PSP Investments' Revera Disaster?
Kevin Skerrett, a Senior Research Officer assigned to pensions for CUPE and co-editor of The Contradictions of Pension Fund Capitalism (2018), wrote a comment in The Bulltet on pension fund capitalism and the COVID-19 pandemic: the case of Revera:
Of the many crises provoked by the COVID-19 pandemic across Canada, the dire situation in long-term care facilities and retirement housing may be the most widely and urgently recognized. Even Ontario Premier Doug Ford, whose own party engineered the significant shift to more privatized and ‘marketized’ long-term care (LTC) provision in the 1990s, recently declared the system to be “absolutely broken.”
A scathing report prepared by Canadian military specialists sent by the Ontario government to provide emergency staff support to five (eventually six) of the province’s worst-hit homes described the conditions found as “gruesome.” A subsequent report from the Canadian Institute for Health Research (CIHI) found that Canada has had the highest proportion of total COVID-19 related deaths in LTC facilities (81%) among the 17 OECD countries studied. Public policies promoting the partial commodification, deregulation, and underfunding of seniors’ care in the LTC system by neoliberal governments in Ontario and across the country have now been exposed as nothing short of catastrophic.
While less discussed, the media has also reported on the peculiar role being played within this “broken” system by one of Canada’s largest pension funds. The Public Sector Pension Investment Board (PSP) is a federal crown corporation established in 1999 to invest the pension funds of federal public service workers, along with most of military personnel and RCMP employees. Since its acquisition in 2006, PSP has owned and operated the second-largest for-profit LTC company in the country under the name ‘Revera’. PSP’s ownership of Revera is not in the familiar passive form of a pension fund buying a small packet of equity shares in the company and collecting dividends. Rather, as part of a recent wave of ‘private equity’ corporations getting more directly involved in for-profit healthcare, PSP bought an existing chain of care homes in 2006 and consolidated it under a new management structure that it fully controls. As its 100% owner, PSP is Revera.
Privatization, Deregulation, and Mismanagement
The social implications of this ownership are especially troubling in the context of the COVID-19 pandemic. The terrible consequences of the privatization, deregulation, and mismanagement of so much of our long-term care have provoked serious questions. How could such an important system have become so broken? Who broke it, and for whose benefit? Most importantly, this crisis has generated a wave of demands for the entire LTC sector to be taken into full public ownership. These demands, which polls indicate have wide popular support, put the spotlight on the central involvement of PSP and other workers’ pension funds in this “business.”
Even prior to the pandemic, long-term care was well known for its exploitative labour regime, a system imposed on a workforce that is very disproportionately comprised of women and racialized workers. The direct care work involved has been systematically deregulated and shifted from nurses to lower-paid personal support workers (PSWs) and care aides. Very low wages are often combined with part-time and precarious scheduling systems that force workers to take up multiple jobs at different facilities to get enough hours to survive. Subcontracting key functions, such as food service, laundry, and cleaning, to private for-profit companies is pervasive. (Some non-profit and public homes in Ontario are now privately contracting out the management of entire facilities.) In combination, these business practices have made owning, operating, and managing LTC homes highly profitable for their corporate owners and managers, and also unstable and under-resourced places to work and to live. It is for these reasons that LTC facilities have been left incredibly vulnerable to an outbreak of serious viral infection.
In this context, PSP’s move into this sector is an especially revealing example of what has been referred to as “pension fund capitalism.” This term has been used to signify the shift that has aligned and implicated pension fund investment managers in neoliberal policy shifts – favouring deregulation, privatization, and intensified worker exploitation. The phrase also signals the fact that pension funds themselves have become key actors within sectors where longer-term ‘fixed capital’ investment, such as public infrastructure and real estate, play a central role in this reconfigured kind of capitalism.
This crisis – a combination public health, social, and economic crisis sparked by the COVID-19 pandemic – offers an opportunity for the left, the labour movement, and pro-public healthcare groups to respond to these developments by building a political challenge to capitalist business-as-usual as it relates to healthcare. It seems clear that most workers do not want their retirement incomes to be derived from the worker exploitation and diminished care provision that is so central to the profit making in long-term care. If so, a serious effort to mobilize pension plan members in support of a campaign to decommodify and transform long-term care could play a role in blocking these processes of capitalist restructuring and at the same time meaningfully strengthen Canada’s public healthcare system. Achieving this would literally save lives.
The COVID-19 Crisis in Long-Term Care
A review of some details of how the pandemic initially unfolded in the LTC sector is instructive. Canada’s Chief Public Health Officer Dr. Theresa Tam reported in early May that some 81% of the country’s COVID deaths were “linked to long-term care facilities.” It is also clear that these death rates are far worse among those facilities owned and operated on a for-profit basis – including many owned by large chain operators. The Ontario Health Coalition has published data showing that these death rates are far higher among the for-profit facilities. An investigative report published by the Toronto Star showed that per capita death rates were four times higher in for-profit LTC homes compared to those publicly owned. Of those residents in Ontario LTC homes that have died of COVID-19, more than half were residents at homes owned by just six for-profit companies. (Revera had the second-highest number of resident deaths in that list as of that report, with 230; data published by journalist Nora Loreto put this figure at 261 as of July 21.)
