Report - OANHSS

OANHSS
A Submission to the Ontario Standing
Committee on Finance and Economic Affairs
March 2013
Ontario Association of Non-Profit Homes and Services for Seniors
Index
page
1.0
Introduction
1
2.0
Maintaining the Gains in LTC
1
3.0
2.1
Past Gains
1
2.2
Maintaining Resident Care Gains with Improved
Financial Management
3
2.3
Maintaining Safe and Comfortable Home Environments
9
Conclusions and Summary of Recommendations
10
1.0 Introduction
OANHSS is the provincial association representing not-for-profit providers of long term care (LTC),
services and housing for seniors. Members include municipal and charitable long term care homes,
non-profit nursing homes, seniors' housing projects and community service agencies. Member
organizations operate over 27,000 long term care beds and over 8,300 seniors' housing units across
the province.
This submission provides input from the non-profit LTC provider perspective on how the system can
be improved through financial policy changes and enhancements; changes that the Ministry may wish
to include in its 2013-14 budget process.
The primary objective guiding the development of our recommendations is to maintain care levels
and ensure safe and comfortable places for frail seniors to live, through improved funding processes,
and modest operations and infrastructure investments.
In this paper we offer recommendations that would simplify an overly complex and rigid funding
system that has resulted in millions of dollars being returned to the Ministry that was intended for
resident care. OANHSS recommends a funding methodology that would result in greater resident
focus and increased efficiency. These recommendations include the collapse of some funding
envelopes and minimizing reliance on supplementary funding pots in a manner that equalizes that
revenue source across all homes and ensures more funding is committed to care rather than homes
returning unused funding to the Ministry.
We also offer recommendations that will deal with the important issue of capital redevelopment and
maintenance. The focus here is on the Redevelopment Program for older homes and the somewhat
ignored area of funding for minor capital maintenance.
2.0 Maintaining the Gains
2.1 Past Gains
LTC funding over the past decade has been substantial and is appreciated by providers and residents.
Overall, core 1 LTC funding has increased at an average rate of 3.5% per annum. Figure 1 below shows
the growth in total core funding which has grown from $110.73 per resident day (prd) at January 1,
2003 to $155.47 prd at January 1, 2013; overall a 40% increase.
1
By ‘core funding’ we are referring to the four funding envelopes through which funding is allocated and tracked.
1
OANHSS Submission to the Standing Committee on Finance and Economic Affairs – March 2013
The two largest components of core funding are for direct resident care (the Nursing and Personal
Care envelope) and accommodation (the ‘Other Accommodation’ envelope) where homes fund the
management, administration, laundry, dietary and related elements of the operation of the home.
The care envelope today accounts for 56% of core funding and the accommodation envelope
accounts for 34% of all core funding. Growth in funding in these two areas is detailed in Figure 2
below. 2
Figure 2: NPC and OA per diem
Jan 1, 2003 to Jan 1, 2013
Figure 1: Total LTC per diem
Jan. 1 2003 to Jan 1. 2013
$180
$100
$160
$80
$140
$60
$120
$40
NPC
$100
OA
$20
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
$80
$0
2003
Funding at January 1
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Funding at January 1
The funding envelope with the most substantial funding increase over the past decade has been the
care envelope which increased by $27.38 per resident per day (45.8%) between 2003 and today; an
annual rate of 3.9%. The rate of growth in the Other Accommodation (OA) envelope has been slower
than that of care envelope at 2.4% annually. Over the past decade it has increased by $11.09 per
resident day (26.9%).
In addition to core funding increases the Ministry has provided targeted funding for select human
resources. Over 2007 and 2008 the Ministry added funding for 1,200 Registered Practical Nurses
(RPNs). In the 2008-09 Provincial Budget the government pledged funding for 2,500 Personal Support
Workers (PSWs) and 2,000 “nurses” 3 to be dedicated to the LTC sector. To date all of the RPNs and
PSWs have been allocated and, we estimate, 624 of the 2,000 nurses.
The Sharkey Report 4, in May 2008, also recognized the need for increased staff and recommended an
increase in staffing, or level of care, to 4.0 paid hours per resident per day by the end of 2011-12.
‘Level of care’ refers to the average amount of time that care staff can provide to each resident each
2
Two other areas, or envelopes, in core funding are Program Supports and Services and Raw Food. Together these two
areas account for roughly 10% of core funding. These envelopes will be discussed in subsequent sections.
3
The Ministry has never identified the breakdown, if any, between Registered Nurses and Registered Practical Nurses.
