Response to the Provincial Request for

Proposal for Additional Long-Term Care

Beds for a New City Home for the Aged

The Policy and Finance Committee recommends that this matter be received.

The Policy and Finance Committee submits the following communication (June 17, 1999) from the City Clerk:

Recommendations:

The Community Services Committee on June 17, 1999, recommended to the Policy and Finance Committee that:

(i)City Council be requested to direct the Commissioner of Community and Neighbourhood Services to respond to the Province of Ontario's Request for Proposal for additional long-term care beds for a new City Home for the Aged prior to the July 30, 1999, deadline; and

(ii)City Council be requested to endorse maintaining the same level of operating service for both the existing and expanding Homes for the Aged portfolio.

The Community Services Committee reports, for the information of the Policy and Finance Committee, having requested the Commissioner of Community and Neighbourhood Services to report to the Policy and Finance Committee for its meeting on June 24, 1999, on the budgetary implications of building a new Home for the Aged.

Background:

The Community Services Committee had before it a communication (May 28, 1999) from the City Clerk advising that the Advisory Committee on Homes for the Aged on May 28, 1999, had before it a report (May 20, 1999) from the Commissioner of Community and Neighbourhood Services respecting an increase to the Homes for the Aged 1999 Operating Budget, which was adopted by City Council at its meeting on June 9, 10 and 11, 1999, and wherein it recommended that such report be referred to the Community Services Committee for discussion of the policy issues and options outlined therein.

Ms. Anne Dubas, President, Canadian Union of Public Employees, Local 79, appeared before the Community Services Committee in connection with the foregoing matter and submitted a communication (June 11, 1999) in regard thereto.

(Communication dated May 28, 1999, addressed to the

Community Services Committee from the City Clerk).

Recommendations:

The Advisory Committee on Homes for the Aged on May 28, 1999:

(1)directed that its support of the recommendations contained in the attached report (May 20, 1999) from the Commissioner of Community and Neighbourhood Services respecting the increase to the Homes for the Aged 1999 Operating Budget be conveyed to the Community Services Committee; and

(2)received the attached communication dated May 26, 1999, from Ms. Anne Dubas, President, Canadian Union of Public Employees, Local 79.

(Report dated May 20, 1999, addressed to the

Budget Committee which was

contained in Clause No. 20 of Report No. 10 of The

Strategic Policies and Priorities Committee, adopted by

City Council on June 9, 10 and 11, 1999).

Purpose:

The purpose of this report is to provide an analysis of the impact and an exploration of the options that a reinvestment of provincial funding would have on the Homes for the Aged.

Funding Sources, Financial Implications and Impact Statement:

The Ministry of Health has confirmed additional funding for long-term care facilities provided that the funding is used to create professional nursing jobs. The Homes for the Aged Division is seeking City Council approval to increase the 1999 operating budget by $697,000.00 (gross). There is a requirement for these new funds to be used specifically for the purpose of enhancing professional nursing services. The funding represents a permanent adjustment to long-term care facility funding from the Ministry of Health and does not result in an increase in municipal net contribution.

Recommendations:

It is recommended that:

(1)the 1999 operating budget of the Homes for the Aged be increased by $697,000.00 to enable the Division to access additional provincial funding, which is available to enhance nursing services;

(2)this report be referred to the Community Services Committee for discussion of the policy issues and options outlined herein; and

(3)the appropriate City officials be authorized and directed to take the necessary action to give effect thereto.

Council Reference/Background/History:

During the Budget Committee's review of the Homes for the Aged Division's 1999 Operating Budget, it was requested that the Division report to the Community and Neighbourhood Services Committee and the Budget Committee on the significant loss of provincial funding since 1996. The request was made in light of the federal government's February 16, 1999 announcement that stated that transfers to the provinces and territories were to increase over the next five years by $11.5 billion through the Canada Health and Social Transfer (CHST).

In the federal government's announcement, Finance Minister Paul Martin stated that a further $1.4 billion will be invested over the next three years to strengthen Canada's health system through research and innovation, health information, improved health services for First Nations, and prevention. The announced increases effectively restore federal transfer payments for health care to levels that were in effect when the present government came to power.

Accordingly, the Budget Committee directed staff to study and report back at a subsequent meeting the impact that a restoration of provincial subsidy would have on the Division if funding were to be restored to the 1996 subsidy level. The report was to include options of expanding the number of available beds, improving the personal care level, as well as other service restructuring restorations.