A more recent study of available data on Ontario’s COVID-19 experience in LTC published by the Canadian Medical Association Journal (July 2020) confirmed that “for-profit LTC homes have larger COVID-19 outbreaks and more deaths of residents.” This study also underlined previous research that found that for-profit homes “tend to deliver inferior care,” which they summarize as including “lower levels and quality of staffing, more complaints from residents and family, higher rates of emergency department visits, more acute care hospital admissions, and higher mortality rates.”
This direct relationship between for-profit ownership and death rates should surprise no one. It is fully consistent with the evidence published by a comprehensive, ground-breaking research collaboration led by York University’s Pat Armstrong. Over many years of comparing Canada’s increasingly private and under-funded system to those of several other countries (including Sweden and Norway), this research has repeatedly shown that profit-driven ownership consistently generates negative outcomes for residents and workers:
“Private, for-profit services are necessarily more fragmented, more prone to closure and focused on making a profit. The research demonstrates that homes run on a for-profit basis tend to have lower staffing levels, more verified complaints, and more transfers to hospitals, as well as higher rates for both ulcers and morbidity. Moreover, managerial practices taken from the business sector are designed for just enough labour and for making a profit, rather than for providing good care.”
They point out that this adoption of practices “from the business sector” exerts downward pressure on wages and working conditions – and quality of care – even in the not-for-profit and publicly-owned facilities. Among their recommendations is an end to such practices, including the extensive subcontracting of so-called “ancillary” services now recognized as crucial to both quality of care and infection control. They also confirm that the disproportionately racialized and feminized labour force has been subjected to increasingly exploitative working conditions.
Crucially, such conditions translate directly into degraded care and living conditions for residents, which these researchers suggest opens up important potential for alliances between workers, residents, and family members who share an interest in transforming this system.
New Calls for Public Ownership of Long-Term Care
The suffering of the pandemic’s hardest hit populations has obviously given significant new force to these recommendations. In recent weeks there has been a steady stream of new and ambitious appeals for long-term care to be treated as vital healthcare – and made fully public, following the model of the Canada Health Act. The Canadian Labour Congress, the Canadian Health Coalition, the federal NDP, and a growing number of public healthcare advocates are demanding a full-scale overhaul of the entire LTC sector so that it can be properly integrated into the public healthcare system. The Canadian Union of Public Employees (CUPE) has launched a major new campaign to this effect, calling for a “well-funded, well-staffed, public long-term care system.” More recently, CUPE was joined by two other unions (SEIU and Unifor) to launch a joint campaign to “end profit-making” in the provision of residential care.
Such a transformation would obviously be no small matter. It would require not only new funding commitments from governments, but also a legal mandate to transfer existing facilities from private to public (or, at a minimum, not-for-profit and strictly regulated) ownership. But the calls for such public control are finding widespread public support. An Angus-Reid poll on the issue showed that fully two-thirds (66%) of respondents supported the full-scale “nationalization” of long-term care. An Abacus Data poll recently released by NUPGE indicates an even larger 86% majority of respondents support having long-term care facilities brought under the ‘universal, accessible’ mandate of the Canada Health Act.
With such a strong mandate – galvanized by the especially catastrophic performance of the for-profit care homes throughout the COVID-19 pandemic – a genuine transformation for this sector suddenly seems achievable. The mechanics of implementation are not clear, but some measure of financial compensation for the homes’ existing private owners would likely be attached. Any such compensation should be closely scrutinized and debated, particularly given the millions of dollars in public subsidies and supports that the companies have been channelling to shareholders and owners.
Of course, the for-profit industry and its extremely well funded lobby have already launched their defence. The largest companies involved – including Extendicare, PSP-Revera, and Chartwell – have been issuing statements to the media rejecting outright the suggestion that private, for-profit ownership of so many facilities has anything to do with the crisis. Industry organizations such as the Ontario Long-Term Care Association (OLTCA) have begun to mobilize such self-interested arguments against these popular pressures, taking full advantage of their links to Doug Ford’s cabinet and Ontario’s governing PC party. The battle is now on. So, what does this mean for the pension fund-LTC operator PSP-Revera?
Pension Fund Capital in For-Profit Healthcare
PSP and Revera are already engaged in a fulsome defence of their ownership rights in this sector, so understanding some basics of their history may be useful. The full, legal name of PSP is Public Sector Pension Investment Board (PSPIB), and it was established as a federal crown corporation in 1999 after the Liberal government of the day decided to build up a fund of financial market assets linked to federal government-sponsored pension plans. One of the largest such funds in the country, they now manage some $170-billion in assets, with about $66-billion of that amount held in private equity, infrastructure, or real estate.
