Q1 2021 Extendicare Inc Earnings Call
And to the extended care, Inc. First quarter 2021 Analyst Conference call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be and opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad.
Should you need assistance during the conference call you May signal, an operator by pressing star and zero I would now like to turn the conference over to Jillian fountain for any opening remarks. Please go ahead.
Thank you operator, and good morning, everyone and welcome to extend and cares first quarter 2021 results conference call.
With me today is extended Kurtz, President and CEO, Michael Greer and.
Senior Vice President and CFO, David Bacon.
Our first quarter 2021 results were disseminated yesterday and are available on our website.
A webcast of today's call is also available on our website along with an accompanying slide presentation, which viewers may advance themselves.
A replay of the call will be available later this afternoon until May 28, the replay numbers and Passcodes have been provided in our press release.
Is it all and archive recording of this call will also be available on our website.
Before we get started please be reminded that today's call may include forward looking statements such statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied today.
Identified such factors and our public filings with securities regulators and refer you to those filings.
With that I'll turn the call over to Michael.
Thank you Julian and good morning, everyone.
Before we get to our first quarter results I will take a few moments to provide an update and our activities related to the pandemic.
It has been more than a full years since the pandemic struck.
And this pernicious virus remains a threat to our community and the world.
Fortunately vaccines have proven very effective and we've seen a dramatic decline and the infection rates experienced by our long term care homes and retirement communities.
However, with the emergence of new more virulent virus variants and significantly higher rates of community transmission and the third wave, we must remain ever vigilant and our fight against COVID-19.
We are focused on keeping our people safe all the while remembering those we have lost.
All of the much loved friends and colleagues or family members.
We recognize the tremendous tool that the past year has taken on our residents team members and their families.
We are hopeful that with increased vaccine supply and accelerated distribution, where and the final phase of the pandemic.
In the meantime, our devoted caregivers continue to work tirelessly to care for and support our residents and clients.
And I think each of them for their selfless commitment and ongoing effort.
As the third wave brought significantly higher case numbers across the country, we've continued to invest and critical programs and support for our residents and staff.
We have further enhanced testing protocols with rapid testing for all long term care staff and visitors across Canada and have increased testing frequency, particularly in areas, where there are high levels of community transmission.
We are now administering over 24000 rapid tests each week through our programs.
Currently approximately 90% of our long term care residents and 86% of our retirement residents have been fully vaccinated with two doses.
Our extensive education and awareness campaign for staff.
Along with the provision of paid time off and reimbursement of travel expenses for vaccination has resulted in 74% of our long term care staff and 67% of our retirement staff having received at least their first dose as of last week.
Community Health care workers became eligible for vaccination more recently so the pyramid vaccine campaign is now also underway.
Each week hundreds more of our staff for joining the ranks of those vaccinated coming together in a community effort to stifle the virus once and for all.
We are very encouraged by the impact vaccinations and increased testing have had on our communities.
As of today, there is only one active resident cases of COVID-19 across our 69 and long term care homes and retirement communities.
We also support our extended care assist clients as they implement similar testing and vaccination programs.
These have resulted in similarly positive outcomes.
During the last year extended care added more than 1000, new frontline caregivers to our long term care homes.
We did this to support enhanced infection control protocols and to fortify our homes against COVID-19 outbreaks.
As we look to the post pandemic future.
The expanded care team positions us well to enhance our quality of care in line with the Ontario governments long term care staffing plan.
Debt targets for hours of care per resident day.
We are also on track with our internal training programs that were launched last year with impairment.
They will resolve and 600, new caregivers being added to the pyramid team this year.
Governments continue to do their utmost to support our COVID-19 prevention efforts.
And we appreciate both the financial support we have received and the policy commitments. They have made to address long standing challenges and the long term care sector.
Yeah.
With that let's turn to some first quarter highlights starting on slide four.
As with the past few quarters, our results continue to be significantly impacted by COVID-19.
Our costs to combat the pandemic and Q1 totaled $46 2 million exceeding related government funding by $2 3 million and the quarter.
$18 $8 million of the government support recorded in Q1 was for reimbursement of costs incurred last year.