Comments and/or Discussion and/or Justification:

Long-Term Care Reform:

For many years, the long-term care (LTC) system in Ontario has been under tremendous pressure to reform. In the early 1990s, the provincial government brought together long-term care facility and community programs under one new administrative structure. These programs had previously been the responsibility of separate Ministries, even though the programs served essentially the same client base. In the past, homes for the aged were the responsibility of the Ministry of Community and Social Services and nursing homes were the responsibility of the Ministry of Health. The Ministry of Health is now fully responsible for the funding and administration of all long-term care programs.

During the years that homes for the aged were under the Ministry of Community and Social Services, they were encouraged to design large facilities and dramatically expand and enrich the programs and services provided to their residents. Many municipalities and some charitable boards took advantage of this support and the cost sharing arrangements with the province to enhance their operations, resulting in higher per diems than other sectors of LTC facility care. To achieve some control of these costs, capping on provincial contributions was introduced in 1989 in cases where the extended care per diem exceeded the provincial average.

When the Long-Term Care Statute Law Amendment Act, 1993 (Bill 101), an Act to amend the three long-term care facility Acts, came into effect on July 1, 1993, the Province introduced a red-circling provision. Homes for the Aged were guaranteed to have their current level of care and staffing protected during the transition to a funding system that was to be based on resident care needs. Because of provincial funding constraints, the long-term care system was able to fund only facilities with an extremely modest per diem of $79.61 in 1993. For the Toronto Homes for the Aged, this created a significant shortfall because the Division's operating per diem was $147.58 at that time. This represented approximately $25.0 million in red-circle funding for the Toronto Homes for the Aged.

When the Province determined it would take too many years for the LTC system to be equalized, the Ministry of Health decided to eliminate red-circling by phasing it out over a two to four-year period. The elimination of red-circle funding commenced on June 1, 1996. Of Toronto's 10 Homes for the Aged, five Homes continue to receive a moderate amount of red-circle funding. Red-circle funding accounts for only $1.6 million of the Division's 1999 operating budget revenue. However, the final reduction in red-circle funding has been effectively offset as a result of the recently announced increase in level of care funding.

Toronto Homes for the Aged:

Historically, Toronto's Homes for the Aged have cared for residents who other facilities and service providers find difficult to manage. The average resident in a Toronto Home has three to five chronic diseases, including heart disease, chronic obstructed lung disease, kidney/liver organ failure and other debilitating diseases. Seventy percent of the Homes' residents are cognitively impaired with dementia diseases such as Alzheimer's Disease.

Toronto's Homes for the Aged Division has a recognized history of and commitment to client-centred, interdisciplinary care and quality of life issues. In response to this commitment, the Division historically staffed at a fairly high level, particularly in the nursing, recreation, rehabilitation, and social work areas. Prior to 1993, both the Province and Council supported the enhancement of staffing levels, based on a commitment to providing vulnerable seniors with quality care and quality of life. In more recent years, affordability has become an issue, and the level of care and service has been substantially reduced.

The Homes for the Aged Division has been proactive over the past six years in adjusting to the new provincial funding system. The Division needed to realize significant budget savings during that time in order to respond to the continuing financial pressures of reduced funding. In addition to reduced provincial funding, the Division's municipal contribution has been decreased by $9.7 million or 29.6 percent since 1993. Expenditure reductions primarily focused on cost-controls and improved resource utilization. Net savings were realized through program restructuring and staff downsizing.

A comprehensive management plan that restructured the organization, streamlined operations, delayered management, identified numerous operational efficiencies, maximized revenue and formed strong community partnerships was implemented. The plan responded to the need for affordability and spending restraint, but did not abandon the concepts of quality, public service, and public accountability, concepts that the community clearly expects from the municipality.

Management identified numerous innovative and creative approaches to maintaining quality services for our clients during a time in which the Division experienced a significant loss of funding. The ways in which the Homes' services are delivered and resources are allocated have been reviewed and improved. The Division's long term plan contained the expectation that level of care facility funding would be adjusted to more accurately reflect the true cost of providing care and services to seniors.

New management levels and staffing standards were introduced across the Division and new sources of revenue identified. A client-centred approach to care and service was maintained as efficiencies were implemented in all areas of the Homes' operations. As the Division restructured, the focus on customer service remained. The Division continues to plan strategically and improve operationally in order to maintain effectiveness in a more diverse, competitive, and changing long-term care environment.

As part of the Division's strategic planning process, the following options are offered for consideration:

Option 1 - Expanding the Number of Beds:

On April 29, 1998, Ontario's Premier and Minister of Health jointly 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 rebuilding and renovating more than 100 older facilities to comply with the new long-term care facility design standards which were released at the beginning of May 1998.

