Welcome to Jail Inc: how private companies make money off US prisons

The Guardian – by Rupert Neate

Getting locked up is unlikely to be good for your health but it’s “terrific, terrific” business for the booming private industry supplying doctors and nurses to jails and prisons. Many of those suppliers descended on Austin, Texas, last month to tout their services directly to jail administrators at the 35th annual American Jail Association conference.

As trade fairs go, this one is a little macabre. Companies line up to market everything from jumpsuits and meal trays to masks to stop prisoners from spitting, straitjackets and other full-body restraints. Once the national anthem had been observed and the AJA’s chaplain had led a prayer for jailers across the country, those gathered at Austin’s convention centre could get down to business: making money.  

How long prisons will continue to be such money-spinners could depend on who wins the race for the White House. On the campaign trail Hillary Clinton has vowed to “end private prisons and private detention centers. They are wrong.” Donald Trump, on the other hand, has called for increased outsourcing of prisons. “I do think we can do a lot of privatizations, and private prisons seems work a lot better,” he said in an MSNBC town hall event earlier this month.

In the meantime, Ahmad Afzal and his two brothers are making a “very good living” manufacturing prison jumpsuits, underwear and suicide safety smocks in Pakistan and selling them to US jails.

“Business is very good,” Afzal said surrounded by a display of some of the 136 items his company Fine Cotton Textiles produces for jails. “Because crime is crazy and there are lots of inmates. We are happy, the number [of customers] is increasing every day.”

The jumpsuits come in orange, red, blue, green, striped or full block colour. “The styles have been fixed from before my birth,” Afzal said. It depends on the prison, Afzal said. Red is generally reserved for the most severe-risk prisoners. “Costs vary from colour to colour, but orange is the cheapest because it is by far the most used. Blue is the most expensive because of the cost of the dyeing.”

A few rows over, past stalls advertising guns, handcuffs, and prison vans, stands Stacy Schultz, general manager of Humane Restraint. His company started selling leather restraints in 1876 and now sells a whole variety of items including helmets, masks and handcuffs.

“We have these suicide blankets,” he said, pointing them out on his display stand. “[They are] for people that can’t be trusted with their own clothes in case they might make a noose and hang themselves.”

The most expensive items are full-restraint beds costing $3,000, and the most popular items are “spit bud” masks that prevent inmates from spitting at guards. “If you take someone’s ability to strike out, you have that for spitting them, all they have is to talk dirty about your mother,” Schultz said.

The US has the highest incarceration rate in the world. Some 2.2 million adults were incarcerated in 2013 in US federal and state prisons and county jails, according to the bureau of justice statistics. States spend about $8bn (£5.5bn) a year on healthcare to try to keep prisoners alive. In an effort to cut costs, more state prisons and county jails are adding healthcare to the growing list of services that are outsourced to for-profit companies.

There is no centrally collated data on prison healthcare privatisation, but Dr Marc Stern, an expert on correctional health at the University of Washington and former head doctor of Washington state prisons, estimates that more than half of all state and local prisons and jails have outsourced their healthcare and that the industry is worth more than $3bn a year.

Federal prisons spending on outsourced healthcare increased by 24% to $327m between 2010 and 2014, according to a justice department report published last week. It surveyed 69 prisons and found that all of them paid much more for medical services than the Medicare rates, with some prisons spending as much as 385% more. The office of the inspector general report suggested the bureau of prisons explores “potential legislative changes that could help contain medical costs”.

Among the healthcare representatives was Todd Murphy, a director of business development for Correctional Medical Group Companies (CMGC), the largest private provider of healthcare to jails and prisons in California. It serves 16,000 inmates across 64 detention facilities, including juvenile halls, in 29 of California’s 58 counties. It also runs the prison healthcare of 11 counties in Georgia, two in Texas, four in New Mexico and one each in Arkansas and Washington state.

“Business for us is terrific,” he said. “We’ve been in business for 32 years, and in the last 32 years we have lost seven accounts all on financial reasons – another competitor undercutting us – but we’ve got all but one back.”

Murphy declined to state how much the company charges counties for its services but said “it’s typically not cheaper, but it’s always better”.

Not everyone agrees. Analysis of California department of justice data by Fairwarning found that about 200 inmates died under the care of California Forensic Medical Group (CFMG), the Californian arm of the CMGC, between 2004 and 2014. Excluding homicide, it works out at a death rate of 1.7 per 1,000 inmates at CFMG jails compared with 1.5 in other jails. The company is facing a class-action lawsuit in Monterey County over medical and mental healthcare failures, for which it has preliminarily agreed that it and the county will pay a $4.8m settlement.

The lawsuit alleged that CMFG “provides deficient medical care in nearly every respect … and [inmates] fail to receive timely or appropriate treatment, resulting in unnecessary and prolonged pain, suffering, worsening of their conditions, and sometimes even death”. The suit, brought by the ACLU, alleged incidents in which a diabetic prisoner was deprived of insulin, and another where an inmate was kept in a cell and not given food for 38 hours.