4
People Caring for People: Impacting the Quality of Life and Care of Residents of Long-Term Care Homes. A
Report of the Independent Review of Staffing and Care Standards for Long-Term Care Homes in Ontario. May 2008. “The
Sharkey Report”
2
OANHSS Submission to the Standing Committee on Finance and Economic Affairs – March 2013
day. The human resource investments noted above have enabled gains in the level of care available
to residents. Currently, including the human resource additions described above, non-profit homes
are estimated to provide an average of 3.14 hours per resident day5. Significantly short of the 4.00
hours that Sharkey recommended.
These gains are being eroded as resident need continues to grow and resources do not keep pace.
Given that, and our understanding of the government’s budgetary situation, we offer a set of low and
no cost recommendations that will effectively help the sector to stretch existing dollars to the
maximum through refinement to the existing funding approaches. We also seek modest funding
increases to meet only the basic resident needs.
2.2 Maintaining Resident Gains with Improved Financial
Management
In this section we provide a high level and simplified description of the MOHLTC LTC home funding
model. We follow that with a description of recommendations for changes to the funding model that
would result in:
•
Increased care funding to recognize rising care needs and a system to measure year over year
changes in care funding needs going forward.
•
Reduced amount of funds flowing back to the Ministry and a redirection of those funds back
into care.
•
Reduced funding complexity and associated administrative workload for providers, the
Ministry and LHINs.
•
Increased care funding stability.
Although the focus of our recommendations is largely on making better use of existing funds, we
cannot avoid the fact that a minimal increase in core funding will be inevitable to maintain staffing
levels to provide the current level of care to the ever-changing LTC population. Given the escalating
level of needs of the LTC resident population, additional investment is required simply to maintain
the same standard of care. Therefore, our first recommendation is for a 2.0% increase to the NPC
and PSS envelopes. As well, in recognition of the high rate of food cost growth, we recommend a
2.0% increase to the current raw food envelope. We estimate the average home will see increase to
care-related funding of $2.06 per resident per day (prd), broken down as follows: $1.74 prd to NPC,
$0.17 prd to PSS and $0.15 prd to RF.
5
3
OANHSS Benchmarking Survey, 2012.
OANHSS Submission to the Standing Committee on Finance and Economic Affairs – March 2013
Recommendation 1: That the Ministry of Health and Long-Term Care budget for a 2% ($2.06 prd)
increase to care needs ($1.74 prd to NPC, $0.17 prd to PSS and $0.15 prd to RF).
Input costs, such as utilities, maintenance, equipment, etc., to the operation of LTC homes continue
to climb. Historically, the Ministry has recognized these pressures through increases to the OA
envelope per diem. Since 2003, the OA per diem has grown at a rate of approximately 2.42% per
annum (see Figure 2, above). OANHSS would urge the Ministry to provide a 2.00% increase to the
current OA envelope per diem in 2013-14. We estimate the cost of this increase to be $1.04 prd.
•
Recommendation 2: That the Ministry of Health and Long-Term Care budget for a 2% ($1.04
prd) increase to the current Other Accommodation envelope to compensate for increased
input costs experienced by the sector.
2.2.1 The Current Funding Model
Apart from resident co-pay 6, core funding to LTC homes comes through an envelope system. The
system includes four envelopes, three of which, Nursing and Personal Care (NPC), Program Supports
and Services (PSS) and Raw Food (RF) are referred to as flow-through, meaning if there are funds
remaining at the end of the year they must be returned to the Ministry. The three envelopes are
directed primarily to funding resident care. One envelope, NPC, is adjusted for each home based on a
measure of its residents needs relative to the resident needs of other homes. The measure is called
the “Case Mix Index” (CMI). It’s a method for sharing a fixed pot of money (NPC funding envelope)
while recognizing different levels of resident need within each home. We will return to the CMI
below.
The fourth envelope, Other Accommodation (OA), is not a flow-through and homes are able to retain
unspent funds. As noted earlier, the OA envelope is intended for the ‘room and board’ service
provided by the home. All four envelopes are illustrated along the left hand side of the figure below.
In addition to the envelope-based funding, there are also a number of supplementary funding pots
intended for targeted purposes. Ten ‘pots’ are illustrated and named in Figure 3 below. Homes may
be eligible for funding in any number of these pots. The RPN and ‘nurse’ funding described earlier
constitutes two of these ‘pots’ (i.e. Pot #5 RN funding for “RAI Coordinators” and Pot #6 RPN
Funding).
6
All residents are required to contribute a co-payment for the room and board component of the services they receive in
a LTC home. The basic co-pay is, in effect, Ministry revenue and flowed back to the home as the “Other Accommodation”
per diem. Homes may also collect a “preferred accommodation” per diem based on the type of accommodation (i.e.
private and semi-private rooms). Homes keep these preferred accommodation revenues.