On May 1, 1998, the Ministry of Health released the allocated figures for facility and community reinvestments. For facility-based care, 5,837 new beds (out of the 20,000 provincial figure) have been allocated for the Toronto region over the next six years. This amounts to a $190.9 million reinvestment. A request for proposal process was conducted by the province in mid-1998 for 2,200 beds in Toronto (6,700 beds across Ontario). The call was open to both the non-profit and for-profit sectors. Although the City of Toronto did not bid on any new beds, the Toronto Homes for the Aged Division provided consulting services to Doctors' Hospital in the development and presentation of their proposal. The Doctors' Hospital bid was strengthened by the Division's offer to provide consulting services for a multi-year period while Doctors' Hospital developed their own expertise in long-term care. Doctors' Hospital was awarded 200 long-term care beds.

The recently announced second phase of the Ontario government's six-year expansion plan will increase the long-term care system by a further 5,790 beds throughout various regions across the province, including the City of Toronto, where there are 744 beds available. A further 2,893 beds will be offered within Toronto in future phases of the expansion plan. Proposals during this phase must be submitted by 12:00 noon on July 30, 1999.

Level of care funding has been enhanced in recent years. A Home for the Aged with a provincial average case mix index of 100 will receive per diem funding of $95.64. If the City's 1996 funding level were to be restored by means of the City of Toronto pursuing new long-term care beds, the City could consider submitting a bid to acquire 200 new long-term care beds, and thereby open a new Home for the Aged. This option would require the City to make a capital investment of approximately $12.0 million and also to restore a portion of the Division's previously achieved net operating savings in order to sustain quality and service levels consistent with the City's other 10 Homes for the Aged.

Option 2 - Improving the Personal Care Level:

Following the Federal Budget, the Ontario Government announced new investments in health nursing services. On March 17, 1999, Long-Term Care Minister Cam Jackson and Health Minister Elizabeth Witmer announced $20.0 million in annual funding to increase the number of frontline nurses available in long-term care facilities.

The additional funding available to long-term care facilities is being provided to enhance support for professional nursing staff and must be used to create professional nursing jobs. This represents a permanent adjustment to long-term care facility funding and will not result in a municipal contribution. For the Toronto Homes, the annualized funding enhancement is approximately $1.0 million. However, in order to access these funds the Homes for the Aged Division requires City Council's approval to increase the 1999 operating budget by $697,000.00 for nursing and personal care. The Ministry of Health has implemented stringent reporting requirements to ensure that these new funds are directed solely towards enhancing the nursing and personal care of residents.

Staff are very pleased regarding the newly announced funding for nursing services, as it provides the first opportunity for a significant number of years to marginally enhance the level of nursing care provided to residents, rather than to continue another year of nursing reductions. Senior management have not yet determined the best allocation of the available funding, and will utilize data from the various Homes (including information related to the classification of resident need, feedback from satisfaction surveys, etc.) to make final decisions. However, senior management's initial opinion is that the best value would be realized by utilizing the funding to increase both registered nurse and registered practical nurse hours (up to 10 percent of the available funding can be used for other nursing expenses, such as the nursing supplies required to deliver more complex care). The exact number of registered nurse versus registered practical nurse hours would vary on an individual Home basis, according to the needs assessment of that Home. Initial estimate is that the funding would allow for the increase of approximately 15 nursing FTEs across the 10 Homes.

It is hoped that the recent nursing announcement is the first of a series of reinvestments in long-term care. As long-term care facilities are expected to deal with more and more residents with serious health conditions and complex continuing care requirements, it will be imperative for the Ministry of Health to reinvest health savings into the long-term care system. Other minor increases in base funding are currently being planned by the Ministry of Health. Moving into the year 2000, the opportunity will exist for the Division to begin receiving provincial funding increases rather than reductions in subsidy since the final phase of red-circle funding elimination will have been implemented.

Senior management has been actively involved in on-going discussions with the Ministry of Health to secure additional permanent funding for the Home' program. As a result, it is anticipated that new monies will be made available to the City within the next year. This will possibly enable the Division to restore some of the previously eroded care levels.

Option 3 - Other Service Restructuring Restorations:

In response to the funding pressures in recent years, the Division has been required to reduce the service level of certain programs that serve to enhance the quality of life of residents. These services, although not all considered mandatory by the Ministry of Health, are considered by the Division to be essential for residents' health and sense of general well-being. The services that fall into this category are typically those funded in the "programs and support services envelope", and include services such as recreation, rehabilitation, complementary care, social work, spiritual and religious care, volunteer services, etc. If funding was restored to the Division, management would target some of the restored funding to expand service in these areas.

For example, the value of rehabilitation services (i.e., rehabilitation workers, occupational therapists, physiotherapists) to residents in the Homes is unquestionable, as it relates to the achievement of the Division's goal of promoting residents' independence, maintaining/improving residents' functional abilities (including behaviours), and preventing/delaying deterioration due to the natural aging process or chronic disease. An increase in rehabilitation service would add value to the Division's overall care and service delivery, particularly as the acuity of residents' care needs continues to increase.

