical practitioners, not bureaucrats.

As a result, the number of LTC facilities in Germany expanded by nearly 75 per cent between 1999 and 2019, which allowed German seniors to avoid the long wait lists that plague many other countries including Canada. Of course, oversight bodies assess nursing facilities and report cards are published online where patients can compare the quality of nursing homes managed by various providers.

In the Netherlands, similar reforms implemented over time sought to give seniors a greater ability to choose providers and organize their own long-term care. Again, Dutch for-profit providers now play a larger role in the sector.

In both countries, users can also opt to receive cash benefits and care at home from the provider of their choice. In fact, the Dutch policy of favouring home-based care over institutional-based care not only coincided with people’s preferences but also helped mitigate the impact of population aging on LTC government spending. To meet the challenges of an aging population, these countries successfully remodelled their LTC system by embracing the private sector, not demonizing it. We should do the same in Ontario and across Canada.

Our LTC sector does not need stricter regulation, like the Ford government’s new legislation contains, but rather more choice and competition while maintaining proper oversight, particularly during times of crisis like during COVID. In health care as in everything else, incentives matter, which is why competition, choice, accountability—and yes, the profit motive—remain central to the efficient delivery of long-term care. That’s the lesson we should learn from countries that do a better job of providing quality care to their cherished senior citizens.