Which resulted in lower net COVID-19 costs for Q1 than we experienced in the previous quarter.
We were very gratified to see further recovery and our home health care volumes in Q1, overcoming the detrimental effects of significant wave two lockdowns.
We are also seeing back office efficiencies contribute to wider NOI margins, a direct result of the new system implementation, we completed in Q4 last year.
Occupancy levels and our retirement community has held up well and in Q1 in line with Q4 again, a great result in light of the Lockdowns and the quarter.
The <unk> customer base continued to grow at double digit rates also contributing to NOI growth and the quarter.
In April we were also very pleased to be able to break ground on our second construction project in Ontario under the new capital funding program.
More on that on slide five.
Here, we see more detail about our redevelopment progress.
We are advancing our plan to replace aging infrastructure with new modern homes that are designed to provide improved functionality safety and comfort for our residents.
Of the 22 long term care redevelopment projects, we have proposed to the Ontario government.
Our requisite beds have been granted for nine so far.
After so many years of advocating for replacement of aging facilities.
It is gratifying to see these projects move forward.
Those nine projects with better allocations represent a $500 million investment by extended care in the future of long term care and the province.
We are targeting to have six of these projects under construction by the end of 'twenty two.
With an additional three projects planned for 2023.
Construction of our Sudbury home continues joined now by the New project underway and Kingston.
This new 192 bad long term care home will replace an existing 150 bed class C home and that city.
It will feature a 114 private rooms, and 78, seven and semi private rooms.
Our investment and this home totaled $45 $4 million with.
And expected and the first quarter of 2023.
Our third project is just outside of Ottawa and Stitz fill Ontario.
It is advancing through the approval process and we expect to begin construction on that home later this year.
This is the first of for projects being planned for the Ottawa area and as a new 256 debt home debt will replace C beds from other extended care homes in that region.
Subsequent to quarter, and we entered into commitment letters for $95 $9 million and committed construction financing for our Sudbury and Kingston redevelopment projects.
This will bolster our strong liquidity position and clearly demonstrates the financing community support of the sector and the new Ontario capital funding program.
Moving to slide six and our long term care segment, the pandemic continued to significantly impact our operations.
As a result of the numerous outbreaks experienced at the height of the second wave and the early part of the quarter.
Costs incurred to protect our residents and staff from COVID-19 for.
$48 $1 million up almost $14 million from the Q4 levels.
Okay.
Occupancy at our long term care homes continued to decline in Q1 as a result of ongoing pandemic restrictions.
Average occupancy declined to 82, 9% and the quarter.
Despite the lower occupancy levels, our revenue base was largely preserved and as governments continue to support the sector through the challenges associated with new admissions during the pandemic.
And Ontario, the government has extended basic occupancy protection funding until August 31.
The Ontario government is also working with the sector to incorporate revised occupancy models that will enable homes with word style for bedrooms and to maintain a maximum of two residents per room until they are redeveloped to modern building standards.
We anticipate that funding for these words style rooms will continue at the current level beyond August 2021.
Through April we have seen long term care occupancy start to recover.
Given the success of the vaccination program and a growing waiting list of people waiting for long term care, both at home and and hospital, we anticipate that occupancy will increase steadily in the coming months.
The Ontario government has continued to demonstrate our commitment to support the long term care sector for costs related to the pandemic.
And Q1, we received a total of $18 2 million fully reimbursing us for COVID-19 related costs incurred in 2020, and our Ontario homes.
In addition, the recent Ontario budget provided for an additional $600 million and COVID-19 response funding for the fiscal year starting on April one.
Yeah.
We have invested and the safety of our people since the beginning of the COVID-19 pandemic without knowing whether we would be fully reimbursed for our costs.
But with a view only to doing everything possible to protect our staff and those and our care.
Over the past year various governments have stepped up to provide funding to cover these substantial costs and we are deeply grateful for the support we have received.
On April 32021, the Ontario long term care COVID-19 Commission delivered its final report, which included 85 recommendations.
On the whole the report calls for greater attention and resources for seniors care and long term care in particular.
We welcome these recommendations and look forward to working with the government and our industry partners to make them a reality.
Turning now to slide seven.
Our pyramid volumes continue to recover from the impact of the pandemic.
