In a world where providers continuously scramble for new revenue sources, this scenario seems almost too good to be true: lucrative contracts with mandates to provide care, steady work for doctors and an interesting and diverse patient mix.
Only the setting gives some pause: This care is provided behind bars.
Nevertheless, correctional healthcare is booming. It's driven by a combination of landmark legal decisions, a mushrooming prison population and increasingly complex treatment regimens.
A 1976 U.S. Supreme Court decision declared that inmates have a constitutional right to healthcare. Almost every state has agreed--under the threat of litigation--to provide better healthcare. Meanwhile, the inmate population has more than tripled since the 1970s, from about 500,000 to 1.8 million today. It continues to grow by 8% annually.
As a result, healthcare in the correctional setting has grown from a fringe concern two decades ago into a $3.6 billion-a-year business. Some experts project it will grow to $6.5 billion a year by mid-decade. Though many local hospitals still care for inmates in their service region via small service contracts with the local jail or prison, it's not unusual for a single private operator to provide healthcare for an entire state or county prison system.
Some 25% of correctional healthcare is now provided through private contracts, with two big for-profit operators competing for a large chunk of that business. Privately held St. Louis-based Correctional Medical Services treats 260,000 prisoners at 315 facilities in 27 states. CMS cares for the entire prison populations of Massachusetts, New Jersey and eight other states. Brentwood, Tenn.-based Prison Health Services (PHS) also operates in 27 states, providing services at 251 facilities for 165,000 inmates. Its clients include the Broward County (Fla.) Department of Corrections, the Clark County Detention Center in Las Vegas and the Philadelphia jail system.
Business Week magazine recently named Prison Health's parent company, America Service Group, a "hot growth" company based on its last three years of revenue and earnings.
America Service reported 1999 net income of $4.6 million on revenue of $273 million, compared with 1998 net income of $5.7 million on revenue of $113.3 million. It shares traded at about $15.25 on the NASDAQ late last week, down from its 52-week high of $17.50.
CMS' revenue has been growing at a compounded average of 22% annually during the past five years. It reported 1995 revenue of about $498 million. The company declined to disclose net income but said it was profitable.
Other notable providers of correctional healthcare include Parker, Colo.-based Correctional Healthcare Management, Chalfant, Pa.-based Correctional Healthcare Solutions and Verona, N.J.-based Correctional Health Services.
Efficiency behind bars. Companies such as CMS and PHS operate much like an HMO. They provide inmate care in exchange for fixed monthly payments from state or county correctional systems. They even offer drug formularies and may charge inmates $2 to $5 copayments for doctor visits, although the latter is typically mandated by governments to control the number of frivolous visits.
"Our first priority is to deliver care, but we look at a significant amount of claims data and cost data," says Michael Catalano, PHS' chief executive officer. "It takes a lot of experience and careful projections to commit to a certain price."
"The real common denominator is that correctional systems are looking for the right providers," says Louis Tripoli, M.D., CMS' vice president of medical affairs and the company's chief medical officer.
Such operators claim they can offer a myriad of cost-saving advantages over government-controlled prison medical programs. Promotional material on PHS' World Wide Web site boasts that it reduced per-inmate medical expenses by 27% during three years and cut off-site transportation of inmates for medical care by 40%.
Transportation of inmates for medical care is a big cost, and telemedicine is making inroads to address the issue. In Colorado, for example, Denver-based U.S. West introduced a pilot telemedicine program at the Limon (Colo.) Correctional Facility in 1998. Telemedical consultations ran just a fraction of the $450 average cost of physically transporting an inmate to see a physician. Telemedicine is now being introduced in six of Colorado's 18 state prisons.
"Privatization has created efficiencies not available in state-run systems," says Roderic Gottula, M.D., an assistant professor at the University of Colorado Health Sciences Center's department of family medicine and recent past president of the Society of Correctional Physicians. Gottula was previously medical director for the Colorado Department of Corrections and monitored an overhaul of the correctional healthcare system in Washington state during the mid-1990s.
"In a government-run system," he says, "it's virtually impossible to get rid of a mediocre employee, while it takes months to replace a nurse. You have to go to the Legislature for budget requests two years ahead of time, not knowing what your actual costs will be. And if you needed something like a new defibrillator, it had to go out for a competitive bid. The private sector doesn't work that way."
Private-sector operators may be better prepared to handle the burgeoning medical complications of their charges. Many inmates were poor and didn't have access to quality medical care prior to incarceration. The rates of mental illness, HIV and tuberculosis among inmates are much higher than in the general population. And as many as 40% of the prisoners in California might have hepatitis C, which ravages the liver. The prison population is also aging, meaning that more costly geriatric and end-of-life care must be provided.