Second, over 137,000 hours of volunteer services were contributed amongst the 10 Homes in 1998. This level of volunteerism far exceeds the average rate of volunteer participation amongst most other providers. The Division believes that additional staff support in the area of volunteer recruitment and coordination would help the homes to realize increased volunteer involvement and volunteer satisfaction, which directly impacts on resident satisfaction. Without question, volunteerism provides residents with an important linkage to the community. In return, community volunteers augment residents' quality of life and contribute substantial dollars through their fundraising initiatives.

Quality of life issues are also addressed by the provision of recreational programs and complementary care services (e.g., massage therapy, music therapy, art therapy, aromatherapy). Both of these services focus on residents as individuals and contribute to their psychosocial and physical wellbeing. In the past academic year, the Division has been able to offer student placement to a number of complementary care students, and these services have been exceptionally well received by residents and their families. Senior management is currently exploring the feasibility of adding complementary care services, on a more regular basis, if increased funding becomes available to cover the costs of same. Likewise, resident and family feedback provides evidence that both of these groups would like to see an expansion of recreation services, particularly in the evening hours and on weekends.

Next, an ever-increasing emphasis for the Division is the critical need to support staff by ensuring that they have access to both on-site and off-site educational offerings, in order to assist them gain and maintain the skills required to competently provide care and service to the Homes' residents and families. Individuals admitted to the Homes are frailer, and have more complex care requirements than several years ago. The Homes are becoming the "new" chronic care facilities, and the Division believes that it should take a proactive role in providing ways and means for staff to upgrade their skills.

Senior management is in the process of confirming a plan, identifying which programs and service areas should be expanded, as a priority, in order to add the most value to residents' lives, if some of the past funding is restored. The cost associated with restoring a portion of the residents' programs and support services would be minimal with substantial returns being measured in the provision of quality care to our residents.

Conclusion:

Over the past six years, the Division has been extremely successful in reducing costs and maintaining quality, in response to the funding reductions imposed. However, senior management has the philosophical belief that seniors residing in long-term care facilities deserve a higher level of care and service, particularly in the nursing and programs and services areas, than is supported through current provincial funding and/or policy. Staff have done a laudable job over the past number of years; however, they have become increasingly more frustrated with their inability to provide the high level of attentive, individualized care that they believe the elderly are entitled to.

For this reason, if there is a potential to achieve further restoration of funding, it would be management's preferred direction to expand the level of care and service provided to the residents currently cared for in the Division's 10 Homes. Prior to the introduction of any resource expansion, it would be management's intention to implement new performance measures, in order to track, manage, and measure efficiencies, effectiveness, and satisfaction.

On the other hand, if City Council made a decision to direct staff to explore the possibility of adding beds to the Homes for the Aged Division's system, immediate action would be required, as the Ministry of Health's current Request for Proposals (RFP) for new long-term care beds closes on July 30, 1999 at 12:00 noon. Based on current information, there is reason to believe that there will not be another RFP released until at least 2001.

Contact Name:

Reg Paul, Director, Financial and Administrative Services, Tel: 392-8896; Fax: 392-4180; E-mail: reg_paul@toronto.ca.

The Policy and Finance Committee submits the following report (June 22, 1999) from the Commissioner of Community and Neighbourhood Services:

Purpose:

The purpose of this report is to provide additional information and a five-year forecast that further explores the cost implications should City Council decide to adopt the recommendation of the Community Services Committee, to respond to the Ministry of Health's current Request for Proposals (RFP) for new long term care beds.

Funding Sources/Financial Implications/and Impact Statement:

This report details the policy and financial implications of securing Ministry of Health approval, through the current Request for Proposals (RFP) process, to build a new 200-bed Home for the Aged. Proposals are required to be submitted to the Ministry of Health by July 30, 1999. Based on the timelines experienced for approvals in the RFP process of 1998, it is anticipated that the Ministry of Health would notify successful bidders by late 1999.

Therefore, if the City submitted a successful bid, it is anticipated that capital costs would be incurred in 2000 and 2001. The forecasted 2000 capital budget would be $9 million (net) and the 2001 budget would be $11 million (net). The Ministry of Health no longer provides upfront capital grants, but rather provides construction funding through a per diem payment system of $10.35 per resident day, for a period of 20 years, with the payment starting after the first admission to the new facility. The anticipated total net capital cost to the City is therefore $12 million.

With respect to the operating budget, there would be no impact on the operating budget until 2002. However, in order to operate the new facility at the same level and scope of service as currently exists in the City's 10 other Homes for the Aged, there would be need for an annual net contribution of approximately $1.25 million, effective 2002.

