State and Local Correctional Healthcare Privatization Update


State and Local Correctional Healthcare Privatization Update

Subsection of Annual Privatization Report 2013: Criminal Justice and Corrections

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Alabama: The Alabama DOC renewed its inmate health care services contract with Corizon in November 2012. The three-year, $224.7 million contract is expected to save the state almost $24 million in health care costs for its 25,000-inmate correctional system.1

California: The California Legislative Analyst’s Office (LAO) published a report entitled, “Providing Constitutional and Cost-Effective Inmate Medical Care,” which provides a thorough update of the state’s medical healthcare service delivery for inmates. The report can be broken down into three major sections:

  • Review of the inmate medical program, which entered federal receivership in 2006. This review identifies inconsistent application of the utilization management system, limited use of telemedicine and an inefficient management structure as the major reasons for why medical care provision has been so inefficient.
  • Analysis of returning medical care to state control. While additional steps have been taken since this report was published, the analysis helps contextualize the state’s actions in 2012 and 2013.
  • Outline of additional steps that can be taken to ensure long-term success for the state’s medical care for its inmates.2

One of the steps the LAO recommends for long-term success is contracting with managed care organizations for medical care on a pilot basis. The LAO notes early in the report that according to the most recent data available, 32 states contract out for some or all aspects of their adult correctional healthcare.3 The report explains, “Contracting out would introduce competition in to the inmate medical care system, which would incentivize the adoption of cost-containment measures.4 The report also recognizes that the California Department of Corrections and Rehabilitation (CDCR) already contracts out for some health care services, and explains further contracting should be competitively bid and on a pilot basis.

Many of the recommendations in the report are being implemented; meaning California’s inmate medical care is well on its way back to constitutionality.

Illinois: Illinois lawmakers considered a resolution that would require an official examination of the state’s auditing practices over its ten-year, $1.4 billion contract with Wexford Health Sources for correctional health care. Representative Greg Harris has expressed frustration over the degree of oversight, and found the response he received from the DOC inadequate in addressing his concerns. The bill, HR 1248, has not cleared the legislature.5

Pennsylvania: The Pennsylvania DOC awarded a five-year, $292 million contract for prison health services to Wexford Health Sources. The contract notably excludes nursing services that are currently provided by public employees. Several lawmakers, notably Rep. Mike Fleck (R-Huntington), opposed expanding the contract to include nursing services and were successful in convincing policymakers to retain public correctional nursing service provision.6

Arizona: In April 2012 the Arizona DOC announced it would be partnering with Wexford Health Sources, signing a three-year $349 million contract for inmate health care services.7 However, a series of challenges early in the contract strained the relationship between the state and the contractor. One of the most high profile incidents occurred in August when 103 inmates at a Buckeye facility were exposed to Hepatitis C when a nurse contaminated the prison’s insulin supply. The contractor immediately suspended the nurse, but did not alert state and local authorities quickly enough to be in compliance with the contract.8

In January 2013 the DOC announced plans to switch from Wexford to a new provider, Corizon, in March. The department cited “unforeseeable challenges” resulting in the termination of its agreement with Wexford, while company officials argued the state was not fully cooperative.9

Florida: In December 2012 the Florida DOC signed a contract with Wexford Health Sources to provide private health service delivery for 15,000 inmates in the state’s south Florida facilities. The $48 million contract is expected to save the state $1 million a month, while the contractor is also expected to retain 98% of the current 400 employees on staff.10

The DOC also sought to privatize health service delivery in north and central Florida through a $230 million contract with Corizon that would have affected 1,900 workers. The Corizon contract was expected to save the state nearly $90 million over the next two years, money that Governor Rick Scott explains would be used to fund things like K-12 education funding.11 On December 4, 2012 a judge ruled the legislature had approved the south Florida procurement, but not the north and central Florida procurement. The DOC has since challenged the ruling.12

North Carolina: North Carolina lawmakers ended the Division of Adult Corrections’ procurement to find a private company to oversee inmate healthcare service delivery. Lawmakers specifically require any RFP issuance or contract signing to have prior approval from the legislature. The language was included in the “Medicaid fix” bill, Senate Bill 797, which passed in May 2012.13

New Mexico: The New Mexico Corrections Department renewed its contract for correctional medical service delivery with Corizon in June 2012. The contract includes comprehensive medical and mental health, dental and ancillary services for approximately 6,000 inmates in the state’s 10 prisons. Corizon has worked with New Mexico for over 20 years.14

Maine: Last year the Maine Department of Corrections combined all its correctional healthcare services, including medical and mental healthcare, substance abuse treatment and pharmacy services, into one contract. The contract is through a partnership between Spectrum Health Systems Partners and Correct Care Solutions, which has been working with the Maine DOC since 2003.15

