Privatized prison healthcare seeks profit at patients’ expense
October 17, 2023
Patients in U.S. prisons and jails have no choice in who provides them with healthcare. Instead, contracts are made between private companies and state and local governments, whose officials may not be motivated by care quality concerns, but instead budgetary questions. Because contracts often protect government entities from legal liability, officials may renew contracts without addressing patient and worker concerns.
Healthcare in U.S. prisons and jails is a multibillion dollar industry dominated by a handful of large companies, including private equity-owned Wellpath and YesCare (f/k/a Corizon Health).[1] Significant market concentration by PE-owned companies leaves local governments with few choices in who administers healthcare services at correctional facilities; for example, some counties have alternated between Wellpath and YesCare in states including California,[2] Georgia,[3] Florida,[4] Michigan,[5] and Texas.[6]
PE’s dominance of prison and jail health services stems the industry’s history of privatization. Prison healthcare began to privatize in the 1970s;[7] approximately 40% of correctional health expenditures—amounting to $3 billion annually—were going to private companies by 2009.[8] That year, a prison healthcare company executive stated, “We think the idea of outsourcing this type of service will be an attractive option as states try to cut budgets.”[9]
A main reason that counties outsource jail healthcare, according to an industry veteran, is to limit legal liability: “the biggest thing we do is indemnify the county against risk and reliability, do everything we can to keep them out of trouble.”[10]
Indemnification provisions are common elements in contracts between prison healthcare companies and their clients (i.e. state and local governments).[11] These provisions make the company responsible for costs, expenses, and liabilities related to correctional healthcare—and require the company to compensate care-related costs and liabilities incurred by its government-entity client. The practice has been criticized for allowing officials to ignore problems inside jails.[12]
The primary focus of a private equity-owned company is to increase company profits. One way to do this is through reduced expenses. This is especially true for prison healthcare, where most states use capitated payment models, in which contractors are paid a fixed per-person facility rate.[13]
In capitated payment models, the healthcare provider is paid a fixed amount per-patient regardless of how much per-patient care it gives. The provider is expected to use the capitated payments to cover costs of care. The provider retains the funds that it doesn’t spend on care. This model encourages companies to avoid expenses that may take funds from the fixed reimbursement rate.
One way that healthcare companies can reduce expenses is by understaffing. In one Washington facility, a former nurse for Correct Care Solutions (merged into Wellpath in 2018) described an understaffed medical unit in which patient requests went unanswered and medication errors were made. A CNN investigation found the company’s focus on growth and “cost containment” led to substandard care provision and avoidable deaths.[14]
Private companies may also reduce costs by assigning workers to do tasks beyond their training. Following the death of an inmate under its supervision, Corizon Health in 2015 entered into a settlement in which it agreed to stop using licensed vocational nurses (LVN) to do the work of registered nurses (RN). For every LVN that did RN work, Corizon was estimated to save 35 percent in costs.[15]
PE-owned correctional companies have made political contributions that raise questions about their influence on contracts and renewals. From 2008 to 2016, Corizon Health held a contract in Alameda County; the city council renewed the contract three times without a bidding process.[16]
The renewals followed recommendations from the county sheriff, who had received $110,000 in political donations from Corizon since 2006.The sheriff claimed—after running unopposed for three consecutive elections—that the Corizon donations went towards a golf tournament, proceeds from which went into medical expense trust fund for sheriff’s deputies.[17]
Wellpath has also made political contributions to sheriffs’ campaigns, including races in Louisiana, Texas, Georgia, and other states.[18] In February 2022, Wellpath founder Gerald “Jerry” Boyle was sentenced after pleading guilty to a 12-year bribery scheme with the former sheriff of Norfolk, Virginia.[19] As recently as May 2019, Wellpath described Boyle as a “visionary” founder, but has since removed mention of him from its website.[20]
The private healthcare model is unfit for U.S. prisons and jails. Whether Wellpath, Corizon, or some other company, the profit motive tends to bring about service cuts to reduce costs. And the practice of private contracting may lead to official indifference and public corruption.
However, some places have rejected the private model in favor of healthcare services from either local health agencies (such as in New York City[21] and Los Angeles),[22] community-based health centers (Washington D.C.),[23] or university-based health programs (Rutgers University in New Jersey).[24]
Healthcare in prisons and jails should be motivated by actual patient care concerns. But decisionmakers have to make other considerations in contracting. State and local officials, in efforts to protect government budgets, may contract out prison healthcare to private companies, which themselves are incentivized to cut costs to achieve greater profits. This private model should be rejected in prisons and jails, in favor of a more publicly-oriented model seen in many places already.
[1] Jason Szep, Ned Parker, Linda So, Peter Eisler, and Grant Smith. “As U.S. Jails Outsource Health Care, Inmate Deaths Rise.” Reuters, October 26, 2020. https://www.reuters.com/investigates/special-report/usa-jails-privatization/.
[2] Brooks Jarosz. “Santa Rita Jail’s Medical Provider Is Target of Lawsuits, Complaints about Lack of Care.” Text.Article. KTVU FOX 2. KTVU FOX 2, May 5, 2021. https://www.ktvu.com/news/santa-rita-jails-medical-provider-is-target-of-lawsuits-complaints-about-lack-of-care.
[3] Reuters. “Dying Inside: The Data behind @Reuters Investigation of US Jail Deaths,” October 16, 2020. https://www.reuters.com/investigates/special-report/usa-jails-graphic/ (California data, pp. 3, 5, and 18; Georgia data, pp. 6-8).
[4] Julianne Amaya. “Alachua County Switches Jail Medical Provider to ‘Improve Mental Health for Inmates.’” WGFL4, April 12, 2022. https://mycbs4.com/amp/news/local/alachua-county-switches-jail-medical-provider-to-improve-mental-health-for-inmates.
