A international group of 95 investment firms with holdings in post-acute and long-term care companies on Thursday called on the industry to bolster care and raise wages for frontline caregivers in the wake of the COVID-19 pandemic.
“As the sector recovers, and we reflect upon the damage to our societies and the loss of human life during the pandemic, we must seize this moment to ensure the industry changes for the better and develops a more humane and resilient model,” the group wrote.
The concerned investment firms include BMO Global Asset Management, Aviva Investors, Sycomore Asset Management, and more than 70 pension funds; UNI Global Union, an international federation of organized labor groups, coordinated the effort.
“We believe these expectations come at a crucial time, and the bar very clearly needs to be raised in quality of resident care and working conditions, including on respecting the rights to freedom of association and collective bargaining,” Nina Roth, a director in BMO Global Asset Management’s responsible investment group, said in a statement. “We look forward to working together with the companies we invest in to reach them.”
The investment firms, which together control more than $3 trillion in assets, laid out their demands for better care in letters sent to virtually all of the major publicly traded nursing home operators and real estate investment trust (REIT) landlords in the United States, including:
- Brookdale Senior Living (NYSE: BKD)
- CareTrust REIT (Nasdaq: CTRE)
- The Ensign Group (Nasdaq: ENSG)
- Five Star Senior Living (Nasdaq: FVE)
- Genesis HealthCare (formerly NYSE: GEN)
- LTC Properties, Inc. (NYSE: LTC)
- National HealthCare Corporation (NYSE American: NHC)
- Omega Healthcare Investors (NYSE: OHI)
- Sabra Healthcare REIT (Nasdaq: SBRA)
- Welltower Inc. (NYSE: WELL)
Each concerned company targeted firms in which they currently hold shares, a spokesperson for UNI noted, with operators in other countries also receiving copies of the letter.
The letters laid out a host of improvements that the investors expect from the industry, with a particular focus on exceeding local regulatory requirements — including adherence to safe staffing levels, the development of infection control programs, raising wages for frontline caregivers, providing hazard pay during outbreaks, and respecting workers’ right to organize and collectively bargain with management.
Each player in the space should have board-level oversight mechanisms to ensure that these goals are being met, the group asserted, with REITs playing a more hands-on role than in the past.
“We also expect investee companies owning real estate used for nursing homes, such as real estate investment trusts, to support the operators to meet these expectations through their oversight of their properties, including through contractual obligations in leases, and labor-related due diligence processes pre and post-investment, including effective monitoring processes to ensure these standards are met,” they wrote.
The investors acknowledged that the COVID-19 disaster in nursing homes and other long-term care facilities had many causes, from a general lack of a coordinated pandemic plan to policy failures. But the group, like many other industry observers, asserted that the pandemic laid bare problems that had existed for years.
“This tragedy has also highlighted the direct link between poor working conditions and quality of resident care, a concern pre-dating and extending beyond the COVID-19 pandemic,” they wrote.
The investors framed internal improvements as both a moral necessity and vital for the future of the sector, arguing that such changes would help rebuild trust with residents and families, while also lessening legal and operational risks for operators and REITs.
“While we acknowledge that some of these expectations might currently be out of reach for some nursing homes operators and others are making significant efforts to address them, we expect companies to embrace them, including through an open dialogue with shareholders, regulators, trade unions, advocates and other key stakeholders,” they noted. “Doing so would improve the confidence of investors, regulators, workers, residents, and their families in the industry in this period of grave concern and beyond.”