The Business of Long-Term Care

December 2013-- Many long-term care homes in Ontario are in need of upgrades. So in 2007 the Ministry of Health and Long-Term Care announced a renewal strategy that will see the redevelopment of approximately half of all long-term care beds (that’s 35,000 beds!) during the next decade.

To assist in this endeavour, the Ministry is offering per diem funding to the operators whose homes are deemed to be in need of redevelopment. But for some, even with a government subsidy, redevelopment may be prohibitively expensive.

Enter Southbridge Investment Group Inc., a new company based in Cambridge, Ontario that has signed a deal with the Ministry to acquire and upgrade 7,000 of these beds. Its founder is Reg Petersen, also the founder of Versa-Care Ltd., once the largest operator of long-term care homes in Ontario. Funds are being raised through the Southbridge Health Care Fund, an open-ended mutual trust fund managed by Yorkville Asset Management Inc. of Toronto.

As such, there has been a flurry of new hiring this year in parts of the province, as Southbridge has been busy acquiring the following homes, newly licensed under the name of Country Village Homes™:

Craiglee Nursing Home, Scarborough

West Park Health Centre, St. Catharines

Maitland Manor, Goderich

Country Lane, Chatsworth

Georgian Heights, Owen Sound

Parkview Manor, Chesley

Birchwood Terrace, Kenora

Maple Village, Owen Sound

By the end of next year, Southbridge expects to be the eighth-largest operator of long-term care homes in Ontario with 17 homes and 1,566 beds, according to a company release. It has plans to broaden into retirement centres, assisted living centres, independent living, and home care as well.

Get to know your local Real Estate Investment Trust

Since Southbridge is an asset manager, and not in the business of taking care of people, it has partnered with Extendicare to manage its acquisitions. Extendicare (Canada) Inc. is a Real Estate Investment Trust.

There is a lot of money to be made in managing long-term care homes, large and small. So Extendicare has created a subsidiary called Extendicare Assist, which will be managing the Country Village Homes, and has also been taking on the management of various non-profit homes in recent years.

For example, Extendicare Assist has contracts with municipally owned homes in Kingston, Muskoka and London.

In London, after running through a couple of short-term contracts with Extendicare, city councillors saw fit to sign Extendicare up for three more years at a cost of about $400,000 per year. Instead of paying $127,000 for a single city administrator, taxpayers will be paying $174,000 for a new one and an additional $342,000 for “operational management consulting services,” according to a story published in the London Free Press.

London councillor Bill Armstrong said, “I won’t support this. I don’t think this is good for the taxpayers of London.” Councillor Joe Swan said he saw “no compelling reason” for the big hike in spending at Dearness, especially when the contract had not been tendered, the news article stated. But they were outvoted.

Extendicare is one of the largest providers of long-term care in Canada, with capacity for about 11,000 beds. It provides home health care and corporate wellness services through ParaMedHome Health Care.