With the rate of growth constrained somewhat by workforce capacity limitations.
Our Q1 volumes are up one 7% from Q4 2020 levels and.
And we have continued to see further growth in April with our average daily volume for the for weeks ending may 2nd up two 7% from Q1.
Ongoing lockdown measures, particularly prolonged school closures and certain regions have impeded the ability of some of our home health care caregivers to continue working.
Which has slowed the pace of recovery and our volumes.
To meet the continued growth and demand for home health care services, we continue to make long term investments and training new health care workers.
Since their inception, and Q3 of 2020, our in House and College partnership training programs have graduated approximately 400, new caregivers, including over 100, who graduated and Q1.
We expect to add approximately 600, new caregivers from these programs throughout 2021.
Demand for home Health care services continues to be robust with new referrals exceeding levels experienced before the pandemic.
We believe we are well positioned for further growth as we emerge from the crisis and address the GAAP between referrals and supply that has widened over the past year.
We are also seeing the benefits of our completed cloud based scheduling and clinical management system.
Particularly with improved efficiency and our back office operations and growing volumes and virtual care services.
We expect that as the impact of the pending pandemic abates and volumes further recover the scalability of the new system will drive further margin improvements.
I'll now turn to David Bacon, our Chief financial officer to provide insight into our financial results for the first quarter.
David.
Thanks, Michael.
I'll start by providing an overview of our consolidated results for the quarter, followed by some financial highlights of our individual business segments and our liquidity position.
As Michael mentioned, we continue to experience a high level of volatility and our financial results due to the impact of COVID-19.
Our pandemic costs this quarter were higher than expected due to the magnitude of the third wave. However, government support received this quarter included reimbursement for costs incurred to the end of 2020, helping to offset the impact of higher costs.
Details of our net COVID-19 costs by business segment are outlined on slide 18 of our presentation.
And Q1, we continued to experience occupancy pressures and our long term care and retirement segments and lower volumes and our home health care segment as compared to our pre pandemic levels.
As in previous quarters revenue declines and our home health care segment on a year over year basis qualified our pyramid subsidiary to receive additional funding under the Canada emergency wage subsidy program, which totaled $9 7 million this quarter.
As in 2020. This subsidy is recorded as a reduction of operating expenses and our home health care business.
Turning now to slide nine and our consolidated results.
And the first quarter, we incurred approximately $46 2 million and COVID-19 related costs and received $43 9 million and government funding for a net reduction of adjusted EBITDA of $2 3 million.
The balance of our COVID-19 related revenues and expenses and Q1 relate to the various pandemic pay programs currently in place.
We are encouraged by governments continued funding support and as Michael mentioned earlier, we received $18 8 million and COVID-19 funding and Q1, and our LTC segment for reimbursement of costs incurred in 2020.
Until the effects of the pandemic are behind US, we expect ongoing volatility and our results as the quantum and timing of the funding is not always known in the period the costs are incurred.
But are optimistic that further reimbursements of costs incurred and our LTC segment in Q1 and beyond will be substantially covered particularly in Ontario.
Our consolidated revenue and the first quarter increased by 18, 6% or $50 6 million to $322 4 million driven by increased COVID-19 funding of $55 4 million to offset in part the $56 $5 million of COVID-19 related expenses incurred.
Revenue also increased as a result of LTC funding enhancements and growth and our SGP and assist operations.
Partially offset by lower home health care volumes timing of long term care flow through funding and lower preferred accommodation revenue.
Consolidated NOI was up $9 9 million to $40 3 million, reflecting the wage subsidy received by pyramid of $9 $7 million and Q1.
Consolidated NOI was otherwise largely in line with Q1 of 2020 <unk>.
Despite higher net pandemic costs and increased cost of resident's resident care and lower home health care volumes.
Our improved home health care back office efficiencies and growth and our SGP and assist operations helped offset these impacts.
Our consolidated NOI margins improved to 12, 5% from 11, 2% and Q1 of 2020, driven largely by the improvements and the home health care operations.
Our consolidated adjusted EBITDA was up 37, 7% or $7 6 million compared to Q1 2020 due to the impact of the pyramid wage subsidy and the underlying improvements and NOI.