"(An inmate's) lifestyle tends to be one of disease induction," says Lester Lewis, M.D., PHS' corporate medical director and former medical director at the Pennsylvania Department of Corrections. "They have a sicker population and a more concentrated level of illness."
CMS has taken steps to more effectively treat prisoners with HIV, and it has teamed up with Johns Hopkins University as a research partner on that and other healthcare issues. A study of 1,369 New Jersey inmates with HIV treated by CMS in 1996 and 1997 indicated that viral loads were reduced and hospitalization of HIV patients declined by 44%.
Quality question. But Gottula isn't sure that the private sector has managed to improve the quality of care for inmates--a subject of enormous debate. Complaints about private operators providing slipshod care to prisoners are leveled regularly, and there is some question as to whether physicians who practice in prisons are as qualified or competent as their outside-world counterparts. A 1998 article in the Journal of the American Medical Association detailed the histories of several suspect physicians employed in state medical systems who had prisoners die while under their care. They included a psychiatrist convicted of having sexual relations with patients and a physician convicted of sodomizing a mentally retarded teen-ager. Both were later hired by CMS. The company was also the subject of a recent investigative series by its hometown newspaper, the St. Louis Post-Dispatch.
CMS spokesman Ken Fields defends his company's hiring practices. "We work with literally thousands of healthcare professionals. We have an excellent record of recruiting and retaining them, and we stand behind that record," he says. Fields contends that the Post-Dispatch series was sensationalistic and biased, and cites a scathing review of the series by the Missouri inspector general, which concluded that many of the allegations were not accurate.
Most state prison systems do require private operators to meet certain quality goals as part of their contracts, experts say. Accreditation bodies such as the Chicago-based National Commission on Correctional Healthcare are also striving to ensure uniform delivery of care in correctional settings.
"There's been a marked improvement in the scope and level of services provided to the correctional population by the private sector," says Anthony Ventetuolo, a principal with Avcorr Consultants, a criminal justice consulting firm based in Warwick, R.I. Although he can't provide statistics to back up his belief, Ventetuolo maintains that inmate complaints have gone down in the wake of healthcare privatization. "Most private-sector healthcare providers are under contract, and the fewer complaints they have, the more likely they'll be renewed. It's a market-driven efficiency," he says.
According to statistics from the National Commission on Correctional Healthcare, more institutions are seeking formal accreditations. The NCCHC accredited 512 facilities in 1999, up from 319 in 1994. Facilities are evaluated on 72 criteria, which include staff credentialing and training, hospital care, pharmaceuticals management, overall access to care, and suicide prevention. Accreditation lasts for three years.
"There have been a lot of changes in quality," says NCCHC President Edward Harrison. But Harrison, like Gottula, says that the quality of healthcare can vary from institution to institution. It's often determined by the local availability of medical professionals and how well prison administrators run the facility, Harrison adds.
"It depends on the people. Some contractors have more resources, usually dependent on the quality and variety of people available," Harrison says.
Recruiting difficulty. Recruiting medical staff to work in a correctional environment is never easy, experts say. Although many prison physicians earn comfortable six-figure salaries, pay can be as low as $70,000 a year--the equivalent of a medical minimum wage, according to Gottula.
The noisy prison environment and treating sometimes dangerous inmates can be stressful. Inmates are also often inclined to "game" doctors, faking an illness to get drugs that may be traded with other prisoners. And doctors who aren't skeptical enough about a prisoner's illness are often suspect in the eyes of corrections officials, experts say.
"Traditionally, there's been somewhat of a rub between (prison administrators and medical staff)," says Ventetuolo, the corrections consultant in Rhode Island.
"Many administrators see the medical staff as a royal pain," Gottula says.
Yet the correctional setting has been attracting more physicians in recent years, particularly those tired of the obstacles presented by private practice.
"Managed care has actually helped us," says Lewis, PHS' corporate medical director. "Many physicians have realized private practice isn't a reality for them anymore, and we offer them the advantage of reasonable employment."
Gottula says that many physicians who work in prisons have a genuine commitment to public health. But others see it as a power trip. "One of the characteristics of the prison health environment is physicians can be relatively autonomous and don't have regulatory people looking over their shoulder," he says. "My personal bias is that it does attract individuals who have a strong need for power and control. They can tell the inmates to get out of their face if need be--not something they can do in the private sector."
Don Robb, Midwestern regional vice president of Staff Care, an Irving, Texas-based firm that recruits physicians for temporary work, admits that doctors often have butterflies when asked to work in a prison. However, the work can make for a well-rounded resume and offer some pleasant surprises.
"The patients are often much more receptive to the care doctors provide than in the outside world," Robb says. "There have been times when people treat inmates as nonhumans." He adds that only two of the 40 physicians he's placed in correctional settings have been unwilling to return.