The problem with profits in long-term care

June 12, 2024
Health-care colleagues discussing file in hospital corridor.
Public spending on private nursing has skyrocketed since the start of the pandemic, leading to an increase in staff who don’t know the facility or their colleagues let alone the patients, residents and families involved.

This is the second article in our series marking National Public Service Week from June 9 to 15, 2024. This week, Federal Retirees is recognizing the work of public servants and the value of a strong federal public service. In this series, we asked experts to explore questions, including the way forward for our public services and how privatization affects people in Canada. Pat Armstrong, distinguished research professor emeritus of sociology at York University, explores the impact of for-profit long-term care. 

The overall problem with profit in long-term care is that profit has to be the goal; it is the purpose of the business. This is not a comment on the people involved, but rather about the focus, the incentives and the objective. The for-profit approach means that some of the money has to go to profit rather than to care. And we are seeing those profits rising, meaning there is less money available for care, even as access to care is declining along with profitizations.

There are two basic ways to make a profit. Sell more or pay less. Doing both is even better. Indeed, the focus of the innovation much touted in health care is on selling more and paying less, not in producing better care. It is often argued that this means for-profit organizations are more efficient because they seek to cut costs and that competing for customers promotes quality. But neither argument gets much support from the evidence in health care.

Efficiency through cost-cutting

In health care, the major cost is labour, so the primary focus of cost-cutting is labour. 

One way to save money on labour is to speed up the work. When we were researching nurses’ hospital work, experts in for-profit methods were brought in to time the tasks. The nurses were initially pleased to co-operate because they were sure the data would show more nurses were required. Indeed, that is what the data showed. But faced with the data, the experts’ advice was to reduce the time for each task and count again. Commenting on the six minutes experts claimed should be enough to bathe a patient, Canada’s chief nursing officer of the time said: “The only way I could do that is to throw him in a chair, hose him down and let him drip dry.” 

Not incidentally, a focus on tasks usually involves increased monitoring, reporting and standardization. This, in turn, limits the autonomy of staff and their ability to apply their skills to address the constantly changing care needs of patients. Staff report more and more time on recording rather than on providing care, with the documentation requirements leaving them rushing to complete listed tasks on time. Forget person-centered care. What counts is what can be counted, leaving out all the joy that can come from providing and receiving care.

All this is particularly evident in long-term care.

When it comes to for-profit strategies in other health-care areas, a common speed-up strategy is to limit the time with each patient. According to a dentist I spoke with recently, the time restrictions set by the for-profit management company she works for limited her ability to respond to special needs such as those of people who experience anxiety or who have small mouths or unexpected complications. 

Reducing staffing levels is another way to speed up the work, leaving less time to care for each person. This strategy is particularly obvious in long-term care where a host of research shows that for-profit homes tend to have significantly lower staffing levels.1 For the staff it does employ, the company saves money with lower wages and benefits, and a lower number of medical versus non-medical staff; that is, fewer clinicians and more aides. The result of these cost-cutting strategies is a pattern of more pressure ulcers, more hospital admissions, an increased incidence of excessive and inappropriate use of psychoactive medications and more transfers to hospitals. There is also more burnout among staff and higher staff turnover. All this means more cost for the health-care system as a whole, as well as less care for the residents and more work for the families to make up for the gaps in care.2

Making more staff precarious by employing them on a part-time or casual basis is another strategy used to make room for profit. Providing just enough care and just-in-time care too often means not enough care. It also means these workers often have no access to the benefits, such as health benefits, paid sick leave and pensions, that many full-time staff do. A greater reliance on precarious workers is not only an issue for the women — many of whom are racialized and/or newcomers — who do most of this work, it is also an issue for the full-time workers who have to spend time showing these precarious workers where to find things and telling them what needs to be done. This is especially the case with the “travelling nurses,” who may have the credentials, but don’t know the place, the patients, the residents, the families or the other staff. Moreover, temporary workers cannot easily provide support for each other on a daily basis, support that is so obviously necessary when they are dealing with constant pressure, with life and with death. The lack of collegial support and extra work contributes to burnout and to undermining care relationships. The same problems can be created within the public sector by contracting out services such as food and management. 

