The largest operator of private nursing homes in Canada has received millions in federal wage subsidies for its home healthcare subsidiary while it has also given millions to its shareholders in monthly dividends.
Extendicare said its home-care subsidiary, ParaMed, applied for and received $ 21 million under the Canada Emergency Wage Subsidy (CEWS) after it “experienced significant declines in demand for home health care services during the pandemic.”
Extendicare executives said the subsidiary will be applying for more wage subsidies and they expect the next payment, if approved, to be “in line” with the $ 21 million already received.
Revenue, however, was up for Extendicare as a whole, driven, in part, by government funding to help combat COVID-19 and growth in their retirement living operations.
The company has paid close to $ 20 million in total dividends since January, according to its most recent quarterly report. Nearly $ 10.5 million of that was paid since the beginning of April, when COVID-19 devastated nursing homes throughout Ontario.
“It does appear quite unseemly that taxpayers are giving millions of dollars to this company and it’s turning around and paying it out to its wealthy shareholders,” said Arthur Cockfield, a Queen’s University professor and tax law scholar.
“Average taxpayers are subsidizing these wealthy corporate interests.”
Unlike the federal government’s COVID-19 loan program for large corporations, CEWS places no restrictions on companies that give their shareholders a dividend.
The CEWS program is designed to help businesses and other entities keep workers on their payrolls as revenues are clobbered by the economic turbulence caused by the pandemic. Torstar, the parent company of the Toronto Star, is among the recipients of the federal wage subsidy.
Extendicare said the $ 21 million was to help ParaMed keep its 9,000 employees, many of them nurses and personal support workers, on the payroll after the subsidiary suffered a drop in revenue in March and April.
The home-care business was impacted by the province reducing elective surgeries and some patients choosing to self-isolate and suspend their ParaMed services.
“Keeping our team in place ensures we can respond quickly to increases in demand for home healthcare services and return to normal volumes as the pandemic recedes,” Extendicare President and Chief Executive Officer Michael Guerriere told investors Friday.
Businesses have a responsibility to their shareholders “to maximize the performance of their companies,” said David Soberman, a professor at the Rotman School of Management.
If a company has a right to a subsidy, it should take it because its competitors likely will also seize the opportunity, he said. In a case like Extendicare’s, the wage subsidy meant employees with the subsidiary continued to get paid, while the government earned tax money from the dividends, Soberman said.
“If their workers are laid off, you’re going to have to pay out benefits to those workers and the company may generate less profits, and on top of that, you’re not going to have the taxation that comes on the dividends that were paid,” he said.
“People are only seeing the bad side of this, which is it looks like these very capitalist-type enterprises are accessing subsidies to pay dividends to shareholders, and I think that’s just a very warped view of what’s going on.”
Duff Conacher, co-founder of Democracy Watch, said, “The public’s money should not be going to companies that are paying dividends to shareholders because they can obviously afford to not have the subsidy.
“If you have the money then you don’t need the public’s money. That should be the rule across the board. Shareholders take a risk when they buy shares and to have them relying on dividend payments consistently, then that is just their mistake.”
For Queen’s professor Cockfield, the government should take a more “holistic” approach when distributing subsidies, considering a company’s overall financial footing rather than assessing the revenues of individual subsidiaries.
Canada’s “Large Employer Emergency Financing Facility,” offering pandemic relief loans for companies with annual revenues of more than $ 300 million, will not give money to companies that pay dividends.
The Canada Revenue Agency would not release information on Extendicare’s CEWS subsidy. It said those privacy considerations will change in a few weeks when the government’s amendment to the Income Tax Act authorizes the Minister of National Revenue to name “any eligible employer that applies for CEWS.”
Extendicare is among the 285,940 employers that applied for and received the CEWS, which gives employers with revenue losses money to help pay workers’ wages, allowing businesses to rehire staff and prevent job losses.
Extendicare owns 58 nursing homes across Canada with about 35 in Ontario where roughly 100 residents died after a COVID-19 diagnosis, according to government data. It also manages numerous Ontario nursing homes, many of which are not-for-profit.
More than 1,840 residents of Ontario’s 626 nursing homes died from the virus.
One home, Extendicare Guildwood in Scarborough, had 48 deaths, according to health ministry figures.
The province appointed Scarborough Health Network to partner in the management of its operations. So far, 11 nursing homes that struggled to get the virus under control are now co-managed by seven hospitals.
In early June, Extendicare said it had started testing its staff two to four times a month “to increase our ability to identify asymptomatic staff early and remove them from the home to self-isolate. (Most homes were starting to test staff twice a month.) As of June 10, Extendicare said the testing found 56 cases of asymptomatic staff in Ontario homes which “avoided 13 possible outbreaks.”
“We remain vigilant in our ongoing battle to keep the novel coronavirus out of our homes and communities. Our focus remains firmly on doing everything possible to protect the health and well being of residents, clients and staff,” Extendicare’s Guerriere told investors.
Extendicare said it applied for the CEWS money in late July to cover ParaMed’s declining revenues in March and April.
When COVID hit, the Ontario government made policy changes that gave nursing homes financial stability. Its Emergency Measures Funding Policy gave homes 100 per cent of their usual occupancy funding until Dec. 31 “regardless of the actual occupancy achieved.” The provincial government said it also added another $ 61 million to the long-term care sector to help with expenses to “prevent and contain COVID-19.”
Some industry leaders are calling for civil liability protection from lawsuits for issues related to COVID. Premier Doug Ford has mused about passing legislation to protect businesses but later said he is “not supporting bad actors” in long-term care.
Seniors’ advocate Laura Tamblyn Watts said home care is an important part of Ontario’s health system so it is understandable that Extendicare is trying to maintain its workforce when the industry is already short-staffed.
“What is difficult to understand, is how large for-profit corporations that provide long-term care are receiving government subsidies and paying out substantial dividends, while at the same time claiming they are underfunded and need protection from class action lawsuits due to negligence during COVID,” Tamblyn Watts said.
“Each of these things can be understood individually but together they make very little sense.”
Public kept in dark about CEWS payments
Despite promises of transparency, the public is still in the dark about which companies have the federal wage subsidy — and how much.
The $ 21 million in subsidies given to a subsidiary of Extendicare is just a few drops of the billions of dollars that has flowed from the Canada Emergency Wage Subsidy program.
The subsidies to Extendicare’s home health care subsidiary, ParaMed, were disclosed in the company’s second quarterly results.
The law passed in April to create CEWS empowers the government to publish the names of employers receiving the money.
The Canada Revenue Agency, which is administering the program, is “still finalizing the details on how we will publish this information,” a spokesperson said.
“We plan to publish the list of CEWS recipients by the end of August,” the spokesperson said.
The government has paid nearly $ 27 billion to more than 285,000 unique applicants since Aug. 9, according to federal statistics. Of those applicants, 210 each received more than $ 5 million in subsidies.
The CEWS program is designed to help businesses, non-profits, political parties and other entities keep workers on their payrolls as revenues are battered by the economic turbulence caused by COVID-19.