4
OANHSS Submission to the Standing Committee on Finance and Economic Affairs – March 2013
layoffs in care staff that impact negatively on both the consistency of care and the quality of
the workplace. For example a recent news story told of a rural home realizing a reduction of
$137,000 resulting in cuts of more than two FTE nursing staff.
This funding model is overly complex, inflexible and inefficient resulting in excessive administrative
overhead, funding volatility, and under-utilization of funds that should be going to resident care. In
today’s fiscal environment, or any fiscal environment, this is not acceptable.
2.2.2 Maximizing Care Funding through Reduced Funding Complexity
We recommend changes in each of the areas discussed above (Envelopes, Supplementary Pots, and
the CMI Adjustment). We believe that the proposed simplifications will go far to eliminate the
problems identified and will do so at no or very low cost to the government.
2.2.2.1 Envelope Issues
We recommend that the three care-related envelopes be collapsed into a single care envelope. This
would result in a two envelope funding structure to balance (Care and OA). As a consequence,
administrative overhead would be reduced, flexibility in financial management would be increased,
and more care dollars would flow to resident care rather than back to the MOHLTC. Critical areas of
expenditure, like food, could still be monitored through the reconciliation process to ensure that
minimal spending levels are maintained.
Recommendation 3: That the Ministry of Health and Long-Term Care collapse the current Nursing
and Personal Care, Program Supports and Services and Raw Food funding envelopes in a single,
flow through, acuity-adjusted envelope and retain the Other Accommodation envelope as a noncare unadjusted envelope.
2.2.2.2 Supplementary Pots
The original intent of most supplementary pots was to address cost differences between various
subsets of homes within the sector. Different cost drivers developed historically between the various
types of homes: i.e. municipal, charitable, and nursing homes. More recently, the pots have also been
used for targeted human resource funding initiatives. Although OANHSS is supportive of the original
intent of pots to balance cost differences within the sector, we assert that the individual pots would
need to be maintained and reviewed on a regular basis to ensure their appropriateness. Over time
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OANHSS Submission to the Standing Committee on Finance and Economic Affairs – March 2013
we have seen some pots grow in concert with need and others stagnate and fall behind current
pressures.
Consistent review of all pots has not been a regular practice and is unlikely to happen with any rigour
in the future. As a result, OANHSS is recommending that this approach of selective compensation for
cost differences be abandoned and that we move to a ‘free market’ approach by moving all current
subsidies into the new two envelope system. The transition from ‘pots’ to envelopes will require a
mitigation strategy given the disparity currently existing between provider types.
Two supplementary funds would remain: Accreditation and Structural Compliance. Accreditation
provides an incentive for homes to become and remain accredited. This incentive contributes to an
improved service quality in LTC and should remain separate and provided only to those homes that
qualify. “Structural Compliance” funding provides financial recognition to homes that approximated,
but did not meet, the 1999 design guidelines without government support. The beneficiaries of this
program is the same group required to upgrade to the most recent design guidelines through the
Redevelopment Program discussed on page 10, below. We feel that this recognition should also
remain until the B and C home redevelopment project is complete.
We have recommended a mitigation strategy to the MOHLTC that will protect homes currently
receiving higher than average funding and will increase revenue for homes currently receiving less
than average funding. A proposed mitigation strategy has been outlined in a technical funding
submission to the MOHLTC. We estimate, based on available 2010 summary data, that the cost
would be approximately $1.41 prd.
Recommendation 4:
That the Ministry of Health and Long-Term Care consolidate all
supplementary pots with the exception of the Structural Compliance Fund and Accreditation
Allowance, into the proposed two envelope funding model. In addition, a mitigation strategy, as
described by OANHSS in our submission to the Ministry Results-based Planning process, is also
recommended.
2.2.2.3 Year over Year Funding Stability
The NPC per diem is adjusted by the homes assessed CMI in order to adjust care funding to the care
needs of the residents. For example, if the NPC per diem was $100.00, homes with a CMI of 1.0000
would receive $100.00 (1.0000 * $100.00), however, if a home has a CMI of 0.9000, a lower CMI,
their adjusted NPC per diem would be $90.00 (0.9000 * $100.00). Adjusting based on the entire per
diem creates two problems: first, it does not recognize the fact that there are fixed costs in the care
envelope (current and proposed), and second, the adjustment of the entire envelope can create
7
OANHSS Submission to the Standing Committee on Finance and Economic Affairs – March 2013
lower need seniors in the community opening up beds for higher need seniors from the wait list.
Increased acuity levels create increased care requirements and resources. The system requires a
method of measuring change in the resident population acuity in order to gauge changes in resource
requirements at the system and the home level. OANHSS urges the Ministry to make the
development of a measure of year over year change in resident population acuity a priority.
Recommendation 6: That the Ministry of Health and Long-Term Care make the development of a
measure of year over year change in LTC resident acuity a priority for 2013-14.