Partially offset by increased administrative costs due to higher wages and insurance as well as higher COVID-19 administrative costs.
Our <unk> was up 68 point.
It was up 68% or $7 9 million compared to Q1, and 2020 due to the improvement and adjusted EBITDA and lower maintenance capital expenditures, partially offset by higher current income taxes related to the pyramid wage subsidy and net.
Net interest costs.
Our quarterly results continue to experience volatility.
And with the impact of COVID-19 expenses and related funding and subsidies.
The estimated basic <unk> per share impact in Q1 of our net COVID-19 costs net of tax is $1 7 million or <unk> <unk> per share.
And the similar impact of the pyramid wage subsidy net of tax and $7 1 million or <unk> <unk> per share.
Turning now to our individual business segments on slide 10.
Our long term care operations and the first quarter saw revenue grow by $44 9 million or 28% to $205 1 million, which included COVID-19 funding of $46 6 million, partially offset by lower preferred accommodation revenue due to lower occupancy secondary depend on road restrictions.
And Q1 are LTC NOI declined by $2 1 million or 11, 6% largely due to higher unfunded COVID-19 costs increased cost of resident care and lower preferred accommodation revenue, which is not included in the Ontario basic occupancy funding protections.
Excluding net COVID-19 costs, our LPC and or NOI margin was 11 points, 11% this quarter.
As a result of the impact of COVID-19 with limitations on move ins and a maximum of two residents per room overall occupancy and in the quarter was down to 82, 9% and and Ontario down to 83%.
As previously mentioned, our LTC revenue has been largely protected despite the lower occupancy levels.
And the most recent budget and Ontario basic occupancy funding protection has been extended through to August 31, 2021, which provides us an opportunity to recover our occupancy in the coming months as the vaccination rollout and our ongoing testing and other AIPAC protocols continue to minimize cases and transmission.
Within our LTC homes.
Turning to slide 11, and our home health care segment.
<unk> increased by $11 6 million to $16 3 million and our margin improved to 16, 3% from four 6% and Q1 2020, reflecting the impact of the wage subsidy of $9 7 million and lower back office cost offset by lower volumes of one 3% and higher net.
COVID-19 cost.
As a result of cost efficiencies, our NOI margin in Q1, excluding the impact of the wage subsidy and our net COVID-19 costs was seven 3% up 150 basis points from five 8% and Q4 of 2020 and 270 basis points higher than Q1 of 2020.
Average daily volumes and the first quarter were one 3% lower than the same quarter last year, but have improved sequentially from Q4 2020 by one 7% and have continued to improve into April as Michael noted earlier.
Turning to our retirement living operations on slide 12.
Our retirement operations have continued to perform well and Q1, despite the ongoing impacts of COVID-19 on our occupancy levels and costs.
And Q1 revenue increased marginally while NOI was down slightly as a result of the ongoing pressures on occupancy levels and operating costs from the pandemic and addition to increased cost of labor and utilities NOI.
NOI margin reflected the impact of increased costs declining to 28, 3% and Q1 down from 38% and Q1 2020.
Throughout the pandemic, our stabilized occupancy has remained above 90%, averaging 97% and Q1 down 60 basis points from Q4 2020.
Stabilized occupancy levels improve towards the end of the quarter ending with 91% occupancy as at March 31 2021.
For the month of April we have seen a modest uptick and average occupancy by 20 basis points to 84, 3% from 84, 1% and Q1, driven by improvements and our lease up communities.
Turning now to our final business segment on Slide 13, our assist contract services and SGP group purchasing services continue to perform strongly but for us.
Consistent growth and revenue and NOI up, 15% and 16, 4%, respectively and Q1.
This growth has largely been driven by SGP client growth and lower travel and marketing expenses due to pandemic restrictions the.
And the underlying demand for our services remains strong and SGP together with its partners now provide cost effective products and services to over 81003rd party residents and an increase of 11, 3% over Q1 of 2020 and up to 8% from the end of 2020.
Finally, turning to slide 14, we.
We remain and our strong financial position at the end of Q1, our consolidated cash and short term investments on hand were $141 million was $71 million and undrawn credit facilities and no scheduled debt maturities until the first quarter of 2022.
