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Overview of the industry

There were 4,291 residential care facilities in Canada serving 235,916 residents at the end of the 2005/06 reporting year. The entire industry generated $13.7 billion dollars in revenue and $13.5 billion in expenses. This was just under the gross domestic product (GDP) for Canada’s agricultural industry ($15 billion) in 2005.

The collective profit margin was $183.4 million, or 1.3% of total revenue. This low margin largely reflects the prevalence of many not-for-profit organizations and government-owned facilities in the industry, and their impact on the collective bottom line.

The industry employed some 117,746 full-time and 95,514 part-time workers, who worked 427.5 million hours, and earned $8.8 billion in salaries and wages.

Most of the activity of residential care facilities was centred in the 2,086 homes for the aged, which served some 196,242 residents and generated some $11 billion in revenue.

Facilities for persons with mental disorders were the second largest group with 1,915 facilities serving 32,289 residents. These facilities generated $2.2 billion in revenue. There were 7,385 residents in ‘Other’ facilities, with $477 million in revenue. These ‘other’ facilities included those for the physically disabled, delinquents/young offenders, transients and other facilities not included elsewhere.

The provincial snapshot of residential care facilities demonstrated some sizeable differences. On a per-capita basis, the Territories, Prince Edward Island, Saskatchewan and Manitoba spent the most on residential care, while British Columbia and Alberta spent the least. For homes for the elderly, British Columbia ($1,874) and Ontario ($2,475) had the lowest expenditures per-capita (for those aged 65+), while the Territories ($6,530), Prince Edward Island ($3,494), Saskatchewan ($3,348), Manitoba ($3,287) and Newfoundland and Labrador ($3,201) had the highest. Noteworthy, however, is that the RCF survey does not collect data from facilities which are under the jurisdiction of a hospital, and for which separate data cannot be obtained. This may partly explain some of the variation in expenditures-per-capita by provinces or territory.

Raison D’être for Facilities Outside of Quebec – For Profit and Not-for-Profit

Canada’s residential care facilities fall into three broad categories based on ownership: private (proprietary), government (federal, provincial and municipal) and not-for-profit. The latter group includes lay and religious-operated facilities. The type of ownership and corresponding raison d’être has an impact on financial measures such as profit margin and expenses-per bed.

Private facilities for some of Canada’s more vulnerable citizens, such as the elderly and the mentally handicapped, have existed for a very long time, and can be viewed as an integral part of the supply chain for this industry. Furthermore, the aging of the population is putting, and will continue to put pressure on the health-care system. This increased demand will likely necessitate an increase in the supply of facilities and beds for the elderly, whether privately or publicly-owned.

Due to differences in the way data are collected for Quebec, compared to the rest of Canada, this analysis will be examining Canadian residential care facilities outside of Quebec.

Over two-fifths (43.5%) of Canadian residential care facilities outside of Quebec, operated as a not-for profit organization in 2005/06, while a slightly smaller proportion (41.4%) were privately-owned. The rest (15.1%) were government-owned and operated. Private facilities though, had the largest share of approved beds (43.4%), followed by not-for-profits (32.6%) and government-owned facilities (24%). Next we will examine differences in not-for-profit, government and privately-owned residential care facilities, by type of facility.

Homes for the aged

The extent to which the private sector provided residential care to the elderly in 2005/06 is seen in the proportion of such homes that were privately-owned (53.7%). The not-for-profit and governmental sectors constituted almost equal proportions of the rest. Some caution should be exercised in interpreting these numbers, however, as 32 of the 1,873 operating facilities were composites, comprised of several smaller facilities.

The private sector had 81,085 approved beds in homes for the aged in 2005/06, or almost half (48.8%) of all beds. This was slightly less than their share of homes for the aged. Not-for-profit and government-owned facilities each had similar shares of approved beds, both slightly higher than their share of facilities.

Looking at approved beds-per-facility for non-composite facilities, reveals that not-for-profit facilities (95.1) and those that are government-owned (89.1) had the highest ratios. Private facilities followed with 76.4 beds-per-facility. Interestingly, although there was some variation, it was not substantial.

Although private operations constituted almost half of all facilities and beds, they had a disproportionately lower share of full-time employees (43.4%). This was also the case for part-time employees (37.2%), hours (38.7%) and wages (36.2%), suggesting that privately-owned facilities operated with lower employee-per-bed, hours-per-bed and wages-per-bed ratios in 2005/06. This in fact was the case. For example, privately-owned homes for the elderly had paid hours of just 1,154 per bed, compared with 1,598 and 1,892 for government-owned and not-for-profit facilities, respectively. Expenses-per-bed were also lower for privately-owned facilities ($39,001) than not-for-profits ($52,845) and government facilities ($59,421).

Looking at the number of residents (at year end), by level of care provided, offers partial explanation. Privately-owned facilities had proportionally more residents receiving lower levels of care. Government-owned facilities, on the other hand, had a much higher proportion of residents who received high levels of care (Type III) that required skilled employees and more hours of their time. This is turn would have increased the level of expenses.

Facilities for persons with mental disorders

Much of the provision of residential care for those with mental disorders in Canada came from the not-for-profit sector in 2005/06. Almost three-fifths (58.9%) of such facilities were owned by not-for-profit organizations, whether lay or religious. Not-for-profits also comprised 76% of the composite facilities. They provided 55% of the approved beds in 2005/06, had the majority of employees, whether full-time (61.5%) or part-time (71.7%), and paid out the bulk of wages (62%).

Privately-owned operations accounted for one-third (32.8%) of facilities and 27.4% of beds. Government-owned facilities accounted for just 8.2% of those dedicated to the care of those with mental disorders, but provided 17.5% of the approved beds. Examining beds-per-facility for non-composites, however, illustrates that government facilities for those with mental disorders tended to be larger (37.8) than private facilities (14.5) and not-for-profits (12.4).

Government facilities had much higher expenses and wages per approved-bed compared with private facilities, and somewhat higher ratios than not-for-profits. This is to be expected given the high proportions of their clientele that received high levels of care in 2005/06, compared with private and not-for-profit facilities.

Other residential care facilities

The not-for-profit sector had a dominant role in the provision of residential care for ‘other’ clients, including the physically disabled, delinquents/young offenders, transients and those not classified elsewhere. A full 70.3% of these facilities were owned and operated by not-for-profits in 2005/06, dwarfing the 17% that were private, and 12.7% government-owned. Not-for-profits also had 71.5% of approved beds in 2005/06.

The size of the facility, expressed using a ratio of beds-per-facility, followed the same general pattern as for homes for the aged and facilities for those with mental disorders. That is, government-owned facilities generally had high ratios, in this case 54.1 beds per facility, while private facilities generally were smaller (10.8). Not-for-profits fell in the middle (27.4) for ‘other’ facilities.

Furthermore, the ratios for private ‘other’ residential care facilities (10.8) and private mental facilities (14.5) were much lower than for privately-owned homes for the aged (76.4). This indicates that privatization within the residential care sector, is on a much larger scale for homes for the elderly, than for facilities for persons with mental disorders and other residential care facilities.

Among ‘other’ facilities, not-for profits had the lowest ratio of employees, hours, wages and expenses per-bed, reflecting the general lower levels of care provided in these facilities (most provide guidance and counselling). Private ‘other residential care’ facilities, however, had higher proportions of residents receiving higher levels of care. As a result, the hours-per-bed were the highest for privately-owned facilities, and the expenses per bed were just below that for government-owned facilities. This is contradictory to the situation for facilities for the elderly and those with mental disorders.