2.3 Maintaining a Safe and Comfortable Home Environment
Maintaining the gains of the past decade include not only the human resource and other direct care
related gains, but also gains in terms of the quality of the LTC homes’ physical environment; from the
building to the refrigerators in the kitchens. The physical environment is important to the care,
safety and comfort of LTC residents and it must receive attention and be maintained as much as
direct care levels.
2.3.1 Capital Redevelopment Program
The Ministry introduced a Redevelopment Program in 2009 with the mandate to redevelop 35,000
beds in older LTC homes over a 10 year period.
To date uptake has been slow. The stated reason for the low uptake was that the funding provisions
were not adequate to properly finance redevelopment. An increasing number of homes needing
redevelopment are experiencing difficulty in filling their beds despite the existence of a 19,000
person waitlist. The government needs to identify the true cost of redevelopment and provide
adequate funding to ensure the upgrade of these homes. Other barriers identified through various
consultations also need to be considered.
Recommendation 7: That the government identify the true cost of redevelopment of this large
segment of LTC homes to ensure that residents have equal access to safe and comfortable homes
across the province.
2.3.2 Minor Capital Fund
The redevelopment program is a great component of a rolling system-wide infrastructure renewal
plan, but, attention also needs to be paid to ensuring the quality and longevity of individual homes
9
OANHSS Submission to the Standing Committee on Finance and Economic Affairs – March 2013
during their functional life time. This focus would include ensuring that HVAC systems are efficient
and functional, roofs are replaced as need, fire protection is effective, food preparation equipment is
up to date, functional and safe, lifts are safe and properly installed, and much more. Without proper
attention to minor capital upgrades such as these, the functional lifetime of homes can be shortened
and the degree of comfort and safety that they provide residents diminished far sooner than
necessary. Unfortunately, there exists no minor capital funding for the maintenance of existing
buildings and equipment like the Health Infrastructure Renewal Fund that is available to hospitals.
Recommendation 8: It is recommended that the Ministry enable access for LTC homes to the
Health Infrastructure Renewal Fund (HIRF) to which hospitals have access for minor capital needs.
3.0 Conclusions and Summary of Recommendations
OANHSS and its members recognize that controlling program cost is very important and secondary
only to the need to maintain, as efficiently as possible, the quality and level of care of our residents.
This is a difficult balance to find. In our submission we have presented a set of recommendations
that will prevent the LTC system from losing the gains that have been realized over the past decade.
We have kept real funding increase requests to a minimum and the level of those increases have
been estimated without factoring in wage inflation. We have also recommended a number of
funding model changes that will go far to reduce care funds from flowing back to the Ministry as a
result of the current, overly complex and rigid, funding model. Finally, we have offered
recommendations that will protect the quality and safety of the built environments within which our
residents live. Overall, we feel that we have found the balance that respects the fiscal realities and
directions of government, but also allows the gains of past investments to be maintained.
Recommendation 1: That the Ministry of Health and Long-Term Care budget for a 2% ($2.06 prd)
increase to care needs ($1.74 prd to NPC, $0.17 prd to PSS and $0.15 prd to RF).
Recommendation 2: That the Ministry of Health and Long-Term Care budget for a 2% ($1.04 prd)
increase to the current Other Accommodation envelope to compensate for increased input costs
experienced by the sector.
Recommendation 3: That the Ministry of Health and Long-Term Care collapse the current Nursing
and Personal Care, Program Supports and Services and Raw Food funding envelopes in a single, flow
through, acuity-adjusted envelope and retain the Other Accommodation envelope as a non-care
unadjusted envelope.
10
OANHSS Submission to the Standing Committee on Finance and Economic Affairs – March 2013
Recommendation 4: That the Ministry of Health and Long-Term Care consolidate all supplementary
pots with the exception of the Structural Compliance Fund and Accreditation Allowance, into the
proposed two envelope funding model. In addition, a mitigation strategy, as described by OANHSS in
our submission to the Ministry Results-based Planning process, is also recommended.
Recommendation 5: That the MOHLTC consider decreasing the percentage of the care envelope to
which the CMI adjustment is applied in order to enhance stability in year over year funding to LTC
homes.
Recommendation 6: That the Ministry of Health and Long-Term Care make the development of a
measure of year over year change in LTC resident acuity a priority for 2013-14.
Recommendation 7: That the government identify the true cost of redevelopment of this large
segment of LTC homes to ensure that residents have equal access to safe and comfortable homes
across the province.
Recommendation 8: It is recommended that the Ministry enable access for LTC homes to the Health
Infrastructure Renewal Fund (HIRF) to which hospitals have access for minor capital needs.
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OANHSS Submission to the Standing Committee on Finance and Economic Affairs – March 2013