Recommendations:

It is recommended that:

(1)should City Council adopt the recommendation of the Community Services Committee directing staff to respond to the RFP for new long term care beds by the deadline of July 30, 1999, City Council recognize and endorse in principle the multi-year cost implications of this decision in both the capital and operating budgets for the fiscal year, starting in 2000 (as outlined in this report); and

(2)if a proposal is submitted to and approved by the Ministry of Health, staff report back with a more detailed financial impact analysis, prior to signing any agreement with the Ministry of Health.

Council Reference/Background/History:

The Community Services Committee, at its meeting on June 17, 1999, had before it a report entitled "Homes for the Aged - 1999 Operating Budget", which set out a number of options for City Council's consideration, and responded to a prior request from the Budget Committee for staff to provide advice with respect to their preferred direction, should provincial funding levels be restored/increased within the long term care sector.

By way of background, prior to the recent election, the Ontario government announced its plan to continue to expand and improve long term care services across the province, and released its second RFP for new long term care beds. This is the second phase of a six-year expansion plan, and upon completion will have increased the number of beds by a further 5,790 across the province. Of these second phase expansion beds, there are to be 744 new beds within the City of Toronto. This commitment does create an opportunity for the City of Toronto to apply for new beds, should City Council endorse this expansion as the preferred direction.

In addition, the Ministry of Health's long range plan is also intended to address the enhancement of facility and community funding, by reinvesting health restructuring dollars into the long term care system. Although the Ministry has not yet released any specific details regarding how enhanced funding might be phased in, the staff report provided background on staff's opinion and a rationale for supporting the restoration of a portion of the level and scope of service lost within the Homes over the past several years due to multi-year budget reductions and the resultant cost restraint exercises.

Therefore, the report "Homes for the Aged - 1999 Operating Budget" detailed a number of options available to City Council, including: (i) the potential to expand the number of long term care beds owned and operated by the City of Toronto, (ii) to improve the nursing and personal care levels within the current 10 Homes, and/or (iii) to restore certain other resident program or service areas, when enhanced funding becomes available.

The Community Services Committee concluded that they were not restricted to recommending only one of the options presented, but rather could select and recommend components from each of the options presented.

The Committee:

(1)recommended to the Policy and Finance Committee that:

(a)City Council be requested to direct the Commissioner of Community and Neighbourhood Services to respond to the Province of Ontario's Request for Proposals for additional long term care beds for a new City Home for the Aged prior to the July 30, 1999 deadline; and

(b)City Council be requested to endorse maintaining the same level of operating service for both the existing and expanding Homes for the Aged portfolio; and

(2)directed that the Commissioner of Community and Neighbourhood Services be requested to report to the Policy and Finance Committee for its meeting on June 24, 1999, on the budgetary implications of building a new Home for the Aged.

As a result of the direction received from the Community Services Committee, staff prepared an initial analysis with respect to the financial impact of adding a new 200-bed Home for the Aged to the Homes' portfolio, for the consideration of the Policy and Finance Committee. The analysis is detailed in this report, and includes a five-year capital and operating forecast on both the gross and net costs associated with a new 200-bed Home for the Aged. For the purpose of this exercise, a 200-bed Home was chosen as the most feasible, due to efficiencies of scale and the past preference of the Ministry of Health for homes of 200 beds, as demonstrated in the results of the 1998 RFP process.

It is important to note that the current RFP process closes on July 30, 1999, and no proposals will be accepted that are received after that date. Therefore, a timely decision by City Council is required to allow ample time for staff to prepare the submission, should City Council decide to apply to expand the number of long term care beds in its current Homes for the Aged system.

The cost analysis included in this report is based on the Homes for the Aged Division's current service standards and staffing levels.

Comments and/or Discussion and/or Justification:

The recently announced second phase of the Ontario government's six-year expansion plan has made available 744 long term care beds within the City of Toronto through a Request for Proposals process. The call is open to both the non-profit and for-profit sectors. Proposals responding to this second phase must be submitted by 12:00 noon on July 30, 1999. It is expected that a further 2,893 beds will be offered within Toronto in future phases of the multi-year expansion plan. However, based on current information, there is reason to believe that there will not be another RFP released until at least 2001.

In staff's opinion, there is value to having a "healthy balance" of non-profit and for-profit providers in the long term care system, in order to offer competition from various perspectives, including cost, quality, and scope of service. Currently, 63 percent of all of the long term care beds in Ontario are operated by the for-profit sector. If the non-profit sector does not respond to the current RFP, and secure a portion of the newly tendered beds, there is a potential that the non-profit share of the system will erode, and that the "healthy balance" will become less effective in offering Ontario citizens a long term care system with equal weight on cost, quality, and scope of service.

