November 26, 1998

Budget Committee

Purpose:

This report presents further information concerning the site redevelopment project included in the Homes for the Aged Division's 1999 - 2003 Capital Works Program request. The purpose of the planned site redevelopment is to complete all the requisite planning for the mandatory redevelopment of 379 long term care beds in two of the City of Toronto's Homes for the Aged.

Although this report was originally requested by the Budget Committee at its November 10, 1998 meeting, and is being submitted there as directed, it is also being referred to the Community and Neighbourhood Services Committee, since the standing committee will be reviewing the department's capital budget request.

Funding Sources, Financial Implications and Impact Statement:

Approval of the site redevelopment project will add $2.0 million in gross capital expenditures to the 1999 Capital Budget.

Recommendations:

It is recommended that:

Council Reference/Background/History:

The Budget Committee on November 10, 1998, had before it a report from the CAO concerning the Homes for the Aged 1999 - 2003 Capital Works Program. In considering the three projects identified within the Division's Capital Works program, the Committee directed the Commissioner of Community and Neighbourhood Services and the Chief Financial Officer to provide a further report that outlined a funding strategy in response to the Ministry of Health's multi-year investment plan for long-term care, and to detail those facilities requiring retrofitting and the resulting financial implications.

On April 29, 1998, Ontario's Premier and Minister of Health announced the Province's Multi-year Investment Plan for Long-Term Care. The investment plan involves the commitment of $1.2 billion annually to expand and improve long-term care services across Ontario. This infusion of redirected monies from hospital services adds 20,000 new beds into homes for the aged and nursing homes. The Province also targeted money for the mandatory rebuilding and renovating 103 older facilities (comprising approximately 13,000 beds, or 20 percent of all existing nursing home and homes for the aged beds in the Province) to comply with the new long-term care facility design standards which were released at the beginning of May, 1998.

Approximately $96 million a year over a multi-year period will go towards construction costs to build new and rebuild older facilities. In total, $2.5 billion in capital costs will be spent. This provincial long-term care reinvestment plan is expected to take eight years to complete.

The Ministry of Health has substantially changed their approach to capital funding. They have moved away from the concept of funding homes for the aged by way of an up-front capital grant. Rather, the concept of providing funding on the basis of a specific per diem allowance over a multi-year period of time after the completion of construction has been implemented. These funds will be paid through the accommodation envelope of the Home's operating budget, for any Home identified for mandatory upgrading. This concept is further explained in the body of this report.

The funding policy also introduces an incentive-based capital funding per diem (for all Homes not identified for mandatory upgrading), with the intention of providing this funding enhancement for replacing or upgrading capital to more fully meet the new design guidelines.

For the first time, capital funding will not be restricted to only not-for-profit homes for the aged; rather, the new capital funding policy applies to all long term care facilities, including both for-profit and not-for-profit, and nursing homes and homes for the aged. The logistics and impact of these changes on the City of Toronto's Homes for the Aged are further described in the body of this report.

Toronto Council, by the adoption of Clause No. 3 of Report No. 6 of The Community and Neighbourhood Services Committee on July 8, 1998, authorized the Commissioner of Community and Neighbourhood Services to undertake a review of the program and policy implications of expanded provincial funding for long-term care services for the City and report back the findings to City Council. This initiative is in process. The capital funding provisions for redeveloping two of Toronto's ten homes for the aged form a part of this review.

Comments and/or Discussion and/or Justification:

In order to compare the existing design of each long-term care facility now in operation to the new Long-Term Care Facility Design Standards (Appendix A), and to identify those homes believed to be most in need of upgrading, the Ministry of Health conducted an internal review and grouped all long-term care facilities into four categories of `A' through `D'. In assigning homes to specific categories, the Ministry recognized that some facilities were currently undergoing construction or renovations; in these cases, the structural status that is identified is based on the category of the home upon completion of construction, not on the current design. For the Toronto Homes for the Aged, the structural rating for Cummer Lodge was determined on this basis.

The criteria used to determine the category of each facility are described as follows:

Notices were issued to all long-term care facilities in July 1998 advising them of the structural status rating that had been determined by Ministry of Health staff. The Ministry confirmed that there would be an appeal process for any facility disagreeing with the specific rating; however, no information has yet been released by the Ministry with respect to the details or timing of the appeal process. It is anticipated, that the appeal process will be a rigorous one, as the "pot" of money for capital funding and reconstruction has already been determined.

