Squeezed out

Dave Bartlett
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Smaller personal care homes may close without financial help

When Genevieve Kennedy decided to take over a personal care home in Holyrood in 1987, she did her homework.

She and her recently disabled husband put their entire life savings into the home because government regulations were such, she was assured her investment would be protected.

When Genevieve Kennedy decided to take over a personal care home in Holyrood in 1987, she did her homework.

She and her recently disabled husband put their entire life savings into the home because government regulations were such, she was assured her investment would be protected.

Those regulations included a freeze on licences and strict rules about who could buy an existing home.

Now, 23 years later, Kennedy is on the brink of losing the care home and her nest egg.

She said changes to government regulations have slowly eroded her profit margins, increased her paperwork and made her home uncompetitive with newer, larger homes which can avail of lower-interest loans that she can't qualify for.

These days, many people prefer more modern homes because the older ones are so short of revenue, owners often can't afford basic maintenance.

That's left Kennedy with only 12 of 33 beds occupied. Because she gets paid per resident, she's been slowly sliding into debt.

"Now that I'm struggling with 12 residents, I can't make ends meet," she told The Telegram this week.

Before buying the home, Kennedy was a nursing assistant in the cancer clinic in St. John's, and the stress level was high.

After they bought the care home, the Kennedys pumped their own money into renovations to modernize and expand it, turning the large open wards into private and semi-private rooms, on the advice of government.

For the first few years the paperwork was minimal, and she enjoyed concentrating on the best part of her job, caring for people.

But in the mid 1990s, Kennedy said, the Clyde Wells government deregulated who could own a home and where they could be built and removed the 20-bed cap.

Large, modern personal care homes, started springing up, she said, creating unfair competition to traditional family businesses.

The next hit, which affected smaller homes far more than larger ones, came when the province ended the so-called night wage subsidy in 2006.

While homes did get a monthly increase per resident at that time, Kennedy said smaller homes actually took a loss because the increase didn't cover the amount of the lost subsidy.

Beyond provincial policy changes, Canada Mortgage and Housing Corporation (CMHC) will only guarantee mortgages to homes with more than 50 beds.

That means larger homes get much lower interest rates and have a longer period to pay back loans.

On top of that, there have been three minimum wage increases in the last few years, meaning higher pay for staff, which further cuts into profit margins.

The Personal Care Home Owners Association represents about 50 homes, mostly small ones in rural areas.

It hired PricewaterhouseCoopers to do a report before this year's pre-budget consultations, which illustrates how these policy changes are slowly putting smaller homes under.

Association president Shaun Lane said some of the homes are the largest employer in some small towns.

"We feel government is trying to weed out the smaller operator," he said.

Lane also said the province has refused to lobby CMHC on the association's behalf, to allow smaller homes to get loan guarantees to help them modernize.

Lane said about eight of the association's member homes in the province have closed since 2003 and five more could be boarded up by the end of the year if the province doesn't act.

Kennedy's is one of those five.

Instead of making a profit, she figures she's losing $3,000 a month.

Because she has remortgaged her building a number of times to pay for mandated upgrades and maintenance, banks won't look at her anymore.

If she does have to close, she won't even own the building.

Kennedy said the government has told care home owners they are private businesses and not to expect help to make their ventures profitable.

But she points out that the government controls how much money they get per resident, who lives in their homes, how many staff they must have, what they must pay in salaries - even what food they serve in their dining rooms.

"Everything we do, except breathe, the government tells us what to do," she said.

Kennedy said the government is essentially her employer.

"We're not big business people. We're only mom-and-pop operations," she said.

Kennedy and Lane both say personal care homes are the most affordable way to care for seniors who don't need around-the-clock medical attention.

If Kennedy goes under, seven employees will be out of work. One of them told The Telegram she's worked at the home for 15 years.

Kennedy's 12 residents will also have to be moved to other homes.

But most of her residents don't want to go anywhere. At least two of them lived at the home before she even bought it.

One 91-year-old lady has been there for 31 years, another woman for 26.

Lane said among the benefits of having a loved one in a smaller home are a greater staff-to-resident ratio, a more intimate atmosphere and the convenience of having seniors stay in or near their home community.

Kennedy hasn't told her residents she may have to close yet, because she doesn't want to worry them needlessly.

"My only hope, the thread I'm holding onto, is the Danny Williams government will seriously look at the PricewaterhouseCoopers report," she said.

That report was given to Finance Minister Tom Marshall at pre-budget consultations this week.

Kennedy suggests the province reinstate the night wage subsidy for smaller homes and make it retroactive to when it was discontinued.

If that happens, she'll be able to pay off some of her debt and do some much-needed maintenance, hopefully helping her attract new residents.

If there's nothing in the budget, she said, the minimum wage increase to $10 an hour on July 1 will be the death blow to her once-promising retirement plan.

"That's the breaking point. I can't hold out any longer after that," she said.

dbartlett@thetelegram.com

Organizations: The Telegram, Canada Mortgage and Housing Corporation, PricewaterhouseCoopers Personal Care Home Owners Association

Geographic location: Holyrood, St. John's, Kennedys

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Recent comments

  • jo ann
    July 02, 2010 - 13:13

    Mr bartlett I feel so sorry for this particular home owner and others facing this dilemma. I thought NL was rich with oil revenues and I would expect Danny Williams and his government to take care of those home owners who care for the delicate and fragile seniors. Shame shame on them if they do not help these's owners. This is certainly not good governing.

  • jo ann
    July 01, 2010 - 19:52

    Mr bartlett I feel so sorry for this particular home owner and others facing this dilemma. I thought NL was rich with oil revenues and I would expect Danny Williams and his government to take care of those home owners who care for the delicate and fragile seniors. Shame shame on them if they do not help these's owners. This is certainly not good governing.