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Insight one

Ontario non-profit long-term care organizations appear more likely to have a board of directors compared to their for-profit counterparts

Some aspects of corporate governance are described as good—generally accepted structures and processes that have been formalized through legislation or authoritative recommendations or codes of compliance (Watson et al, 2021). The adoption and use of a formal corporate governance structure (such as a board of directors) has traditionally and persistently been considered a requirement for good corporate governance.

For this reason, we were interested to find out how many long-term care organizations have a formal governing body, such as a board of directors. Our survey results suggest that it is a common aspect of corporate governance in the sector. 77% of for-profit and non-profit (including charitable) respondents (n=111) indicated that their organization has a governing body, and 94% (n=86) said that the term “board of directors” best identifies their governing body. If these statistics are indicative of the whole sector, they suggest adoption—at high levels—of a foundational element of corporate governance.

Figure 4. Proportion of Ontario long-term care homes with a governing body, by organizational type
% of respondents 97% Non-Profit or Charitable (n=68) | 47% For-Profit (n=43)

As shown in Figure 4 (which excludes municipal homes, due to their unique organizational structure; as discussed above, all municipal long-term care homes have a governing body in their municipal government), almost all respondents that reported the absence of a board were from for-profit organizations.

The finding prompted our curiosity around questions including What does corporate governance look like when there is no formalized or working fiduciary board of directors? What does corporate governance look like when senior managers are not familiar with or do not interact with the board? It is not clear if the survey result stems from a lack of interaction between administrators and boards of directors in some for-profit homes, or if in fact there is a significant difference in board use (an active, working board that extends beyond an organization’s legal requirement to have a board) between non-profit and for-profit organizations, and if it exists more widely in the long-term care sector. Further study would be required to better understand the gap we observed.

Next » INSIGHT TWO: Ontario long-term care organizations with a board of directors appear to use generally accepted good governance practices