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Audit: Privatizing Florida’s Prison Health Care Was Costly and Deadly Mistake

When former Florida Gov. Rick Scott took office in 2011, he pushed to privatize health care for Florida prisoners. He promised the move would save taxpayers millions of dollars and it did, at least until 2014. An audit ordered by the state legislature found that since those initial savings, privatization has cost many millions more.

 “The contracts the [Florida Department of Corrections (FDOC)] entered into between 2012 and 2015, while they saved substantial amounts of money, resulted in substantial reductions in service,” said Karl Becker, senior vice president at CGL Companies and one of the audit’s authors. “Those savings you achieved during that time, you are probably paying for now” through lawsuits and increased costs.

FDOC was the subject of a class-action lawsuit that challenged the conditions of confinement, and the provision of medical care was a large feature of that suit. It took a while, but FDOC turned things around and had in place a very adequate medical system. Then Scott, the former CEO of Columbia/HCA, a giant health care company that was fined $1.7 billion for defrauding Medicare and Medicaid while Scott was in charge, became Florida’s governor. His agenda was to privatize as much of government as possible, arguing it would achieve savings and upgrade services.

With a prison system that holds about 100,000 prisoners and a $2.2 billion budget, lawmakers were game to privatization. Yet the move to was puzzling for FDOC, at the legislature’s direction, had attempted from 2001 to 2006 to privatize its Region 4 health care. That effort with Wexford Health Sources failed due to the usual issues with privatization: “reductions in staffing, dramatic decreases in episodes of outside care, and the number of prisoner grievances about the poor quality of health service care,” according to the audit.

Nonetheless, the legislature directed FDOC in 2011 to privatize its entire medical care system and issue contracts that achieved a 7% savings on current costs. FDOC awarded four-year contracts to Wexford for $237.9 million for Region 4 and to Corizon for $1.1 billion to service Regions 1-3.

“While both contracts achieved required savings levels (and in fact surpassed the seven percent savings requirement), the vendors in many cases initially reduced spending by maintaining lower health care staffing levels,” the audit stated. Serious performance issues ensued.

Prisoners started dying at record levels with death rates increasing from 35 to 40 a year to over 400 a year. Negative publicity led Corizon to terminate its contract in May 2016. It was replaced by Centurion of Florida. Wexford’s contract was terminated in 2017 by FDOC, and Centurion took over Region 4, making it FDOC’s sole health services vendor.

The current three-year contract runs to 2022 and is capped at $421million per year. That contract is a “cost-plus” model, which “does not encourage efficiency and appears to be the most expensive service delivery model,” the audit found. It requires FDOC to pay all incurred expenses and provides an 11.5% administrative fee to Centurion as profit. Pharmacy services are not part of the contract.

Overall, improvements have been seen with Centurion. “The situation has stabilized currently,” Becker said. “There’s a general consensus Centurion is doing a good job compared to the last two contracts.” The audit noted prisoner health care costs have gone up an average of 9% annually, but it said that is “attributable to misalignment between contract funding and service requirements in the initial outsourcing initiatives.” FDOC has also been subject to litigation over mental health services, Hepatitis C treatment, and hernia surgeries, which accounted for $39 million in costs.

The auditors found FDOC’s spends about $6,511 annually on prisoner health care, which was low among the nation’s prison systems but comparable to most large prison systems. That equates to $566.9 million or 21% of FDOC’s budget. A continuing contributor to rising costs for health care was attributed to a 78% increase in prisoners who are 50 or over. Geriatric prisoners’ medical costs are three times that of younger prisoners.

In commissioning the audit, the Legislature required a comparison of other models of delivery. The audit found going back to an in-source model could save the state $46.2 million annually. It noted that FDOC “has the internal capability and expertise to manage inmate health care delivery.” A university model of health care management, which is used by Texas, Georgia, and New Jersey, could save taxpayers $40 million a year, but FDOC managers who have approached the state’s universities have been unable to generate interest. Continuing the outsourcing model could achieve up to $5.5 million in savings if competitive bids were submitted, but Centurion was the only company to submit a bid the last time the contract was up for negotiation.

FDOC Secretary Mark Inch said the audit is “pretty accurate.” He has said the “status quo is not sustainable,” and he has asked the Legislature for $113 million to help increase pay for guards, fill vacancies, and reduce overtime. The long term effects of mass incarceration are having detrimental impacts in all areas of FDOC’s operations. Inch said it is up to legislators to determine its future direction. The attention to date is focused on saving money with little attention or interest in the prisoner death rate increasing over 1,000 percent since health care was originally privatized. Prisoners are indeed an expendable population in Florida.