Among PSP’s earliest major acquisitions was a friendly $800-million takeover of an existing for-profit LTC and retirement home company (Retirement REIT) whose Board was chaired by former Tory Premier Bill Davis and also included former Ontario Finance Minister (and later premier) Ernie Eves. Once “Revera” was launched, Davis was invited to join the Board of the new company – and he is still there. These close PC-LTC industry relationships were developed even further in 2003 when former Premier Mike Harris joined the Board of Chartwell Retirement Residences shortly after leaving politics. He is still there today. This means three of the last four PC Ontario premiers have spent time on the boards of these companies – with Doug Ford the only exception.
After Revera was launched as a “private” entity, PSP quickly consolidated it into a multinational operation with more than 500 LTC and retirement homes in Canada, the US, and the UK. According to one recent study, it is now the second largest corporate LTC chain in Canada.
PSP’s move into this sector was rooted in the politics of privatization that marked the neoliberal turn of the 1980s and 1990s. Following the recession of 1991, the federal and most provincial governments worked to cut taxes and social transfer payments, reduce the role of public ownership in the economy, and make private ownership of various types of public infrastructure easier and more profitable. This was particularly the case in Ontario, where the hard-right governments of Mike Harris and Ernie Eves (1995-2003) showed an ideological preference for private, for-profit ownership in, among other areas, long-term care. According to Justin Panos’ brief history, regulatory and legislative changes in that period significantly shifted a sector that had previously been primarily public or not-for-profit into a far more attractive field for private capital to occupy.
In Ontario, these policy changes included the elimination of a minimum-hours standard of care per resident, the de-linking of public funding flows from staffing levels, and the provision of 20-year streams of government payments to for-profit corporate operators to build new LTC facilities. When combined with serious shortages of available beds for a rapidly growing senior population, these policies greatly enhanced the sector’s profitability. Real estate and financial firms began buying up and consolidating individual homes (both private and non-profit) into larger, for-profit chains operating both publicly-supported LTC as well as what have come to be called “retirement residence” facilities or “retirement homes.” (In 2015, the Ontario Teachers Pension Plan expanded their interest in the retirement residences sector by combining the Amica chain of facilities with an existing portfolio of homes under the name Baybridge.)
As a result, investors in private LTC companies, such as Chartwell, have been rewarded with consistently high profit rates, ranging from 9.6% to 12.6% from 2007 to 2012 according to one study. While Revera’s profit rates are not disclosed – even to federal public service plan members – its tax-exempt status, bestowed as a result of its pension fund ownership, suggests that its annual profits may be even higher than this. But these profit levels are not disclosed, and most financial information is even redacted out of reporting required by requests using federal Access to Information legislation.
The Contradictions of ‘Pension Fund Capitalism’
The historic shift of pension fund practices, from primarily passive investment in stocks and bonds into active, direct operation of corporations such as Revera, raises challenging questions about the relationship between pension plan members and these controversial new portfolios. It has been suggested that this could have a perverse impact on the political views of plan members and their unions with respect to sensitive policy topics such as the private ownership of healthcare facilities. A columnist with the Toronto Sun recently suggested that trade union advocates of full public control over LTC facilities don’t appear to “have much to say” about care homes that are owned by “workers’ pension funds” – citing PSP’s ownership of Revera (along with the ownership of the Amica-Baybridge chain of residences noted above). When the workers who belong to such pension plans learn that “their” funds own and profit from these companies, the columnist argued, their perspective on the legitimacy of such private ownership will become more positive simply out of financial self-interest.
However, there are several reasons that this columnist’s confidence about this is misplaced. First, it is quite clear that until recently, very few members of the federal government pension plans that use PSP were even aware that “their” pension fund owns and operates Revera. Pension plan members are told very little about the portfolios or investment practices of their funds, with managers generally limiting such communication to their latest annual ‘rate of return’ and some very abstract commentary about their investment ‘principles’. If the 850,000 members of PSP’s client pension plans were told about its Revera operation, and the real, brutal basis of its profitability, it seems likely that a very large number would want nothing to do with it – if they had any choice in the matter.
Secondly, the membership of the pension plans that have their funds invested by PSP is composed primarily of public sector workers, most of whom are, or were, members of unions with strong commitments to public services and public ownership. It also includes over 400,000 retirees and survivors receiving benefits – at least some of whom are themselves likely to be residents of a troubled LTC facility operated by Revera or one of the other for-profit facilities. These members of the client plans of PSPIB may well be even more likely to support moving to a fully public long-term care system than the general public recently polled.
Third and most significantly, the recent exposure of Revera’s ownership by PSP has prompted the largest union representing federal public service workers – the Public Service Alliance of Canada (PSAC) – to follow up on previously-expressed concerns with a public call in May for the full-scale transfer of Revera to public ownership. PSAC president Chris Aylward argues that his union has long believed that these facilities should be publicly owned and managed. He argues that the growing number of recent class action lawsuits against Revera and the grave problems exposed by the COVID-19 crisis illustrate that the PSP’s ownership of this company now poses a clear “material risk” to plan members.