As Michael mentioned earlier subsequent to quarter, and we signed the commitment letters for $95 9 million and committed construction financing for our Sudbury and Kingston LTC redevelopment projects that are now under construction further strengthening our liquidity position.
With that I'll pass it back to Michael for his closing remarks.
Thank you David.
And while we're extremely encouraged by the impact of vaccinations and the lower COVID-19 infection rates and our homes.
We remain vigilant and our efforts to protect residents clients and team members.
We know that we cannot let our guard down until this virus is no longer a threat to the people we care for.
In addition to keeping our people safe we are actively working to create a better future.
We are investing and our people and and new homes to provide state of the art services to meet the needs of our residents and clients.
We are ready and willing to play our part to build a better future for seniors across Canada.
With that we welcome any questions you may have.
Operator.
Thank you.
We'll now begin the question and answer session to join the question queue and you May Press Star then one on your telephone keypad and you will.
Serotonin and acknowledging your request.
You are using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press star and then too.
We'll pause for a moment as callers join the queue.
The first question comes from Jonathan Kessler from TD Securities.
Go ahead Sir.
Thanks, Good morning.
Hi, Jonathan.
First question just on the staffing.
Generally I guess, it's been an issue for the industry is going to continue to be an issue with for hours of care coming.
Government, obviously been supportive of you guys are or as well with your programs.
Are you seeing.
And as much take up with new people entering these training programs as you would have otter and anticipated.
Yes, we're seeing good uptake with those programs we've.
We've had very good.
Very good luck in terms of.
Fully populated and those those programs and I think we're getting the volumes that we expected.
As as we set those programs out so.
Of course, they're welcoming new people into the sector.
And.
Of course, we've got.
A significant.
Laxity and the labor market that that is helping us with those with those recruitment efforts.
Don't forget, though that we have a lot of people that are still on long term lead since the beginning of the pandemic.
And that we're looking for our dwell coming back we still see a couple of hundred people coming back.
On a quarterly basis, we've seen that pick up with the vaccinations now that's certainly helping.
The lockdowns and the.
Online schooling or not helping those efforts we definitely see.
A.
A reduction in availability and staff every time a lockdown occurs.
But as you know vaccination efforts pick up and the third wave seems to be cresting.
We're looking for to getting a lot of those people back into the workforce.
Okay, and then 1000, new frontline workers to long term care is that a net number or is that.
And new hires.
Okay.
That is a.
And net numbers, so thats actually additional people working we hired a lot more than 1000 people over the last year too.
And to deal with with attrition and that's that's the net increase.
Okay, and how has <unk>.
Trish and her turnover trended the last the last couple of quarters.
Well, it's it's been higher certainly than than what we saw pre pandemic.
But.
We've seen a lot of movement of people into.
And to leaves of absence, and then and then coming back as well.
So the attrition is not necessarily permanent but just people who are having to take leads for childcare purposes or health purposes.
And and we expect that of course, we will we will and as the pandemic subsides.
Okay and then my.
Secondly on on your development.
I guess.
And your costs are probably mostly fixed on sub for Sudbury and Kingston and.
Maybe it's fitsville, but how do you how do you think about the other six projects you're targeting being under construction.
Costs.
Development costs, obviously, increasing and how do you think about your returns.
And those projects.
Yes, Jonathan and I think Youre right on Kingston and Sudbury.
And we're into fixed price contracts on those and construction is underway.
We're I think confident and the near term here on Statesville and.
Potentially a fourth project that could come a bit early of the six that were targeting but it is their construction costs are rising for.
For sure. So we are watching that closely.
We do think that we're hopeful that if we could move through the final stages of the balance of the projects here that we want to have.
Up and running into construction by the end of next year that.
We can hopefully a run that a little bit but it is it is a concern that I think the sector will have to watch on cost Escalations. The current program.
While its theres a lot of great features to the current program and the New program. That's the one thing that does not currently have included us.
And any kind of CPI or cost inflation protection built into it so.
So it will be something I think we're going to all have to collectively watch.
For the next year or two as we all try and get as many of these projects into the ground as we can.
Okay.
For a level.
Where you would look at the returns day.