The City's Homes for the Aged are known and respected for providing very good, client-centred care and service to their residents. Although it is acknowledged that the level and scope of service have been reduced in recent years, on an annual basis, in order to respond to a diminishing budget, the level of service is still above that often found in other long term care facilities, and client satisfaction remains high. The public accountability associated with the City's Homes, and the responsiveness of staff in responding to any concerns on a timely basis, are reasons often cited by residents' families as to why they selected a City-owned home for their family member.

For those reasons, there may be merit in the City of Toronto responding to the current RFP. However, staff did not directly recommend this approach in the report entitled "Homes for the Aged - 1999 Operating Budget" for one specific reason: namely, the belief that the current Ministry of Health funded per diem is insufficient to provide the level, quality, and scope of service that we philosophically believe residents are entitled to. Therefore, any expansion of beds in the City's portfolio would have a direct impact on the operating budget and would require a corresponding increase in net contribution.

The balance of this report attempts to explain and quantify the impact on both the capital and operating budgets of adding a 200-bed Home for the Aged to the current portfolio, should City Council decide to direct staff to respond to the current RFP.

Capital Budget:

All new construction projects must meet compliance with structural standards set out in the "Long Term Care Facility Design Manual" which was released in May 1998. 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. Staff estimate the Ministry's financial commitment to be equivalent to approximately one-half the expected capital construction costs of a long term care facility, as the requirements in the design guidelines describe a facility built to the minimum space and accommodation standards. It is anticipated that any facility considered by the City would exceed the minimum space requirements per resident, in order to add to quality of life.

The Ministry of Health does not provide upfront capital grants. Rather, for every project approved by the Ministry of Health through the RFP process, the Ministry will pay a per diem rate of up to $10.35 per resident following construction of a new facility, up to a maximum of $75,000.00 per bed, towards a facility's total capital costs. That is, any costs above those which can be accommodated through the provincial construction funding are the responsibility of the facility. The provincial funds must be directed to the payment of construction costs and cannot be used to purchase land. The funds begin to flow immediately following admission of the first residents to the new facility, for a period of 20 years.

Staff estimate that the provincial construction funding provides just enough dollars to meet the payments of a 20-year mortgage for half of the cost of the building. Factored into this per diem payment is an implicit interest rate of seven percent. In financial terms, this funding model is much the same for building a new building as implementing the traditional matching grants formula, applied to non-profit facilities in the past, across the whole long term care sector. The difference is that payments will be spread over 20 years rather than provided by way of an upfront capital grant.

In order to provide a reasonable budget forecast for construction, the cost of building the proposed 200-bed long term care facility is roughly estimated at $20 million. Therefore, the total net capital cost to the City is estimated at $12 million.

Private and semi-private accommodation would be included in the design of the new building to improve the individual living areas. General amenity space would also be provided over the province's minimum standards. Preferred accommodation rooms and the additional amenity space will ensure the optimal dignity of residents by recognizing the need for privacy and opportunities for meaningful social interaction. Preferred accommodation may be charged to 60 percent of the Home's total population, amongst residents who have the ability to pay and/or who request either a semi-private or private room (currently $8.00 per day and $18.00 per day respectively). The Ministry of Health currently claws back 50 percent of any revenue a facility collects for preferred accommodation. It is estimated that the proposed facility will realize approximately $600,000.00 annually in preferred accommodation revenue, which may be used as a minor offset to construction costs.

Construction of a new long term care facility would take approximately 18 to 24 months to complete. The entire project would need to be initially financed by the City, since the Ministry's construction funding does not begin until the facility is officially opened. Funding will then be provided on a per diem basis over a 20-year period. Construction could begin in late-2000, with the new facility opening in early 2002.

For the sake of this example, it is assumed that all construction costs would be incurred in 2000 and 2001, with the facility opening in 2002. The financial impact is outlined in Appendix 1 of this report.

Operating Budget:

As directed by the Community Services Committee, the five-year forecast does not reflect any care level increases nor does it include any program or service enrichments. The forecast has been developed using the same quality standards and staffing levels as those previously established by Council. In addition, the forecast does not make any assumptions related to the current collective bargaining process, the future roll-out of the Corporate Services delivery model, or to a possible funding increase which might result from the continuing provincial health restructuring initiative. For purposes of this exercise, there has been a one percent escalation factor applied to both expenditures and revenue.

A proposed organization chart, based on the Division's management plan which restructured and downsized all areas of the Homes' operation has been developed, and is attached as Appendix 2. Since 1993, the Division has reduced its gross expenditure budget by $38.0 million, while caring for the same number of residents whose health needs demonstrate an increasing acuity. This represents a 23.3 percent decrease. This budget reduction was planned and implemented to deal with reduced provincial funding. In addition to the reduced provincial funding, the Division's municipal contribution has decreased by $9.7 million (29.6 percent) over the same period of time.