PSAC appears to be quite right about this risk. According to a Toronto Star investigation, some $1.5-billion in dividend-profits have been flowing into the pockets of private LTC company shareholders over the last decade – a figure that does not even include the unreported profits captured by Revera. Now, the disaster of the COVID-19 pandemic has provoked a number of multi-million dollar class action lawsuits citing negligence causing death against Revera, Sienna, and other private operators. This litigation, combined with concerns relating to both pandemic and pre-pandemic problems, has triggered a collapse in the share values of the large for-profit LTC companies. Will these companies continue to reap significant profits in the coming years?
The PSAC, other unions, and plan members, have a very good reason to oppose “their” fund being invested in this risky and socially harmful profiteering. The pro-public control statements, campaign launches, and other responses to this crisis from the labour movement suggest that the private corporate operators in this sector have already lost a great deal of their legitimacy. This includes PSP-Revera.
Revera and the For-Profit LTC Lobby
Whether these companies can survive financially may well be decided in the battle over public policy now being waged. Will governments bail out these troubled companies, which have for years extracted large profits by underinvesting and understaffing their facilities, while underpaying workers? In the past, it has been public policy decisions that determined the portion of public funding taken in by these private providers, and it has been government policy that protected the companies from the “costs” of minimal staffing standards – despite pressure from both resident advocates and unions.
But the pandemic has provoked an intensified policy “engagement” from the for-profit LTC sector in Ontario, which is likely to have parallels across the country. It was recently reported that five of the for-profit LTC corporations (including Revera) have enlisted the services of professional lobbyists who previously worked inside the Ford cabinet to lobby their former employers on their behalf. Their agenda in doing so is no secret – they will be looking to counter the popular momentum behind moving to public ownership and management of the LTC sector.
These lobbyists will press for urgent increases in the public funding that flows to them, such that their ongoing profitability will be secured. In fact, they have already scored an important victory with the Ford government’s rapid passage of quasi-bailout legislation (Bill 161) that will provide at least some measure of “immunity” to the for-profit providers, and itself, even from entirely valid COVID-19 death-related class action lawsuits. This measure was then supplemented by an announcement of a massive infusion of public funding for new and redeveloped LTC beds, much of which will flow to the for-profit entities.
Of course, such lobbying may not even be necessary, as established neoliberal reflexes are reinforced by the close links between the for-profit LTC industry and Ontario’s PC party (noted above). In addition to his appointment to the Board of LTC operator Chartwell, former Premier Mike Harris has also spent time as a ‘Fellow’ of the hard-right Fraser Institute, arguing alongside former Reform Party leader Preston Manning for the further privatization of Canada’s public healthcare system. As noted above, former Tory premier Bill Davis has had a seat on the PSP-Revera Board from its inception. His presence surely continues to serve a useful purpose, even symbolically. While both former Tory premiers have presumably received generous compensation for their services over the years, their most important role may be as communications conduits for company agendas.
Notwithstanding such existing linkages, these corporate-political relationships are further organized and brokered through the province’s industry lobby group mentioned above, the Ontario Long-Term Care Association (OLTCA). Alongside all of the other major for-profit firms, Revera is represented on the OLTCA Board of Directors by its Senior VP for Long Term Care, Wendy Gilmour, whose personal background is in private sector lab service companies CML and Lifelabs. The primary spokesperson for OLTCA, Donna Duncan, is yet another LTC industry player with past connections to Ontario Tory politicians, having served as policy director for then-PC leader John Tory in 2006 as well as “various” roles in the Government of Ontario in the 1996-2001 period (most of the Mike Harris years).
But Revera also intervenes politically on its own accord. From the time of its formation, the company – again, a subsidiary of a federal crown corporation – has made thousands of dollars in direct donations to those provincial political parties it sees as representing its interests. (Notably, according to the National Post’s donations database, the company has not reported any donations to the NDP.) In this context, we can anticipate that Revera, alongside its fellow for-profit LTC operators in Ontario and across Canada, will be working hard in the coming weeks to defend for-profit long-term care, and to politically oppose the growing popular calls to make the entire sector public.
Challenging Revera and ‘Pension Fund Capitalism’
Most workers do not want their pension benefits, or their RRSP or mutual fund investments, to be built from the exploitation of other workers, or the privatization and degradation of public services such as healthcare (including long-term care). For this reason, it should not be surprising that the pension and retirement fund industry appears to limit disclosure of their most politically sensitive investments. The PSAC’s call for relinquishing PSP’s ownership of this company, and its transfer into public hands, is an exceptionally bold demand. Similar calls from other unions representing federal public service workers, and from members of the general public, may well follow.
But while the Revera case may be a particularly disturbing example of predatory pension fund investment, it is not exceptional. The PSP also holds significant private equity stakes in corporate entities that own and operate other kinds of public infrastructure, including airports, electricity generation and transmission, toll highways, child care centres, and even a US company specializing in for-profit physician outsourcing. These are among the most socially and politically sensitive types of “public infrastructure,” and include investments into functions that many people in Canada (and many pension plan members) feel should be publicly owned and managed in the public interest.