The City of Toronto operates 2,641 long-term care facility beds in its ten Homes for the Aged. Based on the Ministry of Health's assessment, the Toronto Homes have been initially categorized as follows:

Facilities categorized as A, B, or C will receive an enhanced per diem payment, meant to recognize their full or partial compliance with the new design guidelines. Facilities categorized as A will receive an additional $1.50 per resident day; B facilities will receive an additional $1.25 per resident day; and C facilities will receive an additional $0.50 per resident day. All payments will be made through the facilities' operating budget, in the accommodation envelope, for transfer to a capital reserve.

For the City of Toronto, the designation of 2262 of its long term care facility beds (ie. eight Homes), in the A, B, or C categories means that additional funding will be provided in the Homes' operating budget in the amount of approximately $460,000 in 1998; $612,000 in 1999; $738,000 in 2000; and $778,000 in 2001. The amount varies on a year by year basis up until the year 2001, due to the phase in of funding for Cummer Lodge following completion of the current redevelopment project. After that time, the funding will be static year-by-year, unless there is a further change in the funding formula. This funding is to be transferred to a capital reserve and utilized for upgrades and/or retrofitting needs.

It is worthy of note that the Homes for the Aged Division has the intention of appealing the designations for Lakeshore Lodge and Seven Oaks, as staff believe that they fit the criteria for a B rating; that is, they exceed the 1972 regulated nursing home structural standards. A successful appeal would result in these two Homes being reimbursed at the level of $1.25 per resident day rather than at the $0.50 level. This would increase the annual additional funding to the Division's reserve by approximately $109,000. A further report will be provided with respect to this issue, once information on the appeal process is released by the Ministry of Health.

Two of Toronto's Homes for the Aged, representing a total of 379 beds have been designated as D facilities. This designation means that there is a mandatory requirement to rebuild or renovate the physical plants to meet the requirements of the newly released capital design guidelines.

The main elements considered in designating a facility as a D rating are issues related to the provision of an environment that provides high quality of life for residents. For example, the new design guidelines require all rooms to have no more than two occupants; all rooms to have ensuite washrooms; resident units or "houses" to have no more than 32 residents, in order to create smaller, quieter environments; each unit or "house" to have its own lounge and diningroom space; each facility to have community space, such as outside space, enhanced resident spaces, specific safety features, wider corridors, etc. There is general agreement in the long term care sector that the design guidelines are appropriate and will add value and quality to residents' lives.

Without question, the residents of Albion Lodge and True Davidson Acres will benefit from upgrading of the respective physical plants. What is at question is the future configuration of the 379 beds. For example, it may be more appropriate and cost effective to redevelop the 379 beds in two sites of 179 beds and 200 beds. A start point in making this determination will be identifying the number of beds that could be accommodated in the current True Davidson Acres site, using the new space requirements for each resident. The planning to determine the best configuration and redevelopment plan will occur in 1999. Further reports will be provided to Council related to the outcomes of these planning initiatives, prior to the initiation of any construction.

A redevelopment plan for the total 379 beds provides the City with an opportunity to integrate these two projects by possibly redistributing the beds between the two sites. It is unlikely given the land available at the True Davidson Acres location that the Division would be able to construct a home that would be able to house anywhere near 281 residents. In addition, the current number of beds at Albion Lodge is not considered optimal as far as being able to provide cost efficient care and services to residents.

As stated earlier, D facilities have a mandatory requirement to upgrade. However, by virtue of being identified as D facilities, capital funding is guaranteed, without the need for further steps in the provincial funding approval. This part of the capital funding policy is superior to the former model applied to homes for the aged. Previously, many essential capital projects could not proceed because funding was not readily available. The new system earmarks specific projects, and prioritizes them, in order to ensure that those redevelopments most needed are completed first.

The guaranteed capital funding will be provided to D facilities following completion of the site redevelopment. That is, funding will be provided on the basis of a specific per diem allowance of up to $10.35 per resident day to offset the facility's cost for capital construction. Construction cost funding is estimated to provide just enough dollars to meet the payments on a 20-year mortgage for half of the costs of the building. The Ministry's financial commitment is equivalent to approximately one-half of the capital costs, up to a maximum of $75,000.00 per bed. Funding will commence immediately following construction. More detailed information is provided in Appendix B.