We'll pause on this until the till either construction costs come back a little bit or the government readout for the deal.
Yes, I think we look at returns on projects and a number of different ways. You can see our first two projects are in and around that 8% NOI.
NOI yield target range, which I think is you're seeing consistent and other LTC projects that are getting Greenwood here under the new program. So.
That's a good barometer I mean would we move off of that slightly and the right set of circumstances I think there's obviously a range plus or minus around that but I think thats a good that as a good proxy for for how we think about things and we wouldnt want to see things move to materially off of that.
And.
Okay. Thanks ill turn it back.
Sure.
The next question comes from Tal Woolley with National Bank Financial. Please go ahead.
Hi, good morning.
Good morning, good morning.
Just to talk about Paramount for a second.
And now that we're seeing sort of volume growth return it looks like labor availability is going to get a little bit better.
Prior to the pandemic you had a lot going on and this business I'm just wondering if maybe we can sort of recap like what.
With the destination is supposed to look like for this business.
We kind of get back to normal.
We're running at a more reasonable average kind of volume that you would see in the past what are your hopes for the NOI margin and this business.
Yes, Tom.
I think.
No I think a few things there there has been a lot going on as you know.
We were happy to get the systems part of the of the equation finalized and pyramid last year with the Finalization of the rollout of the new platform.
The new recruiting programs are critical I think we are seeing volume recovery, but we still.
We still have the staffing where we want it to be fully take advantage of the return and demand that we're seeing.
I think if you go back.
<unk>.
Into say 2019 pre pandemic.
And look at that look at the business then.
The margins at that point, where and the benign range I think look we don't know exactly when.
We'll return to those levels, but.
The key for US right now is the focus on building the staff capacity, we have seen three quarters of sequential volume growth, albeit a little bit slower in Q1, we're trending potentially a little bit higher here in Q2 with the two 7%, we're seeing and the last sort of for weeks up to early may.
So I think we're going to still see some progression on volume and that'll be the focus for us this year and get back to pre pandemic levels and start having sequential volume growth quarter over quarter.
And as we've seen with the investments now and the back office and some of that some of the efficiencies starting to kick in there where as we add that volume we can hold steady on fixed costs and indirect costs really start driving that model, but.
We have set and the past and longer term I mean, we do believe that this should be a double digit NOI business, but I can't tell you today exactly when will when we will hit that.
And we need to see our way still out of the.
And the effects of the pandemic here and through the balance of 2021.
And just is there a lot of operating leverage and the margin because I'm just thinking like obviously your biggest variable cost and probably the chunk just one of the P&L for that business as well labor and so every time you have another hour and another hour of labor to like.
This isn't like a business that we.
And we should expect like would go if it was running at 9% like ours.
Ours go higher it would go up like mid teens kind of thing.
So I think there is definitely room for improvement, where we are today as I mentioned I mean, this should be a double digit business I don't I think debt.
There is a lot of.
Leverage and the operations.
For from revenue growth.
And your growth.
And is driven by the volume and the investments we've made have got us into a very good place where.
And automated a lot of what was manual and the efficiencies and the scheduling platform. So there is more leverage there.
I think and not sure it and it goes in and.
AD infinitum into higher and higher margins as we go.
Because I think to get some of those.
Huge revenue or volume gains youre sort of imagining there I think other things are probably going on and the business in terms of expansion geographically and things like that too.
That would have some fixed cost components that come into it but but we do think this should be back into into low teens double digit business like it was back and 17 16 and 17. After we did the <unk> acquisition before we.
And had the downturn that we've pretty comfortable we've rectified now.
Okay.
And.
Just to go back for the long term care Commission report.
Yeah.
From an earlier call today, but it.
And it did seem like.
Particularly when it came to new development, the split and off of.
The model into construction versus care cause or versus care.
The minister did seem somewhat supportive of that.
Initially coming out of.
The reports released and I'm just wondering like.
How you feel about that going forward and what sort of subsequent dialogue have you had with the government about and maybe this operating model changing.
So a couple of things on this one.
First of all.
We would agree with.
The commentary and the report that operators and seniors care should be mission, driven and using their their words.
And the commission specifically contemplated for profit mission driven organizations they did address that.