These kinds of investment holdings and practices reflect an industry-wide 20-year trend among Canada’s large pension funds, including CPPIB, Ontario Teachers, Caisse de dépôt et placement du Québec (CDPQ), and OMERS. Such pension fund strategies reflect the ongoing ‘financialization’ of vital public services and infrastructure. Virtually all of the largest Canada-based pension funds have channeled billions of dollars into these very same sectors, often in other countries where their controversial social impacts are less likely to be reported. As with the case of Revera and long-term care, these large pension funds have not only taken advantage of the opportunities that neoliberal policies have created, they have also collaborated and formed partnerships with other giants of global finance to maintain and extend them ever further.
These powerful collaborations and agendas must be politically challenged. When institutions of private capital like PSP-Revera run into inevitable clarifying moments – such as the COVID-19 pandemic – social movements of workers and public interest advocates need to seize them to build the counterweight we need. In this case, two key strategic initiatives present themselves. First, the tragic case of Revera, and the loud new calls for long-term care to be made fully public, offer an opening for those of us arguing that this system can only be fully fixed through a combination of accountable public ownership and enough public funding to allow the care work at its centre to be fully decommodified, valued, and properly compensated. Along with trade union and social advocacy campaigns in this direction, pension plan members and their unions can insist that any pension investments involving privatization or private for-profit management of public services and infrastructure be, at bare minimum, fully disclosed. As a principle, we should know what is being done in our name, with what we are told is “our” money. From there, we can entertain the serious debates needed about how we can work to ensure that the role currently played by pension funds and other forms of private capital in the provision of healthcare, social care, and other vital public services is phased out entirely.
Secondly, and over the longer term, the labour movement and the retirement security movement need to develop a strategy for reversing the expanded “financialization” of our pension system. That process has involved more than just workplace pension plans and fund managers like PSP. Through a series of public policy measures, the Canada Pension Plan (CPP) and the Québec Pension Plan (QPP) were re-engineered into massive financial asset funds that now hold over $750-billion in global financial markets. As these funds were being built up, retirement security was being re-framed as an individual under-investment problem, to be solved through more private savings into individualized RRSPs and investment savings accounts – highly profitable products that channel these savings into financial markets with ecologically destructive and anti-social appetites. In that light, the Revera case and the COVID-19 pandemic have underlined the serious risks of building our vital social systems on a foundation of private financial profits. The alternative we now urgently need is a universal and adequate public pension system that is secured – like public healthcare – by our collective commitment to each other.
Oh boy! I wasn't going to touch this with a ten foot pole but after reading it, I decided it definitely is Pension Pulse worthy.
First, let me thank Sam Boskey for sending this comment. Sam is a proud Montrealer and an even prouder Lefty. He he has been a provincial civil servant for many decades. He represented south-eastern NDG on Montreal City Council for most of the 1980s and 1990s, first for the Montreal Citizens’ Movement and later for the Democratic Coalition of Montreal, under three different Mayors.
Sam is part of an old email distribution list (called UGLYNEWWORLD) started by the late Sam Noumoff, a "radical Leftist" who taught politics at McGill University for decades (he was one of the nicest and smartest professors I ever had when I took an elective course he taught and I enjoyed many dinners with him and the rest of the Men's Club at Alep restaurant here in Montreal).
My own political and economic leanings are right of center but I've learned a lot about capitalism from guys like Sam Noumoff, Tom Naylor, George Archer, Jonathan Nitzan, Robin Rowley, Sam Boskey and others.
I have also openly stated on a few occasions that greatest intellectual tour de force I ever came across is professor Charles Taylor, a renowned political philosopher who is a card carrying member of the NDP.
So if I used to hang around with all these Lefties and admire their intellectual prowess, why do I lean right of center? Maybe because I've worked in finance and genuinely believe in the primacy of the private sector. Without a strong, vibrant private sector, you simply can't afford to have a strong and vibrant public sector.
It doesn't mean I think capitalism is perfect, far from it, and I will touch more about it tomorrow when I go over Ray Dalio's latest warning on the crisis of capitalism:
Billionaire investor Ray Dalio on capitalism’s crisis: The world is going to change ‘in shocking ways’ in the next five years https://t.co/3QFYdyCljV— MarketWatch (@MarketWatch) September 17, 2020
Now, let me get back to Kevin Skerrett's comment above as it's extremely critical not just of PSP-Revera, but also of the process he has dubbed as "pension fund capitalism" which according to him, pervades all of Canada's large public pensions and is a real cause for concern as it exposes all these large public pensions to "predatory pension investments".
Before I share my thoughts with you on the comment above, please note I did send it to PSP's President and CEO, Neil Cunningham, as well as to Darren Baccus, Senior Vice President and Global Head of Real Estate and Natural Resources, over the weekend.
Not surprisingly, they didn't get back to me and are probably reluctant to discuss this comment publicly for legal reasons (Mr. Baccus used to head up PSP's Legal department so I'm sure he told Neil not to comment and PSP generally avoids making any public comments).
That's fine, I totally understand PSP's corporate culture but I would have appreciated some feedback.