Notwithstanding these decreases, the Division is committed to providing residents with a level and scope of service that exceeds the minimum provincial standard, with the belief that seniors are entitled to and require a higher level of service, to meet their personal needs and to achieve a reasonable level of family satisfaction.

Appendix 1 estimates the ongoing net contribution to be approximately $1.25 million per year. This net contribution would be directed at maintaining a higher level of service at the actual cost of providing the service, with a recognition that the City pays a higher wage to its employees than the average for-profit facility.

Conclusion:

In the report "Homes for the Aged - 1999 Operating Budget", staff proposed two things. First, they proposed an increase in the 1999 Operating Budget in the amount of $697,000.00, to enable the Division to access additional provincial funding which is available to enhance nursing services; the increase was approved by City Council at its meeting on June 9 and 10, 1999. Second, they proposed that the policy issues related to bed expansion and/or service enhancement be referred to the Community Services Committee for further discussion and consideration.

At their meeting on June 17, 1999, the Community Services Committee recommended that City Council direct staff to respond to the current Request for Proposals issued by the Ministry of Health. Although staff did not suggest a bed expansion strategy in their report, due to the Division's current cost constraint requirements, staff would be able to respond and prepare a Proposal within the requisite timeframe, if so directed by City Council.

The Homes for the Aged Division is committed to providing vulnerable seniors with a client-centred approach to care and service. To maintain care levels and quality of life programs, the City would need to restore a portion of the Division's previously achieved net operating savings, should the Division be directed to develop and operate a new long term care facility.

It is acknowledged that there would be benefit to the community if the City elected to respond to the RFP and was successful in its bid. However, this community benefit would have an associated net cost. The gross expenditure level necessary to operate a 200-bed facility is estimated to be $8.8 million, with an annual net contribution of $1.25 million. This expenditure level would enable the Division to sustain quality and service levels consistent with the City's other 10 Homes for the Aged.

Contact Name:

Reg Paul, Director, Financial and Administrative Services

Tel: 392-8896; Fax: 392-4180; E-mail: reg_paul@toronto.ca

The Policy and Finance Committee also submits the following communication (June 28, 1999) from the City Clerk:

The Policy and Finance Committee on June 24, 1999, had before it the following communication and report:

(i)(June 17, 1999) from the City Clerk, advising that the Community Services Committee on June 17, 1999:

(A)recommended to the Policy and Finance Committee that:

(i)City Council be requested to direct the Commissioner of Community and Neighbourhood Services to respond to the Province of Ontario's Request for Proposal for additional long-term care beds for a new City Home for the Aged prior to the July 30, 1999, deadline; and

(ii)City Council be requested to endorse maintaining the same level of operating service for both the existing and expanding Homes for the Aged portfolio; and

(B)requested the Commissioner of Community and Neighbourhood Services to report to the Policy and Finance Committee for its meeting on June 24, 1999, on the budgetary implications of building a new Home for the Aged; and

(ii)(June 22, 1999) from the Commissioner of Community and Neighbourhood Services, recommending that:

(1)should City Council adopt the recommendation of the Community Services Committee directing staff to respond to the RFP for new long term care beds by the deadline of July 30, 1999, City Council recognize and endorse in principle the multi-year cost implications of this decision in both the capital and operating budgets for the fiscal year, starting in 2000 (as outlined in this report); and

(2)if a proposal is submitted to and approved by the Ministry of Health, staff report back with a more detailed financial impact analysis, prior to signing any agreement with the Ministry of Health.

The Policy and Finance Committee:

(1)deferred consideration of the aforementioned communication and report until the meeting of the Policy and Finance Committee scheduled to be held on July 20, 1999, in order to afford more time for a thorough review;

(2)requested the Provincial Government to extend the July 30, 1999, deadline for response to the Province of Ontario's Request for Proposal respecting additional long-term care beds; and

(3)requested the Commissioner of Community and Neighbourhood Services, in consultation with the Chief Financial Officer and Treasurer, to submit a report to the July 20, 1999, meeting of the Policy and Finance Committee on:

(i)how the City's exposure can be reduced;

(ii)a policy of projecting what the City's future role should be respecting long-term care;

(iii)what the City's participation within the ratio of a balanced service delivery system should be;

(iv)what number of beds should be provided in the future; and

(v)whether there is an opportunity to submit a co-operative bid with the private sector:

The Policy and Finance Committee also submits the following report (July 12, 1999) from the Commissioner of Community and Neighbourhood Services:

Purpose:

The purpose of this report is to provide an update on the status of the Department's request to the Ministry of Health for an extension to the submission deadline with respect to the current Request for Proposals (RFP) for new long term care beds.