[5] Emerson Wigand. “Controversial Provider Takes over Health Care for Mich. Prisoners.” The Detroit News, October 2, 2021. https://www.detroitnews.com/story/news/local/michigan/2021/10/03/controversial-provider-takes-over-health-care-mich-prisoners/5956859001/.
[6] Reuters. “Dying Inside: The Data behind @Reuters Investigation of US Jail Deaths,” October 16, 2020. https://www.reuters.com/investigates/special-report/usa-jails-graphic/ (Texas data, p. 8).
[7] Susan M. Reverby. “Can There Be Acceptable Prison Health Care? Looking Back on the 1970s.” Public Health Reports, October 9, 2018. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6304726/.
[8] Noga Shalev. “From Public to Private Care The Historical Trajectory of Medical Services in a New York City Jail.” American Journal of Public Health, June 2009. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2679790/.
[9] Angella Mueller. “Valitas Locks in Record Results from Prisons.” St. Louis Business Journal, February 22, 2009. https://www.bizjournals.com/stlouis/stories/2009/02/23/story3.html.
[10] Rupert Neate. “Welcome to Jail Inc: How Private Companies Make Money off US Prisons.” The Guardian, June 16, 2016. https://www.theguardian.com/us-news/2016/jun/16/us-prisons-jail-private-healthcare-companies-profit.
[11] Health and Human Services. “Agreement with CFMG/Wellpath,” pp. 20, 24, 28, 31. Placer County, May 19, 2020. https://www.placer.ca.gov/DocumentCenter/View/44556/2020-051920-On-File-Document-Item-10A-HHS; Caroline County Government. “Vendor Contract with Wellpath,” p 2. May 16, 2023. https://www.carolinemd.org/DocumentCenter/View/8409/Wellpath-Contract; Board of Commissioners. “Professional Services Contract, Klamath County Jail Medical,” p. 5. Klamath County, October 20, 2020. https://www.klamathcounty.org/AgendaCenter/ViewFile/Item/12411?fileID=9073. See also, Rupert Neate. “Welcome to Jail Inc: How Private Companies Make Money off US Prisons.” The Guardian, June 16, 2016. https://www.theguardian.com/us-news/2016/jun/16/us-prisons-jail-private-healthcare-companies-profit.
[12] Andy Marso. “Corizon Health Has $2 Billion in Contracts with Kansas, Missouri. But There’s Little Accountability.” The Kansas City Star, January 21, 2018. https://www.kansascity.com/news/politics-government/article195673934.html.
[13] Pew Charitable Trusts. “Prison Health Care: Costs and Quality,” p. 12, October 2017. https://www.pewtrusts.org/~/media/assets/2017/10/sfh_prison_health_care_costs_and_quality_final.pdf.
[14] Blake Ellis and Melanie Hicken. “CNN Investigation Exposes Preventable Deaths and Dangerous Care in Jails and Prisons across the Country.” CNN, June 25, 2019. https://www.cnn.com/interactive/2019/06/us/jail-health-care-ccs-invs/.
[15] Dan Levine. “Prison Health Provider Agrees to Changes in California.” Reuters, February 10, 2015. https://www.reuters.com/article/us-usa-prison-settlement-idUSKBN0LE2KT20150210.
[16] Simon Aponte. “2 Investigates: Jail Medical Company Corizon Loses Alameda Co. Contract.” Text.Article. KTVU FOX 2. KTVU FOX 2, August 5, 2016. https://www.ktvu.com/news/2-investigates-jail-medical-company-corizon-loses-alameda-co-contract.
[17] Simon Aponte. “2 Investigates: Questions Surround Jail Contractor’s Donations to Sheriff’s Campaign.” Text.Article. KTVU FOX 2. KTVU FOX 2, September 4, 2015. https://www.ktvu.com/news/2-investigates-questions-surround-jail-contractors-donations-to-sheriffs-campaign.
[18] Michael Fenne. “Private Equity Firms Rebrand Prison Healthcare Companies, But Care Issues Continue,” pp. 17-21. Private Equity Stakeholder Project, November 15, 2022. https://pestakeholder.org/reports/private-equity-firms-rebrand-prison-healthcare-companies-but-care-issues-continue/.
[19] Eastern District of Virginia. “CEO Sentenced for Bribing Former Norfolk Sheriff.” U.S. Department of Justice, February 25, 2022. https://www.justice.gov/usao-edva/pr/ceo-sentenced-bribing-former-norfolk-sheriff-0.
[20] Wellpath (archived by the Wayback Machine). “History > Wellpath,” May 30, 2019. https://web.archive.org/web/20190530211859/https:/wellpathcare.com/about/history/.
[21] The official website of the City of New York. “Health and Hospitals Corporation To Run City Correctional Health Service,” June 10, 2015. http://www.nyc.gov/office-of-the-mayor/news/383-15/health-hospitals-corporation-run-city-correctional-health-service.
[22] Health Services Los Angeles County. “Correctional Health Services (CHS).” Accessed September 26, 2023. https://dhs.lacounty.gov/correctional-health-services/our-services/correctional-health-services/.
[23] Unity Health Care. “Unity Health Care Awarded DOC Inmate Comprehensive Medical Services Contract.” Cision PR Newswire, April 16, 2019. https://www.prnewswire.com/news-releases/unity-health-care-awarded-doc-inmate-comprehensive-medical-services-contract-300832653.html.
[24] Rutgers University Behavioral Health Care. “University Correctional Health Care.” Accessed September 26, 2023. https://ubhc.rutgers.edu/clinical/uchc/overview.xml.