I think it's fair to state Revera has been an unmitigated communications disaster for PSP Investments:
- Public sector union calling on PSP to end investment in long-term care operator
- PSAC calls on public service pension plan to pull out of the business of long-term care
- One of Canada's largest long-term care operators is owned by a federal Crown corporation
- Feds 'Urgently' Need To Make Private Nursing Homes Public After COVID-19 Outbreaks
- It is time to forget the profits and fix long-term care
- Ottawa should renounce ownership in for-profit long-term-care sector
From that last article:
In a column on May 11, I reported that the federal government owns 100 per cent of the second largest chain of for-profit nursing homes and retirement residences in Canada, Revera Inc., which, as it happens, is also the second largest for-profit operator in the United States.
That ownership is held through a Crown corporation, the Public Sector Pension Investment Board, which invests the pension contributions of federal public servants, Canadian Armed Forces and the RCMP. PSP Investments, as it known, created Revera in 2007 when it purchased retirement residences and LTC homes from the Reichmann family.
Although none of the five nursing homes in the military report is owned by Revera, the company has been the focus of considerable controversy and legal activity. Its Forest Heights Long-Term Care Centre in Kitchener has been the epicentre of the COVID-19 crisis in Waterloo Region, as another Revera property, McKenzie Towne Continuing Care Centre, has been in Calgary.
Dozens of lawsuits have been filed over deaths at Revera homes in Western Canada and Ontario. In the largest COVID-related class action in Canada, six representative plaintiffs are seeking $120 million in damages against Revera and Sienna Senior Living Inc., another for-profit chain.
Even without the COVID-19 deaths and lawsuits, why the government would want to be in the business of squeezing profit from the care of frail, elderly citizens is a question that deserves to be asked.
It was not until last Thursday, however, that the question finally got asked, by NDP leader Jagmeet Singh, and answered, after a fashion, by Deputy Prime Minister Chrystia Freeland. She said federal pensions funds are managed by independent Crown corporations — in addition to the PSPIB, there is a separate Crown corporation for the Canada Pension Plan. But, she added, the “ownership structure” of LTC facilities “is something that needs on be on the table.”
I am puzzled by the PSPIB. In its 2019 annual report, the investment board expresses sensitivity to environmental issues: “We strongly believe that environmental, social and governance factors — such as climate change, health and safety and ethical conduct — are material to long-term returns and that we need to integrate them into our investment decision-making processes.”
But there is no indication in the report that the board has any interest in the care, or lack of care, of patients in the LTC homes it holds for the federal government.
I went over PSP's 2009 Annual Report. Back then, they used to post the compensation of Revera's CEO:
And they added a footnote: "Mr. Watchorn is not an employee of PSP Investments, but is employed by Revera Inc., a wholly-owned subsidiary of PSP Investments. His compensation is based on a contract with Revera Inc. Revera Inc.’s financial year ends on December 31."
I'm not sure how much Mr. Wellner earns but I'm sure it's market rate which is a few million dollars a year.
Now, to be fair and completely honest, I haven't reached out to anyone at Revera, I don't know them at all and I'm sure they have been extremely busy ever since the pandemic hit Canada.
It's also worth noting that this isn't the first time Revera has received bad press.
In 2016, a Toronto malpractice lawyer launched an unprecedented multimillion dollar class-action lawsuit against Revera, charging that it routinely neglected or mistreated elderly residents.
The multimillion-dollar suit was prompted by the case of Ross Jones, a 68-year-old man who allegedly spent the last days of his life in agony, an infected pressure sore left untreated by a Revera Inc. facility.
At the time, John Beaney, a former Revera vice-president, said he could not comment on the specifics of the allegations, but argued the suit lacks merit:
“We’ve been operating as an organization for more than 50 years … and have successfully cared for hundreds of thousands of people,” he said. “We’re very proud of our dedicated employees who provide that care.”
He also noted that nursing home residents have increasingly complex health issues, their deaths often a result of multiple factors.
“When a resident passes away … it’s not black and white and this can understandably make it difficult for loved ones, who seek answers in those cases.”
Mr. Beaney is still with Revera, SVP Retirement, and I never found out the fallout from this class action lawsuit.
He is right about one thing, nursing home residents have increasingly complex health issues, and their deaths often are a result of multiple factors.
It's easy to point the finger at neglect and mistreatment, sometimes it's just that there are underlying health conditions which are very complex and can make the old and frail a lot more vulnerable to death.
We saw this with COVID-19. Canada's long-term care facilities (LTC) got hit very hard.
We have one of the worst track records among any OECD nation, if not the worst.
From Quebec to Ontario to British Columbia, public and private long-term care facilities got hit hard during this pandemic, and we lost too many people that quite honestly shouldn't have died.
Importantly, we as a nation failed our most vulnerable citizens, we should all be ashamed of this.
But to politicize this tragedy the way Kevin Skerrett does above and to blame it on "pension fund capitalism" and "predatory pension investments" is just ridiculous and plain wrong.
I can tell you for a fact, one of the worst hit long-term care facilities in the country was Town of Mount-Royal's Vigi Home, right in my backyard.
Investigators are still looking into the catastrophic outbreak that infected all residents of TMR seniors' home, killing over 70 people.
The Canadian Armed Forces were called in, I saw them in the parking lot loading up dead bodies, it was horrific.
