Thousands of seniors live in nursing homes across the country. That number will grow rapidly as the baby boom generation ages.

That demographic fact means care for the elderly is becoming an extremely lucrative business.

Three years ago, Ontario's Conservative government announced an unprecedented expansion of long-term care facilities. The government planned to spend a record $1.2 billion on 20,000 new long-term care beds.

That meant a windfall for the industry because every nursing home bed that is built is heavily subsidised — both construction expenses and daily care costs are subject to government aid. The government pays $10.35 per bed per day over 20 years for construction; it pays nearly $100 per bed per day for operations.

The amounts of money are staggering. For instance, if the government awards your private company a hundred beds, that is worth almost $80 million in subsidies over twenty years. Your company ends up with a valuable building and a nursing home licence, both of which can be sold.

In the past, non-profit and for-profit organizations have had an equal number of beds. But over the past few years, two-thirds of the beds have gone to for-profit companies.

There are several questions Marketplace wanted to find answers for, including:

• is the process fair and based on merit?
• if it's not, is the quality of care given to you or your parent at risk?

Quality of care

Ordinarily, Ernie Johnson strikes you as pretty easy-going. His mother is now receiving excellent care at St. Patrick's Nursing Home in Ottawa. But it wasn't always that way.

Johnson's 87-year-old mother used to live at Versa Care Lodge in Ottawa. Johnson says the care she received there left a lot to be desired.

Johnson's mother, Ellen Cardillo, suffers from dementia and Parkinson's Disease. She is totally reliant on caregivers. But Johnson was shocked by conditions when he visited her — there was dried vomit on her blouse, she had been put to bed fully clothed and there was fecal matter on her hands. She also suffered serious and unexplained injuries.

"I stopped in to see her in the afternoon and bent down to give her a peck on the cheek and touched her arm and she winced back in pain," Johnson said. "I … found a very large gauze bandage on her upper arm, peeled it back and found a very angry and running sore or burn on her arm. And I just virtually almost exploded."

Johnson moved his mother out of the Versa Care home, a part of the large group of nursing homes owned by CPL Real Estate Investment Trust — or CPL REIT. In 1999, a provincial inspection of Versa Care Lodge in Ottawa cited the home for 22 violations of standards.

The Ontario government had just awarded another CPL REIT subsidiary in Ottawa more than a hundred nursing home beds.

When those beds were awarded, the government rejected applications from non-profit organizations that had a good history of service to seniors in Ottawa. The Salvation Army, Sisters of Charity, Montfort Hospital and the Royal Ottawa Hospital, were passed over in favour of private operators in the first round of bed awards.

'We were all stunned'

"We were all stunned when each and every one of these community, non-profit providers were rejected," Ottawa city councillor Alex Munter told Marketplace. "The Sisters of Charity were looking after people in the lumber yards of lumber in Bytown. I mean these agencies have a history of service, a credibility in this community that goes back for a very long time and they were all rejected."

Munter questions why a company, with a nursing home that had been cited by the Ministry of Health for almost two dozen problems, was awarded more beds.

Some critics of the nursing home industry suggest there's a link between political campaign contributions from nursing home companies and the Ontario Government's awarding of beds to those same companies.

Trish Spindel has spent years fighting for the rights of the elderly.

"If I were to put my mother or grandmother into a nursing home, I would want to know that the minister who's responsible for licensing, funding and inspecting those homes is not also accepting campaign contributions from that industry," Spindel told Marketplace.

NEXT: Analyzing political contributions »