Does the profit motive matter? COVID-19 prevention and management in Ontario Long-term Care Homes

Abstract

This paper introduces evidence that for-profit long-term care providers are associated with less successful outcomes in COVID-19 outbreak management. We introduce two sets of theoretical arguments that predict variation in service quality by provider type: those that deal with the institution of contracting (innovative competition versus erosive competition) and those that address organizational features of for-profit, nonprofit, and government actors (profit-seeking, cross-subsidization, and future investment). We contextualize these arguments through a discussion of how contracting operates in Ontario long-term care. That analysis leads us to exclude the institutional arguments, while retaining the arguments about organizational features as our three hypotheses. Using outbreaks data as of February 2021, we find that government long-term care homes (LTCHs) surpassed for-profit and nonprofit homes in outbreak management, consistent with an earlier finding from Stall and colleagues (2020). Nonprofit homes outperform for-profit homes but are outperformed by government homes. These results are consistent with the expectations derived from two theoretical arguments - profit-seeking and cross-subsidization - and inconsistent with a third - capacity for future investment.