They also highlighted the colossal.
Task, that's ahead of us to meet the demand for seniors care.
And that's driven by demographic realities.
So we.
We really need all hands on deck to solve that that issue and I think the commission raised.
Creative options for bringing more capacity to the table.
But I don't think we should read that as being to the exclusion of existing models.
None of the 85 recommendations are a barrier to for profit operators getting on with the urgent task of replacing seabed homes.
And we've certainly seen.
No pause or no change.
And our work with government and advancing those nine projects that I referred to earlier so for the last couple of weeks we've had.
A number of of correspondence with the government on a number of those projects and things are moving forward.
As anticipated.
No.
And I really think that this should be read as being an effort to.
Bring some new models into expand capacity and this sector, because they need and so urgent.
But I.
I think we should also pay attention to the commentary and the Commission report that.
Specifically says that.
And the need is clear.
<unk> and it is urgent and that we need everybody contributing to it.
And that May call us as a doctor.
And I'm just wondering if.
If you can help me sort of understand.
You sort of a risk question.
The <unk>.
Investment that the government is going to make and increasing care hours.
How much because there were issues.
There were revenue and issues prior to depend on it.
Crop up and different facilities and a lot of it had to do with.
Staffing and labor availability and things like that the investment and care hours with the governments sort of planning to make how much do you think that will reduce the operating risk and the current LTC model with respect to when it comes to resident care.
Yes, it's a good.
It's a good question for great question.
I think it'll have a material.
Impact on reducing risk.
And and predominantly because it'll increase the resiliency and the in the sector.
I mean, what's happened over 20 years.
Is that the.
And the funding has just ever so slightly been behind inflationary labor costs.
And as a result.
We have.
Quite thinly staffed homes.
Right across the country and and and of course, that's the same whether youre talking about not for profit or not.
Not not for profit or for profit entities for all funded the same way.
And.
And for hours of care per resident day as an average is is really an internationally recognized standard.
And so this is the first time that we are.
Setting.
Our target or and objective in terms of the ratio of staff to residents, which not only helps us from the perspective of having having more staff on hand to address any issues that come up and a home.
Such as an outbreak as we've seen more recently, but theres other things that that debt that can happen as well.
It's a peak.
People booking Rob sick.
And and so that and that puts put stress on the staffing and at home so having more staff to begin with.
Ads that resiliency, but I also think it's very important debt.
Debt to fund or is now.
Making and implicit commitment to funding to those for hours of care. So not only does it does and derisk the operations and also de risks.
And the sector from that perspective of that erosion.
And the staffing levels and funding doesn't keep pace with wage inflation.
So I see this as a sea change and in the sector.
Everybody has been.
Lobbying for this for 20 years, and when I say, everybody and thinking about unions political parties operators everybody has seen this as being.
A step that that really entrenches and certain.
Quality commitment and.
And in the industry.
And so this is an incredible step.
And by the way I mean, it is Ontario, that's done that we haven't seen any other provinces do that but I would say that from the perspective that the federal government now has stepped in with this idea of national standards and <unk>.
Truck group to to define what those might be.
Put $3 billion and funding and the most recent budget behind that.
And if I've made a comment that debt is potentially more to come in the form of the health transfers to the provinces.
No.
I think there is a realistic possibility that that for hours of care standard might be adopted across the country and backed by the federal government.
And as tragic as the pandemic has been the <unk>.
Movement from.
A government policy perspective.
Has been historic and.
And so we are incredibly buoyed by it and we're very excited about it.
Alright, Thats a great answer just wanted to thank for you I really enjoyed reading your testimony to the commission and that was very interesting here and you can speak to the doctor to as well.
Thank you.
And again, if you have a question. Please press Star then one.
Yeah.
This concludes the question and answer session I would like to turn the conference back over to Jillian fountain for any closing remarks.
Thank you operator that concludes our call for today. This presentation is available on our website and sorry, the call and numbers for an archived recording.
We're looking for Keith joining us at our virtual AGM on Thursday May 27 debt 10, 30, a M. Further details are posted on our website.
Everyone for joining us today, please don't hesitate to give us a call. If you have any further questions.
Goodbye.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.