Anyway, the Army report found workers at this publicly run facility stole PPEs (personal protective equipment) and neglected patients, it was a disaster.
Now, to be fair, another bigger catastrophe in Montreal was CHSLD Herron, a privately run long-term care facility run by incompetent criminal fools who were tied to the mob and where abuse and neglect was rampant.
The point is there are plenty of cases of mismanagement, neglect and abuse at both private and public long-term care facilities in Canada, and I question Mr. Skerrett's biased comment which basically claims abuse and neglect was much worse at for-profit facilities.
This isn't to say we don't need a commission to investigate what went wrong and how we can make sure this never happens again but to blame private long-term facilities and neoliberal deregulation is just a bunch of left-wing nonsense.
I can't stomach that crap and I don't care if it comes from Mr. Skerrett, CUPE or PSAC.
What else do I find ridiculous in his comment? His entire discussion on pension fund capitalism and predatory pension investments is so ill-informed and just plain ludicrous.
Canada's large pensions are known to be the best pensions in the world. That's a fact.
They are run like businesses and are run by professionals who have extensive experience managing public and private assets in the best long-term interests of their members. This includes adopting the best ESG standards for all their investments across public and private assets.
Importantly, the cornerstone to their success is a governance model which keeps government out of their day-to-day operations.
All this is totally lost on Mr. Skerrett and these public sector unions whose members benefit the most from the success of the Canada model".
Is the governance at Canada's large public pensions perfect? No, it isn't, it's a work in progress, but to lambast them and accuse them of "predatory pension investments" is so wrong on so many levels.
I know Neil Cunningham, PSP's President and CEO. I guarantee you he has had multiple calls with Mr. Wellner, Revera's CEO, over the past six months to discuss the pandemic and how they are treating and caring for their patients.
There's no doubt in my mind Neil cares about these people, none whatsoever, and if he thought Revera was doing a lousy job, heads would have rolled. I'm convinced of this.
All this to say it's easy for Mr. Skerrett and others to criticize from the outside, they have no clue what is going on in the background.
And I'd rather have PSP Investments managing long-term care facilities than some bozo government agency where there's literally no accountability whatsoever.
Having said all this, I do agree with Mr. Skerrett on one thing, the pandemic has exposed PSP and its members to litigation risk and this can go on for years and potentially cost cost hundreds of millions of dollars. There will also be increased regulations and much more scrutiny on all long-term care facilities.
That all remains to be seen, however, so it's hard to gauge the fallout right now.
The other problem for PSP and other large pensions investing in long-term care facilities is how the pandemic will impact demand in the years to come.
On the one hand, more people are getting older with all sorts of health conditions and will require long-term care, on the other, I'm not so sure people will be carting their loved ones off to a long-term care facility as they have been doing pre-COVID. I wouldn't want to see my loved ones die like that, nobody would.
Alright, I realize this is a long comment but I needed to cover this topic and give you my thoughts.
If you have anything to add, feel free to reach out to me at LKolivakis@gmail.com.
Below, Revera CEO Thomas Wellner welcomes you to Revera .He doesn't sound like an evil capitalist to me.
Also, a Director of Care explains a day in her life at Revera. Remember, Revera is global now.
Lastly, the Canadian military's report into Quebec's long-term care homes during the COVID-19 crisis found ongoing staff shortages and issues with the use of personal protective equipment.
As I stated above, this is a national tragedy, a disgrace that needs to be thoroughly investigated and we need to learn and make sure it never happens ever again at public and private long-term care facilities.
Update: Wayne Kozun, CIO at Forthlane Partners and former SVP at OTPP, shared this with me after reading this comment:
I enjoyed your response to this Leo. A couple of other things I would add.
- The story implies that it was just recently "revealed" that PSP owns Revera. You showed that there was info on Revera in PSP's annual report from 11 years ago. This was not a secret. If PSP members were not aware that the plan owned Revera then that is their own ignorance of failing to pay attention.
- The story talks about privatization of LTC. I am not an expert on this, but I don't think that LTC homes were ever primarily government owned institutions. These were always privately run. You can argue that for profit is not a good model, but that is a different issue.
- Amica/Baybridge is mentioned in the article. I was part of OTPP creating Baybridge. Baybridge owns and operates independent living and assisted living homes, not LTC. The difference is that LTC are nursing homes that are populated by very old and frail people. Independent living and assisted living are different and have much less of a healthcare component. They are more like apartment buildings for seniors with food service and some lighter nursing care.
I thank Wayne for sharing his wise insights with my readers.
Also, on Friday morning, James Infantino of the Public Service Alliance of Canada (PSAC) shared this with me:
I was obviously interested in your most recent posting on PSP Investments and Revera Inc.! I am not sure you are aware or not but on Wednesday evening the PSAC in conjunction with the Canadian Health Coalition sponsored a very successful cross-country virtual Town Hall meeting in support of the “Make Revera Public” campaign. The event is already receiving media interest (see here) and the PSAC anticipates further news coverage in the forthcoming 24 to 48 hours.