The Province is anxious for long-term care facility owners to commence the redevelopment of their facilities and they are ready to approve construction plans for any `D' facility operator wishing to immediately proceed. The deadline for initiating building renovation projects has not yet communicated in writing because the Ministry is conducting a small number of reassessments and they are reluctant to communicate a firm deadline before this process is complete.

Based on discussions with provincial staff it is likely that construction plans will have to be submitted for provincial review by no later than the end of 1999. However, that is intended to be an outside date and Ministry staff have confirmed that any redevelopment plans filed earlier will be reviewed as a priority in order to initiate a process of building upgrades as soon as is possible. The Ministry's review process will be one of ensuring that all proposed site redevelopments comply with the new design guidelines. In addition, although the Division has not received written confirmation, it is staff's understanding that for any municipality having more than one facility identified for redevelopment it will not be a Ministry requirement for construction to commence simultaneously on both facilities. That is, although the Homes for the Aged will plan the most effective redevelopment of the total of 379 beds, the actual construction of the two new sites will likely be able to be phased in.

The Division has requested a capital budget allocation of $2.0 million for design, construction documents and review of construction, including architectural, structural, mechanical, and electrical services related to the site redevelopment project. The work to be completed in 1999 will be up to and including the completion of working drawings. It is reasonable to assume that this amount of work can be fully completed in 1999; the only potential barrier to work completion would be unanticipated delays in Ministry confirmation that the plans fully comply with the mandatory requirements of the new design guidelines.

Capital Reserve:

In the September 30, 1998 variance report, the Chief Financial Officer is recommending that the one-time transition funding from the Ministry of Health of approximately $8.0 million to the Toronto Homes for the Aged be transferred to a new Capital Reserve Fund to be created for Homes for the Aged capital. The creation of this new Capital Reserve accomplishes a number of priorities. First, it provides a base for the ongoing annual contributions to the reserve that will occur as a result of per diem funding to the facilities classified as A, B, or C. Second, it creates a fund for the retrofitting required in a number of the Homes, even thought they have not been identified for mandatory upgrading. For example, staff of the Homes for the Aged are working on a multi-year capital plan, and have identified the need for a number of capital upgrades. There is a need for new and/or additional elevators in two additional Homes; upgraded life safety (fire) systems will be required within a period of approximately four to five years in four Homes; upgraded resident communication and response systems is desired in six of the Homes; improved door access and security is planned in eight of the Homes; and an expanded parking area is required in one Home. All of these initiatives, and others that will be identified on an ongoing basis will have their source of funding from the Capital Reserve Fund created for Homes for the Aged.

Conclusion:

Two of the City of Toronto's Homes for the Aged have been identified for mandatory upgrading. This mandatory upgrading is applicable to a total of 379 beds. By virtue of being identified as D facilities, Ministry of Health funding is guaranteed, and no further funding application to the Ministry of Health is required. In order to begin planning and have the requisite drawings prepared in time to start construction in the year 2000, the Division requires a capital allocation of at least $2.0 million in 1999. Once this construction planning work is complete, staff will be able to provide the Budget Committee with a precise construction plan, timetable, budget, and financial implications for further consideration and approval. Staff of the Homes for the Aged Division will work with Finance Department staff in analyzing the financial implications that arise out of the site redevelopment project.

Contact Name:

Sandra Pitters, General Manager, Homes for the Aged Division

Tel: 392-8907; Fax: 392-4180; E-mail: sandra_pitters@city.toronto.on.ca

Commissioner of Community and Neighbourhood Services

Chief Financial Officer and Treasurer

Appendix A

Long-Term Care Facility Design Standards

The Long-Term Care Division of the Ministry of Health released in May, 1998 a Long-Term Care Facility Design Manual which contains building design standards and functional recommendations. The development of new homes and the redevelopment of existing homes must comply with these standards in order to be eligible for provincial funding assistance.

The development of building design standards represents an acknowledgement of the positive impact that building design has on residents' quality of life in long-term care facilities. The standards help ensure the optimal dignity of residents by recognizing the need for privacy and opportunities for social interaction. The design objectives are intended to encourage innovation and flexibility, and preserve accountability. In order to integrate the concept of home with the concept of care, the dining room is defined as the focus of the long-term care facility. Living space for the resident is organized around the dining room.

