Chairman’s Letter – May 2020

The Data Behind COVID-19 and Beyond

In response to the rapid spread of a potentially destructive novel virus, almost every western government implemented a containment approach that had never been used before. Through emergency orders, all non-essential businesses were ordered closed, the entire population (except essential workers) was ordered to stay in their homes, and social distancing was enforced. The well intentioned moves were designed to “flatten the curve” and reduce the stress on hospitals, allowing time to understand Covid-19, develop an antibiotic, and develop a vaccine.

Ontario, like the rest of Canada followed and, in some cases, lead in legislating these measures. We have lived with these conditions for the past 2 months.

The costs and losses associated with these measures have been unthinkably massive; federal support packages costing over $100 billion in Canada and $5 trillion in the United States but even more significantly – life altering losses to tens of millions of individuals who have lost their livelihoods (jobs, businesses, retirement incomes, etc.) and for many their mental and physical health. Sadly these losses are growing rapidly daily.

At Stillwater, we have had many discussions about the impact of Covid-19 over the recent weeks. We wanted to understand our current environment and the risks facing our staff, our company, and the people and businesses we serve. But critically important to us  – we needed to make sense of the economic loss we all are being asked to suffer and the request to keep sacrificing for the greater good.

In many ways we feel that we are living Woody Allen’s quote “More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.”

Understanding data to develop well-formed risk assessments is a critical aspect of how we advise our clients and how we plan and operate our business. Outlined below is some of the analysis we have done to assess the risks associated with Covid-19. This is the information we are using to make sense of where we are today and to craft our go-forward plans and policies.

The Data

Our analysis was based on May 11, 2020 data from the province of Ontario. The data we considered from several other countries and jurisdictions was not materially different and our observations would not change had we used the data from those other jurisdictions. Our data sources are detailed at the end of this letter.

We reviewed the data somberly with the constant awareness that each death represents a great loss to us all. We also recognize that the data is dynamic and it changes every day. There is plenty of uncertainty in the outcomes for the people who have not yet finished their battle against the virus. 

Hospitalization, the Second Wave, and Reopening

The primary reason cited by the Ontario government for their Emergency Orders and the current go slow “Phased Approach for a safe reopening” was an elevated concern about a potential second wave of Covid-19 cases that could overwhelm Ontario’s hospital capacity.

We understand and appreciate the exceptional efforts of our health care workers and the heightened level of ongoing vigilance required of them to protect themselves, their families, and their patients from this virus. No doubt this is both stressful and demanding and they require the resources and continued protection to perform their functions in safety.

By April 30, 2020, Ontario had almost 25,000 acute care beds and 3,500 critical care beds with 3,000 equipped with ventilators. As of mid April, 29% (7,300) of acute care and 57% (2,000) of critical care beds were empty.

Over the past 2 months, more than 50,000 surgeries have been cancelled in Ontario. As a result, average hospital occupancy rates have fallen from 96.2% before the measures to 65% now, the lowest hospital capacity utilization in decades. Emergency room wait times have fallen sharply and complete hospital wards have been closed.

Conclusion: At no time were Ontario hospitals stressed by an influx of Covid-19 patients. It is worth noting that Ontario’s hospitals handled over 20,000 positively tested cases of Covid-19 (or possibly 130,000 to 140,000 infections when estimated non-tested positives are included – see discussion below) with just 589 ICU beds.

Covid-19 in Ontario – The Raw Data

Table 2 shows Ontario’s aggregated Confirmed Positive Data as of Monday May 11, 2020 by age bands.

Most of the media reporting in the press has focused on the last line of the table – 1,669 deaths, 20,546 cases and an 9.9% mortality rate (open cases have been excluded from the mortality rate calculation). Since 88% of Ontario’s population is 69 or younger, that data is misleading and provides no useful information by which the general population can assess their risks.

This data tells us that, based on age alone, of the people who tested positive for Covid-19 in Ontario there were:

  • Under 60:       9,416 people infected with 78 reported deaths.
  • 60 to 69:         2,562 people infected with 133 reported deaths.

As discussed below, the data does not include anyone who had the virus but was not tested. Applying a factor of 8 to 10 to the positive test cases to estimate the number of people infected in these groups gives a most likely mortality rate below 1/10th of 1 percent in those under 60 and ¾ of 1% in those in their 60’s. These rates are a critical element in our assessment of the Covid-19 risk.

The other critical factor is understanding the impact of comorbidity conditions in Covid-19 related deaths.

Global research has shown a very strong correlation between underlying health problems and Covid-19 fatalities. The 7 leading comorbidities are hypertension, diabetes, heart disease, atrial fibrillation, chronic obstructive pulmonary disease, and active cancer in the last 5 years. In New York state, 86% of those who died from COVID-19 had at least one comorbidity. Although Ontario is not publishing daily comorbidity data, other information indicates Ontario’s experience conforms to this as well.