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Murphy said the death rate at jails using his company’s doctors and nurses is lower than county-run jails but he was not able to provide figures. “The people who come into our facilities are sick,” he said. “They don’t know how to take care of their hygiene. They have a lot of substance abuse issues, a lot of mental health issues.”

“We like to think that the mortality rate is lower with us. But these people are coming in sick and you know a lot of these people are going to pass with us. Some things we just can’t control.”

Murphy said the main reason counties are choosing to outsource their jail healthcare is not to reduce daily costs, but for the comfort of knowing that a lawsuit brought by the family of a dead inmate would be brought against the company and not the county. “We provide a full partnership to our county partners,” he said. “But the biggest thing we do is indemnify the county against risk and reliability, do everything we can to keep them out of trouble.”

CFMG this month is expected to take over the jail healthcare contract for Alameda County in California, which includes Oakland and Berkeley, from Corizon Health, the largest private prison healthcare provider in the country. Corizon’s eight-year contract was worth $250m.

Last year Corizon and Alameda County paid out $8.3m to the family of Martin Harrison, who died two days after being jailed on a warrant for failing to appear in court on charges of driving under the influence after being arrested for jaywalking. Harrison was hallucinating from a severe form of alcohol withdrawal, which his family’s lawyers said would have been spotted if he had been admitted by a registered nurse, not an unsupervised licensed vocational nurse provided by Corizon. It was the largest civil rights wrongful-death settlement in California history.

Over the past five years Corizon has been sued more than 1,300 times, according to analysis by financial research firm PrivCo. Alongside several wrongful death lawsuits, Corizon has also faced legal action over sexual misconduct of its doctors and nurses, including a female employee who paid inmates for sex.

Lawsuits haven’t stopped CMCG and Corizon from steadily increasing earnings for their private equity owners over the past few years. Corizon’s revenue has grown by 15.6% over the past three years to $1.55bn in 2015, according to analysis for the Guardian by PrivCo.

PrivCo estimates that CMCG, which is rapidly acquiring rival companies to expand beyond its California stronghold, made revenues of about $110m to $120m last year.

Corizon is owned by Chicago-based private equity firm Beecken, Petty, O’Keefe & Co. CMCG is owned by HIG Capital, a Miami-based private equity firm with $19bn of capital under management.

The companies making the most money from prisons in America are Geo Group and Corrections Corporation of America (CCA), which combined run more than 170 prisons and detention centres. CCA made revenues of $1.79bn in 2015, up from $1.65bn in 2014. Geo Group made revenues of $1.84bn, a 9% increase on the previous year.

But it’s not all about the money. Wayne Dickey, the new president of the AJA and jail administrator for Brazos County, Texas, said one of the key goals of his tenure as leader of the association is to reduce the jail mortality rate. He warned that jail administrators and county officials across the country need to ensure that private healthcare contractors are working as hard in the interests of inmates and their families as they are for the bottom line of their shareholders.

“I want the association to take a role in reducing mortality in jails,” he said in an interview with the Guardian at the AJA conference. “We should be striving to get it down.”

Dickey said mortalities were high as people in jail often have drug and mental health-related illnesses, which contribute to a large number of jail suicides. “We at least need to give it the attention to say what can we do,” he said.

Suicide has been the leading cause of death in jails every year since 2000. In 2013, the most recent year for which there are BJS statistics, a third (34%) of jail inmate deaths were due to suicide. The suicide rate increased 14% between 2012 and 2013 to 46 per 100,000. That compares with 13 per 100,000 in the population as a whole.

Dickey said he thought it made sense for many prison services, like laundry and catering, to be outsourced to private contractors, but he did not believe it was appropriate for healthcare services to be run by for-profit companies at his 1,089-person-capacity jail in Bryan, Texas. “I run my own healthcare, I have a physician and 10 nurses or healthcare professionals,” he said.

He said that jail administrators and county officials had to “make sure that people in custody and their families aren’t taken advantage of” from for-profit deals. Dickey said officials needed to be vigilant to avoid a fresh prison outsourcing scandal following outrage over inmates and their families being charged up to $14 per minute to call their loved ones.

Stern, who resigned as Washington state’s medical director for the department of corrections in protest over the state’s execution policy in 2009, said he was “not fond” of prison healthcare privatisation and he did not believe it was necessary.

He said the sweeping privatisations across the country did not necessarily make life in prison more dangerous for inmates. “What makes it dangerous is we don’t put enough money into it, period,” he said. “When a private company comes in, we don’t give them enough money and they don’t provide good enough care. But that also happens in state-run prisons.

“My belief is the lack of money causes deaths in prison. If we were talking about deaths in hospitals this wouldn’t be happening: we’d put money in, we’d fix this.”

Stern said prison healthcare is woefully underfunded because “society doesn’t think it’s important until a friend or family member is in prison”.

“But prison healthcare ultimately effects public health. The public have this perception that you go to prison and you don’t come back. But 98% of prisoners rejoin society, and they bring all the diseases we have in jail back with them – HIV, hepatitis B, and mental health problems.”

https://www.theguardian.com/us-news/2016/jun/16/us-prisons-jail-private-healthcare-companies-profit