In the past, there was not a single set of long-term care facility design standards which applied to all types of long-term care facilities. In 1972, regulated design standards for nursing homes were established. These standards were used to inspect nursing homes and to ensure compliance. In 1982, non-regulatory design guidelines were established for municipal and non-profit homes for the aged. The homes for the aged design guidelines were used by the operator in the design and planning process and were also used by Ministry of Health staff during the capital approvals process.

The new design standards were necessitated not only by the need for a consistent, outcome-focused approach, but also by the changing needs of residents of long-term care facilities. Many long-term care facilities were designed for residents who require light levels of care. Long-term care facilities are currently caring for residents with increasingly heavier care needs, and municipal homes in particular are affected by this demand to provide heavy and complex care (i.e., wandering cognitively impaired residents). Trends in the health care system will continue to contribute to this demand. Many clients with lighter care needs are remaining in their homes with the support of community support services, and enter long-term care facilities only when they have higher care requirements. At the same time, the Health Services Restructuring initiative is placing increased demands on long-term care services as clients are transferred from the hospital sector to long-term care facilities.

The new design standards will allow flexibility in areas such as how space is used and how bedroom space is arranged. Some key areas of importance, such as minimum bedroom size and mandatory call systems for emergencies, are prescribed in the design standards. With regard to space requirements, the design standards require that a gross amount of space be provided for each resident. In addition, precautions for safety and accessibility will be enhanced, ensuring security systems to protect people with dementias such as Alzheimer's Disease, and accessible building layouts and designs to ensure people with physical disabilities maintain their independence. These enhancements are expected to provide more opportunities for personal privacy and increased safety and accessibility for residents and their families.

The operator will be allowed to determine how the remaining space is allocated across the facility for such uses as recreational or lounge areas, provided that minimum space requirements are met for the bedroom and dining room areas. All long-term care facilities will ultimately be required to comply with these new standards.

Appendix B

Long-Term Care Facility Capital Funding

The Ministry of Health has decided that funding will no longer be provided to homes for the aged by way of up-front capital grants. Therefore, the concept of a single pool of funds that provides funding on the basis of a specific per diem allowance has been implemented. These funds will be paid through the accommodation envelope of a facility's operating budget. For municipal homes for the aged, this means the end of 50 percent capital cost-sharing with the Province.

Construction cost funding is estimated to provide just enough dollars to meet the payments on a 20-year mortgage for half the costs of the building. The difference is that payments will be spread over 20 years rather than up front. In financial terms, this funding model is much the same for building a new facility as implementing the traditional matching grants formula across the whole long-term care sector. This standardized system of capital funding is based on the Ministry of Health's move towards equitable funding and treatment of all long-term care facilities, including municipal and non-profit homes for the aged, and nursing homes.

The Ministry of Health will pay facilities a per diem rate of up to $10.35 per resident to offset the facility's cost for capital construction over a 20-year period following construction of either new or redeveloped facilities. Factored into this per diem payment is an implicit interest rate of 7 percent. The Ministry's financial commitment will be equivalent to approximately one-half of the capital construction costs, up to a maximum of $75,000.00 per bed. These funds must be directed to the payment of construction costs. All new construction and renovation projects must meet compliance with structural standards set out in the "Long-Term Care Facility Design Manual".

Facilities that are compliant or partially compliant will receive a pro-rated "structural compliance premium" ranging from $0.50 to $5.00 per resident per day. The length of time that a facility is eligible to receive this premium is currently open ended. Facilities that are non-compliant (i.e., an estimated 105 homes) will not receive this allowance; instead, these facilities will be required to redevelop according to the design standards. The Ministry will pay these designated facilities a per diem rate for capital costs similar to the new facilities developed by successful applicants in the Request for Proposals process (i.e., up to $10.35 per resident per day).

The structural compliance premium allowed for each facility category is outlined below:

For facilities rated as a Category `A', Category `B' or Category `C' home, the government's monthly payment will be paid retroactive to April 1, 1998, in accordance with the new premiums outlined above. For facilities currently under construction (i.e., rebuilding or renovations), the new monthly payment will begin only upon completion of the construction project and Ministry of Health approval to occupy the premises.