As discussed below, high mortality rates in people over 70, are not age related. The primary determinant of Covid-19 death is the existence of other comorbidity conditions.

Conclusion: Without considering any factor other than age, people under 70 have a mortality risk of less than 1%.

Long Term Care Facilities Are the Real Battleground

It is well known that patients in long term care (LTC) homes have been devastated. What is happening to some of our most vulnerable people who are living in these homes is a tragedy. One need look no further than the superior performance of LTC homes in the Kingston region to know that this tragedy was to some extent avoidable, and there have been many LTC home failures throughout the province.

Some history is necessary to understand why LTC homes are at great risk. In 2010, during the time of the H1N1 virus, Ontario implemented its aging-in-place strategy. This meant that LTC homes could now only accept patients with high or very high care needs. Today 76% of all LTC patients in Ontario have diseases related to their heart or circulation. In addition, since many of the LTC patients are of limited financial means, have restricted mobility, and need social contact, most share a room with one or more other patients.

With shared rooms and a high prevalence of comorbidity, it should come as no surprise that most of Ontario’s LTC homes have been the main battleground for Covid-19. In fact 231 of Ontario’s 600+ LTC homes have reported at least 1 Covid-19 case. The 37,000 beds in these 231 homes account for 48% of the 78,000 LTC beds in the province. In other words, 48% of the patients in long term care in Ontario have already been in close proximity to the Covid-19 virus.

Table 3 summarizes the information regarding Ontario’s LTC homes.

There are 2 key data points from this information.

1. Extent of the Deaths: The 1,237 deaths reported in Ontario’s LTC homes plus the 154 deaths reported in Ontario’s retirement homes and hospitals, represent 83% of all Covid-19 deaths reported in Ontario.

2. Comorbidity: While there is no data comparing the infection rates in patients to the infection rates in staff, it is abundantly apparent that 600 times more LTC patients who tested positive for Covid-19 died than the healthy staff who cared for them. This clearly demonstrates the very strong correlation between underlying medical conditions and Covid-19 mortality risk.

Conclusion: Comorbidity is the absolute dominant factor in Covid-19 outcomes. The virus has rampaged long term care patients because of comorbidity conditions. The LTC population group represents 7 out of 8 Covid-19 deaths in Ontario.

Covid-19 and the General Population

As discussed, the risk profile of the LTC patient population is vastly different from the risk profile of the general population. The LTC Covid-19 outcomes must therefore be excluded to properly assess the risks to the general population.

Table 4 summarizes Ontario’s data splitting LTC homes (including hospital and retirement home reported deaths) from the totals. The “All Other” category in Table 4 is the best depiction of Covid-19’s impact on the general population.

Without question, the state of Emergency Orders that confined Ontario residents to their homes for the past 2 months has significantly slowed the spread of the virus in the general population.

The number of “All Others” deaths must be reviewed in the context of Ontario’s population of 14.6 million people. There are 2 key insights from this data.

1. Mortality Rates Are Much Lower Than Reported: The actual mortality rate in the general population who have tested positive for Covid-19 currently is 1.86% across all ages (open cases excluded). Several emerging studies from Europe and the United States are finding that for every person tested positive, there are at least 8 to 10 other infected people who have not been tested. For example, New York state health officials performed random testing on the general population and estimated that in addition to the 337,000 people who had tested positive for Covid-19, there were another 2.4 million people who had the virus but were not tested.

Applying this to Ontario would imply that between 130,000 to 140,000 Ontarians have or already had the virus. This is critically important as it reduces Ontario’s estimated mortality rate to less than ¼ of 1%. If the 278 deaths were further stratified between those with and without a comorbidity, we expect that the data would show mortality rates in those without a comorbidity to be significantly lower than ¼ of 1%.

2. Unnecessary Fear and Anxiety: Much of the current media reporting is focused on aggregated data – the 1,669 deaths. While aggregated data makes for exciting news reports, it is misleading because it does not allow the general public to clearly understand the risks to them from Covid-19. From press reports, it would be easy to conclude that healthy individuals are at significantly higher risk of dying from Covid-19 than the data suggests. This reporting has created an unnecessarily high level of fear and uncertainty in the people of Ontario which needs to be reduced before the economy will fully return.

Conclusion: The general population has a less than ¼ of 1% risk of mortality from Covid-19.