I am not claiming that these labour force strategies are exclusive to the for-profit sector, but they are more common there. Indeed, most of the strategies have been developed by the for-profit sector, then adopted by other sectors that assume the search for profit means efficiency, lower cost and higher quality, all assumptions contested by the evidence. 

In fact, these labour force strategies in the for-profit sector don’t save any public money or make care more efficient. Rather, they may cost more, as is the case with the travelling nurses or with specialized surgery facilities such as those in Ontario. We learned during the pandemic that precarious health-care workers seeking a living wage through employment in multiple places can put the health of many at risk while raising the costs to taxpayers without cutting profits. And I would argue that these strategies undoubtedly contribute to the current labour force crisis in care throughout the system.

The bad and the ugly

Our research on the impact of media coverage that raised public concerns about nursing home practices in five countries3 found that first, most of the scandals occurred in for-profit homes. Second, the most common response in the Nordic countries was to get rid of the profit, while in North America, it was to increase regulation and monitoring mainly of staff, limiting their autonomy and time for care while spending more money on surveillance. The Canadian scandal studied was one where 88-year-old Eldon Mooney died from choking in a for-profit home, instead of “peacefully” as his daughter was told. She found this out because she’d hidden a camera in his room after previous treatment raised suspicion. In the end, an investigation concluded that the facility had 23 contraventions of the Community Care and Assisted Living Act. 

While labour is the biggest cost, for-profits may also save money on equipment and materials. It is hard to do the research on this because of the secrecy of contracts. We do have evidence from the military on their experiences providing support in care settings during the pandemic. Four of the five homes they were called into in Ontario were for-profit, the other one was private, not-for-profit. The military reports detailed how personal protective equipment was limited or absent, ignoring the old adage regarding an ounce of prevention being worth a pound of cure. 

These are just some of the ways the for-profit sector reduces spending to make profits. 

As I said earlier, selling more is the other way to make profits and we do have research on upselling in health services. There are plenty of reports of upselling lenses in the case of cataract surgeries, for instance. A CBC investigation found that one woman was upsold close to $8,000 for appointments, equipment and procedures at a private clinic, procedures that another doctor said were not medically necessary.4

A producer of medical devices offers the following advice to its sales reps:

While upselling and cross-selling are similar in that they make existing accounts more profitable, they vary in their execution. Upselling refers to opportunities reps have to add units of a certain product to an order. When cross-selling, on the other hand, reps suggest new products that complement an account’s existing order. Medical devices generate constant demand, giving sales reps plenty of opportunities to try out these techniques.5

I think we can assume the same advice is given to surgical centres. And a number of pharmacists are suing Loblaws’ Shoppers drugstores, saying their upselling practices compromise a pharmacist’s ability to deliver safe and effective patient care.6

The Canada Health Act bans extra billing for those hospital and doctor services that have been deemed medically necessary. Ontario, at least, is getting around this by telling us we will pay with our health card and not our credit card. But they neglect to say that the surgical clinics are being paid more than the hospitals for the same services. And the Ontario slogan fails to say that the profits are still paid out of our tax dollars. 

Five other problems with for-profit care

  1. They are drawing on the same pool of staff as the public sector, making it harder for the public sector to provide care and contributing to the labour force crisis. Moreover, many of the for-profit services take those already trained without providing any training themselves.
  2. They receive public money, but escape significant public scrutiny, with claims about the right to privacy that is essential to competition and a right of ownership. To get data on a staffing company operating in Newfoundland and Labrador and New Brunswick, among other places, The Globe and Mail had to spend a lot of time, money and effort. According to the paper, 

    “The investigation included searches of land titles, court papers and corporate registries, as well as 40 freedom-of-information requests, which produced more than 4,000 pages of documents, including hundreds of pages of CHL invoices and contracts. The records open a rare window into an industry that operates mostly out of public view, even though its clients are taxpayer-funded hospitals and nursing homes.”7

    The Globe’s investigation revealed expenses billed to taxpayers included things such as furniture and pet transportation. It also found that one company invoiced Newfoundland and Labrador for $1.6 million in meal allowance even though the companies’ contract with nurses indicated that they were required to pay for their own food. 

    It is even harder to get accountability for our money as more and more private equity is involved, making following the money and finding out who to hold responsible  even more difficult. These investment management companies buy other private companies in order to make a profit by combining them. They don’t have to publicly disclose their information about finances, operation, business risks or liabilities.

  3. For-profits swoop in to take away the stuff that is the easiest to do and the most amenable to for-profit efficiency strategies. The harder cases are left to the public system and when things go wrong, the patient is sent to the public system, driving up costs there. At the same time, the private hospital makes the public system look less efficient.
  4. These companies can pack up and leave as we have seen recently in Ontario nursing homes. The corporations may be more interested in the real estate than in the service and may go with whatever is worth more. And regulations to ensure quality may mean the service is no longer producing the kind of profit the corporations seek. 
  5. For-profits fragment the system. Instead of surgeries integrated within hospital services, for example, for-profit ones are separated from those services. This contrasts with Toronto’s Hospital for Sick Children working with six hospitals in the Toronto area to reduce wait times for surgeries.8

In short, for-profit services do not provide better quality at lower costs or ease the burden on the public system. At the same time, they further fragment a system that is already suffering from fragmentation while decreasing our democratic control over our money and our care.

Pat Armstrong held a Canada Health Services Research Foundation/Canadian Institute of Health Research Chair in Health Services and is a Distinguished Research Professor Emeritus and Fellow of the Royal Society of Canada. Focusing on the fields of social policy, of women, work and health and social services, she has published widely, making the relationship between paid and unpaid work central to the analyses. Armstrong has served as an expert witness before bodies ranging from the Federal Court to federal Human Rights Tribunals and investigator on grants, with this work primarily focused on women’s work, women’s health and health care. Armstrong was principal investigator on the 10-year "Reimagining Long-term Residential Care: An International Study of Promising Practices" and the Canadian Institute of Health Research funded "Healthy Aging in Residential Places" and she is currently working as principal investigator on two Social Sciences and Humanities Research Council funded projects. She also served on the technical committee developing proposed long-term care standards for the Health Standards Organization. Armstrong earned her Ph.D. in Sociology from Carleton University. 

1. Marrocco, F., A. Coke and J. Kitts, (2021) Ontario Long-Term Care Covid Commission, Final Report. .Toronto: Queen’s Printer. 
2. Armstrong, P. ed. (2023) Unpaid Work in Nursing Homes: Flexible Boundaries Bristol, England: Policy Press, 2023 
3. Lloyd, L., Banerjee, A., Harrington, C., Jacobsen, F. F. & Szebehely, M. (2014). “It is a scandal!: Comparing the causes and consequences of nursing home media scandals in five countries.International Journal of Sociology and Social Policy, 34(1/2), pp. 2-18.
4. Cutler, M. (2023) Medical upselling in Canada can cost patients thousands of dollars. CBC News. April 02.
5. Jackson. A. How to Upsell And Cross-Sell Medical Devices. Downloaded April 27, 2023.
6. O’Hara, C and Hannay, C. (2024) Pharmacists file class action against Loblaw, Shoppers over patent care Globe and Mail, April 16. 
7. Ha, T.T. , Grant, K. and Chambers, S. (2024) Have nurses, will travel Globe And Mail Feb. 16, 20 
8. Weeks, C. (2024) SickKids lowers surgery backlog through successful new partnership with nearby hospitals Globe and Mail May 27