Funding Sources/Financial Implications/Impact Statement:

There are no financial implications related to this report.

Recommendation:

It is recommended that this report be received by the Policy and Finance Committee for information purposes.

Council Reference/Background/History:

At its meeting on June 24, 1999, the Policy and Finance Committee had before it a communication from the City Clerk respecting recommendations from the Community Services Committee (June 17, 1999) that:

(1)City Council be requested to direct the Commissioner of Community and Neighbourhood Services to respond to the Province of Ontario's Request for Proposals for additional long term care beds for a new City Home for the Aged prior to the July 30, 1999 deadline; and

(2)City Council be requested to endorse maintaining the same level of operating service for both the existing and expanding Homes for the Aged portfolio.

The Policy and Finance Committee deferred consideration of the communication from the City Clerk and the report (June 22, 1999) from the Commissioner of Community and Neighbourhood Services. The Committee requested that the Commissioner of Community and Neighbourhood Services ask the Minister of Health to extend the Request for Proposals deadline in order to afford Council the time needed for a thorough review of the options available to the City of Toronto. In addition, the Committee requested that the Commissioner of Community and Neighbourhood Services, in consultation with the Chief Financial Officer and Treasurer, submit a report to the July 20, 1999, meeting of the Policy and Finance Committee, exploring further the options available to City Council with respect to expanding the Homes for the Aged portfolio.

The report was to consider how the City's exposure could be reduced; to advise on a policy of projecting what the City's future role should be respecting long term care; to indicate what the City's participation within the ratio of a balanced service delivery system should be; what number of beds should be provided in the future; and, on whether there is an opportunity to submit a cooperative bid with the private sector.

Comments:

On April 29, 1998, Ontario's Minister of Health announced that the Province would invest $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. Twenty thousand beds are said to be the equivalent of adding 175 new facilities into the long term care system.

On May 1, 1998, the Minister of Health released the allocated figures for facility and community reinvestments. For facility-based care, 5,837 new beds (out of the 20,000 provincial figure) were allocated for the Toronto region over a six- to eight-year period. This amounts to a $190.9 million reinvestment. An initial call for requests for proposals for 2,200 beds for Toronto (6,700 beds across Ontario) was issued in 1998.

The second phase of the Ontario government's six-year expansion plan released this spring will increase the long term care system by a further 5,790 beds throughout various regions across the province, including the City of Toronto, where there are 744 beds available. A further 2,893 beds will be offered within Toronto in future phases of the expansion plan. Proposals during this phase must be submitted by 12:00 noon local (Toronto) time on August 4, 1999. The original submission deadline was 12:00 noon on July 30, 1999.

City of Toronto staff submitted a formal request to the Minister of Health asking that the RFP submission deadline for long term care beds be extended by one month. The Ministry of Health responded by communicating that no such extension would be granted. A subsequent communication was issued by the Ministry of Health shortly thereafter, advising that due to unanticipated difficulties experienced by the company responsible for transmitting facsimile copies of an Addendum to the RFP, the province had revised their timetable to grant an extension to the submission deadline for proposals to 12:00 noon local (Toronto) time on August 4, 1999.

The new submission deadline extends the timeframe for completing the RFP by only three business days, which does not allow staff sufficient time to prepare and submit a proposal to the Ministry of Health should City Council decide to proceed with a bid following its review of the options. It is acknowledged that there will be additional opportunities for the City of Toronto to respond to Requests for Proposals during future phases of the province's multi-year long term care expansion plan. It is staff's belief, however, that the next RFP will not be released until at least 2001.

Conclusion:

The Ministry of Health did not approve the City of Toronto's request for an extension to the RFP submission deadline, thus making it impossible for Council to consider its options and provide staff with the necessary direction in time for the City to prepare and submit a proposal for new beds.

Staff will proceed with developing an option paper as directed by the Policy and Finance Committee for consideration at future meeting. The Advisory Committee on Homes for the Aged will be given an opportunity to provide input into the responding to the questions raised by the Policy and Finance Committee, especially concerning what the City's future role should be respecting long term care.

Contact Name:

Reg Paul, Director, Financial and Administrative Services

Tel: 392-8896; Fax: 392-4180; E-mail: reg_paul@toronto.ca.

(A copy of Appendices 1 and 2 attached to the foregoing report was forwarded to all Members of Council with the July 20, 1999, agenda of the Policy and Finance Committee and a copy thereof is also on file in the office of the City Clerk.)

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Councillor Jack Layton, Don River, appeared before the Policy and Finance Committee in connection with the foregoing matter.