Our Bottom Line – Reopen with Some Haste

Covid-19 is a serious virus and must be treated as such in our day-to-day activities. However, we believe that the time to lift the restrictions has passed. We all know how to live with the virus – hand washing, no face touching, and wearing a mask when social distancing cannot be practiced. It is time to trust the people to do what they have to do to protect themselves, their families, and society.

The vulnerable and those at risk must be protected to the best of our ability and the rest of the population needs to get on with life.

As many have observed, we are in a large-scale, high-risk experiment. The thesis of the experiment is that in the end, the benefit of the lockdown – lower mortality rates from Covid-19 – will outweigh the enormous economic costs associated with it.

People now need to be allowed to ask questions about these experimental measures without being ridiculed as uncaring and cold-hearted. Questions like:

  • Do they continue to be necessary? Have they already served their purpose?
  • Will they have made any difference in the final outcomes? Have we done anything other than temporarily slow the virus’s march through our ranks?
  • What if there is no vaccine found in the near term or ever? Do the restrictions continue until proven vaccines and antibiotics are available for all?
  • What will be the final cost of these measures? What will these measures have irrevocably destroyed that can never be recovered?
  • What damage have we done to our society?

Today, there is no proven vaccine that can stop the spread of the virus. There are no proven antibiotics that work for all infected people. As people re-emerge from the lockdown, the same virus will still be present, and it will be just as contagious then as it was 2 months ago. The Swedish government expressed it well when it said that “the virus is going to do what it is going to do”.

While the measures have bought some time, most vaccines take years to develop and test. It is unlikely that one will be available before the fall, and, we know viruses mutate, so there is also no guarantee that one will even be found. Neither the federal governments nor the people have the financial ability to carry the costs of these measures until then.

Without a vaccine or a proven antibody available now, it seems altogether possible that we may have simply kicked a very expensive can down the road.

We are indeed at the crossroads, however, we do not have to choose between total extinction or despair and utter hopelessness. There is a third road open to us – reopen and aggressively protect the vulnerable.

Why Lift the Restrictions?

The reasons for first implementing the measures are no longer there. The risks are different than first thought- we know that individuals with comorbidities are the ones at risk – and the costs are staggering.

Removing restrictions can and should proceed as rapidly as possible, for the following reasons:

  • The mortality risk to the general population from Covid-19 is low.
  • Healthy people of all ages have exceptional recovery rates.
  • Patients in LTC homes have been identified as the segment of the population most vulnerable to dying from the virus.
  • All levels of governments are aggressively protecting and caring for these people.
  • Our hospitals are not and have not been overwhelmed by Covid-19 and the risk of them becoming overwhelmed is low if the most vulnerable are properly protected.
  • The restrictions placed on the general population were initially necessary to understand and control the virus.
  • We now have a very well formed (but not perfect) understanding of Covid-19.
  • The restrictions are hurting millions of people’s physical, mental, and financial health.
  • Continuing these restrictions will be catastrophic to the population.

A Slow Reopening is Unworkable

A slow reopening raises common sense questions that will be difficult to answer politically – for example – How is it that customers can be kept safe going into an “essential” business like Walmart or Home Depot, but they cannot be kept safe going into a small privately owned, “non-essential” retail store?

Furthermore, the rate of reopening will need to accelerate as very few businesses are viable when operating at the reduced capacity stipulated by the province and most do not have the runway to continue to bear the losses from the restrictions. For example:

  • How can restaurants survive in a competitive environment if they can only operate at 50% seating capacity?
  • How can a business operate in an office located in a downtown Toronto skyscraper if the social distancing restrictions mean that it takes their employees over an hour to get the elevator from the lobby to their office floor?

Millions of people have already suffered great financial hardship from this experiment and the longer the reopening period, the greater the damage to them will be.

Stillwater and Some Concluding Thoughts

At Stillwater, we grieve the loss of life and the loss of hope that this virus has caused. We have seen how it has hurt so many businesses and people.

We have felt the financial impact of the forced closures having closed our office in early March. We committed to our staff that we would continue their employment at full salaries, which we have done. We also donated to local charities involved in helping those hurt by the restrictive measures.

Our office remains closed today and we all are working remotely.

While we still have an active client load, we have been busy preparing Stillwater for a future that includes Covid-19. We are developing the protocols to protect our staff, clients, families, and the people we meet. We have upgraded our systems, refined our remote work force methodologies, hired some outstanding people, and developed our growth plans. We are excited about this new season of business and the challenges and opportunities it holds.

We strongly encourage you to understand your risk profile and the risk profiles of your loved ones and your employees. Build actions and safeguards around the existence and impact of known comorbidities.

We hope you and your families are safe and healthy. If you have lost loved ones we share your sorrow. We also wish you a speedy recovery from the load that you are carrying during this difficult time.

Douglas Nix


Data Sources: