No easy answers to soaring costs at Pioneer Manor

Personal support workers earn 20-30 per cent more at Pioneer Manor than their counterparts in private long-term care homes, city councillors will be told at its next meeting June 26.

City council asked for a detailed report on the facility in December 2011 as councillors look for ways to get rising costs at the Manor under control. Staff was asked for a report on ways to control costs, while still providing quality care. Options include selling the facility to the private sector.

While the province provides most operating funds for the Manor, the city provides an annual subsidy and covers funding shortfalls. That subsidy has risen from $1.4 million in 2004 to an estimated $4.2 million next year.

Another $700,000 is also allocated in the capital budget for Pioneer Manor. In fact, $50 million has been spent over the last 10 years upgrading and expanding the facility.

Funding shortfalls have averaged about $1 million since 2008, peaking at $1.8 million in 2009.

In the report, staff outlines some of the reasons why costs are higher in municipally run homes in Ontario, and in Sudbury specifically. Out of a total of 622 in the province, 103 are owned by towns or cities.

One of the biggest reasons is higher salaries paid to workers at municipal long-term care facilities, compared with those in the private sector.

“Such added costs are … directly or indirectly as a result of an arbitration process that perceives municipal employers as having an ability to pay and the ongoing impacts of pay equity requirements,” the report reads.

The most obvious example is personal support workers, who earn 20-30 per cent more working in municipal LTC homes than in the private sector.

Absenteeism rates are also higher, pushing salary costs up further.
Pioneer Manor also spends more providing residents with food, spending $8.75 a day per person, while receiving just $7.46 in funding, creating a shortfall of $200,000.

It also has fewer private beds than average, which are more expensive, but also more profitable. Only 40 per cent of Manor beds are private, compared to the 60 per cent the province allows, which translates into $570,000 in lost potential revenue every year.

The facility has also grown substantially since it opened in 1953. It began with 123 beds; today, that figure stands at 433, making Pioneer Manor the second-biggest home in Ontario. It has gotten so large, in part, to try and help the community deal with a chronic bed shortage that is wreaking havoc in the city’s ER.

These patients, known as alternative level of care patients, are too ill to live on their own, but shouldn’t be in acute care beds in hospital, either. Many stay in hospital beds because there is nowhere else for them to go. Facilities such as Pioneer Manor have increased in size to help with the ALC crisis.

“The number of beds operated in recent years has increased from 342 to 433 in response to council’s efforts to assist with community alternative level of care (ALC) pressures,” the report said.

Historically, when regional government was imposed in 1973, the region took over responsibility for Pioneer Manor, with additional financial support from all the municipalities in the region.

In 1999, the province passed new rules freeing towns and cities from having to run the homes.

“Unlike municipalities in southern Ontario, there is no legal obligation for the City of Greater Sudbury to operate a home,” the report reads.

In addition to an annual subsidy, Greater Sudbury taxpayers must also make up for any extra expenditures not accounted for in the budget, an amount that totals $1 million this budget year alone.

Much higher absentee rates – an average of 30 days per employee in 2010 alone – also contribute to higher costs, as staff must be called in or work long overtime shifts to make up the difference.

“If these expenditures are not controlled or eliminated, then it’s expected that the budget may require a further correction of up to $500,000 in 2013,” the report concludes.

That would translate into a $4.7-million subsidy in 2013.

To deal with the soaring expenses, councillors will consider four options: the first is to continue on as is, with Pioneer Manor taking up two per cent of the municipal tax levy and rising.

The second option is selling operations to the private sector, although the report warns this would be a complicated process. Existing union contracts would have to be honoured, some workers would have to be bought out, and the buyer would have to get an operating license.

The impact on groups that operate at the home – the Alzheimer Society and the City of Lakes Family Health Team – would have to be considered, since both don’t pay rent under the current arrangement.

However, if all the issues can be worked out, the report says the city would stand to gain substantial property taxes. With an estimated value of $34 million, taxes revenues would be between $500,000 and $1.5 million every year.

A third option is to conduct an outside review of operations to ensure Pioneer Manor is using “best practices” in the industry to keep costs down. A similar review conducted in Muskoka allowed the municipality to eliminate its $400,000 subsidy to its LTC home. A similar effort is underway in Kingston.

And the fourth option is to contract out management of the home, in the expectation that the contractor would find savings. But the staff report admitted that there are no examples of this approach saving money, although it has been done by hospitals that operate LTC homes, but as a reorganization measure, rather than one meant to save money.

Councillors will discuss the report June 26 and direct staff on which avenue to pursue for cost savings.

Posted by Arron Pickard