I think it is important to emphasize that the PSAC does not claim that PSP Investments or Revera Inc. are a bunch of capitalistic evil-doers out to deliberately annihilate seniors in private long-term care facilities. Rather, the point is that the for-profit model does not work and is a failure in the long-term care industry. For your information, I am attaching copies of the exchange of e-mail correspondence between PSAC National President, Brother Chris Aylward and PSP Investments CEO Neil Cunningham which raises the concerns of the “material risk” Revera Inc. presents to the pension funds of our members.
As for your Mr. Kozun, please advise him that the PSAC has had concerns with Revera Inc. dating back to 2012 when approximately 80 Licensed Practical Nurses, Health Care Aides and other support workers at Revera Inc. long-term care facility in Alberta (Revera Riverbend, were forced out on strike in an attempt to negotiate a first collective agreement for “salary and working conditions equivalent to industry standards”.
The response of then PSP Investments CEO to a formal request from the PSAC to intervene with Revera Inc. that PSP Investments does not involve itself in the operational matters of its subsidiaries was frankly B.S.. Fortunately, the Alberta Government at the time, out of concern for the welfare of the residents of Revera Riverbend, issued a Ministerial Order which put an end to the strike and referred the outstanding issues to binding arbitration.
Secondly, Mr. Kozun is right that Revera Inc. operates chains of both “long-term care facilities” as well as “retirement residences”. The latter are less problematic for the PSAC and would probably not be included in the proposal to transition the management and operation of these facilities to the provincial jurisdictions in which Revera Inc. operates.
As I said during the “Make Revera Public” Town Hall meeting, PSAC is determined to pursue this matter and be on the right side of history in this debate. Are you?
I thank James for sending me this message as well as the email correspondence between "Brother Chris Aylward" and Neil Cunningham, PSP's President and CEO.
James allowed me to share this with the public but for brevity purposes, I am only sharing Neil's email response (added emphasis is mine):
Dear Mr. Aylward,
Thank you for your letter dated May 11 regarding PSP’s investment in Revera Inc. The impact of the COVID-19 pandemic on long-term care facilities across Canada has been devastating as we all now know and we at PSP have the deepest sympathy for those who have succumbed to COVID-19, their families, their friends and all those effected, including the staff who cared for them.
PSP insists that our investment partners who operate the assets in which we invest use best industry practices in their operations, including, but certainly not limited to, health and safety concerns for the workers and all those who access our facilities. This is especially true for residents and staff of Revera operated long-term care homes and other facilities.
Revera has been operating elder care facilities for close to 60 years, with dedicated and professional management and employees. At the time of our acquisition of Revera in 2007, PSP put in place a public company-style governance structure with an autonomous Board of Directors that oversees Revera’s activities and ensures it consistently applies best industry practices throughout its long-term care facilities. The Revera Board is composed of a majority of independent Directors, including two former medical professionals, with deep and relevant industry experience, expertise and skill sets to rigorously oversee the quality of care provided at Revera facilities.
The structural issues in the long-term care system, many of which stem from chronic under-funding, have long been apparent to those involved in the industry. Sadly, it has taken a horrific event to bring those issues to the forefront, but we’re hopeful that, if there is a silver lining in this very dark cloud, there will be a review of the sector that leads to positive change. Revera has always worked within the long-term care system to try to improve it and they are today committed to being part of the solution going forward. For more background on Revera’s initiatives towards constantly improving care within its facilities as well as some statistics from industry studies on care levels in long-term care homes, including some broken down by ownership type, I invite you to read the recent release by Revera here.
I would caution you against relying on media reports of potential litigation as a means of risk assessment of PSP’s investments or as justification for a divestiture decision. PSP has a very robust risk management process and I can assure you that this investment has been subjected to appropriate scrutiny and does not in our view represent undue risk for the Federal Public Service Pension Plan.
It is unfortunate that you were not available to get together in Ottawa when I was there. I hope that we’ll find a mutually convenient time to meet at some point in the not too distant future, although obviously not possible in the very near term. In the meantime, I trust you, your family and colleagues are all safe and well.
James Infantino also told me PSP Investments will be doing its annual update to stakeholders next Friday (virtually) and the PSAC plans to raise the issue of Revera directly with PSP's senior managers. I'm looking forward to getting an update on that meeting, it will be very interesting.
Lastly, I did reach out to Thomas Wellner, CEO of Revera, on Friday morning to inform him of my blog comment and Susan Schutta, Vice President of Corporate Affairs, sent me back this response:
Mr. Wellner shared your email with me and requested that I follow up with you. We have both read your blog and we appreciate the passion with which you raise the need to address systemic issues in Canada’s long term care sector. We agree that the sector has not received the support or funding needed from governments across Canada, and that more attention needs to be brought to the sector if we are to address longstanding issues such as labour shortages and a stable workforce. As Revera outlines in our May media release, these pre-existing systemic issues impacted operators of all ownership models.
Change is needed in the long term care sector. It is important that we invest time and energy advocating for the right change.
Thank you for your passion and commitment to improving the long term care sector in Canada.
I thank Mr. Wellner and Ms. Schutta for sending me their response on this matter.