Michigan: After conducting lengthy procurement, the Michigan DOC decided to keep its prisoner physical and mental healthcare and food services in-house. The proposed privatization deal could have been worth almost $350 million and affected nearly 1,700 state public employees. According to the DOC, the three bids represented 3-4.5% savings, which fell short of the 5 % savings threshold required by the state. DOC spokesman Russ Marlan explained that recent pension and retiree benefit reforms, like requiring state workers to pay 4% toward future pension benefits, eliminating retiree healthcare for new hires, and pre-paying employees’ future health care liabilities made public provision more cost competitive.16

Louisiana: Louisiana Governor Bobby Jindal is pursuing privatization for six of the seven facilities under the Louisiana State University (LSU) Health Care Services Division.17 All of the new privatization agreements will require health care services for prisoners to be continued at the hospitals, unless otherwise noted. The Lallie Kemp facility is expected to remain university-run, so it is expected to retain its inmate health care duties. And the Baton Rouge facility negotiated an agreement several years ago that did not include prisoner care.18

Portsmouth, Virginia: In April 2012 Portsmouth officials signed a contract with Birmingham, Alabama-based Naph Care Inc. to provide comprehensive health care service delivery for inmates in the Hampton Roads Regional Jail. The partnership includes the use of new technology for medical, security and administrative improvements.19

Lane County, Oregon: In May 2012 officials in Lane County announced they were partnering with Corizon to provide administrative services related to the provision of comprehensive medical and mental health, dental and ancillary services to inmates in the Lane County Adult Corrections Facility. The contract for the 500-bed facility marked the completion of rigorous RFI and RFP processes that began in 2010.20

Niagara County, New York: The Niagara County Sheriff’s Office announced plans to expand privatization of medical services for the county jail by January 2013, partnering with Florida-based Armor Correctional Services. The county privatized mental health services for inmates in 2010. The contract for the 499-bed jail also transfers legal liability for any lawsuits filed by inmates over medical care to Armor Correctional Services.21

Santa Cruz County, California: The Santa Cruz County Board of Supervisors voted in June to outsource medical services in county jails, partnering with Monterey-based California Forensic Medical Group. The firm will provide new services, such as dental care, EKG tests, x-rays and lab work, while saving the county as much as $1.5 million. California Forensic Medical Group also offered jobs to all current employees.22

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1 Brian Lyman, “Alabama Department of Corrections signs new inmate health care contract,” Montgomery Advertiser, November 16, 2012.

2 Mac Taylor, “Providing Constitutional and Cost-Effective Inmate Medical Care,” Legislative Analyst’s Office, April 19, 2012.

3 Ibid, p. 18.

4 Ibid, p. 24.

5 Rob Wildeboer, Illinois lawmaker demanding proof on prison health care,” WBEZ 91.5, October 9, 2012.

6 “CapitolWire ‘Under the Dome’ News Briefs,” July 6, 2012.

7 Bob Ortega, “Arizona prison’s health care to be run by Pa. company,” Arizona Republic, April 3, 2012.

8 Craig Harris, “Prison nurse tied to hepatitis C exposure,” Arizona Republic, September 4, 2012.

9 Arizona severs ties with prison health contractor,” Associated Press, January 30, 2013.

10 Steve Bousquet, “State inks deal to privatize South Florida inmate health care,” Tampa Bay Times, January 4, 2013.

11 Bill Kaczor, “Fla. Prison medical outsourcing mostly rejected,” Associated Press, December 05, 2012.

12 Arek Sarkissian II, “DOC completes contract to privatize South Florida health services,” Tallahassee Democrat, January 3, 2012.

13 Mark Binker, “Medicaid fix would stop prison hospital privatization,”, May 23, 2012.

14 “Corizon Wins New Mexico Contract Renewal,” Corizon Press Release, June 13, 2012.

15 “Spectrum Health Systems Partners with Correct Care Solutions in Maine,” August 14, 2012.

16 David Eggert, “Michigan won’t privatize prisons further, report says,” Detroit Free-Press, March 1, 2013.

17 Marsha Shuler, “Hospital privatization could impact thousands of state employees,” The Advocate, March 11, 2013.

18 Melinda Deslatte, “No privatization planned for LSU’s Lallie Kemp,” Associated Press, January 29, 2013.

19 “NaphCare, Inc. proudly announces first partnership in the state of Virginia with Hampton Roads Regional Jail in Portsmouth, VA,” NaphCare Inc. Press Release, April 30, 2012.

20 “Corizon Wins Lane County, ORE. Contract for Healthcare Services,” Corizon Press Release, May 29, 2012.

21 Thomas Prohaska, “Niagara County to privatize jail medical services,” The Buffalo News, September 17, 2012.

22 Jason Hoppin, “County Supervisors approve outsourcing inmate medical services,” Santa Cruz Sentinel, June 20, 2012.