TALLAHASSEE — In a stunning rebuke of the decade-long push to privatize Florida prisons, an independent audit concludes that Florida is losing money and facing litigation because of its decision to turn its prison healthcare system over to private contractors.
The audit, requested by the Florida Senate in the 2019-20 state budget, recommends the state end its private healthcare contract and either bring the work in-house or initiate an agreement to obtain healthcare through the university system’s teaching hospitals.
The state would save $40 million to $46 million a year, said CGL Companies, a national prison consulting firm that conducted the audit.
Those savings would come at a time when the Florida Department of Corrections is beset by problems, from rapid turnover and inexperienced corrections officers to crumbling facilities and an inmate population that is increasingly violent, drug-addicted and prone to mental illness.
Florida Department of Corrections Secretary Mark Inch has warned that the “status quo is not sustainable,’’ and has asked the Legislature for a $113 million injection of new money to increase pay and retain officers, reduce overtime, and fill vacancies.
But for the first time, the auditors show how many of the problems have been self-imposed by the state. In the last 10 years, former Gov. Rick Scott and state legislators extracted millions from the prison system, first by shifting from 8- to 12-hour shifts to cut 3,700 jobs, then with a push to privatize prisons and prison healthcare.
The audit spells out how the short-term savings, realized between 2011 and 2014, are now costing taxpayers millions and leading to settlements from successful class-action lawsuits on behalf of inmates.
“The contracts the department 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 CGL Companies and one of the authors of the audit.
Those reductions included “unfilled positions, inmates not being able to be taken out to see providers in the community, and this led to a backlog of medical and mental health issues and probably has contributed to the litigation that the department has suffered from in recent years,” he told the Senate Appropriations Subcommittee on Criminal and Civil Justice on Wednesday.
“Those savings that you achieved during that time, you are probably paying for now” through lawsuits and increased costs, he said.
Auditors said that in the current fiscal year alone, the state will be required to spend $39 million in additional healthcare expenses as a result of lawsuits over mental health programs, Hepatitis C treatment, hernia care, and treatment of the disabled that were likely prompted by the state’s “complicated” history with inmate healthcare services.
In a summary of that history, auditors outlined how the Legislature first ordered Florida Department of Corrections to move to a privatized healthcare system in 2001 but only for Region 4, the portion of the state that covers prisons in South Florida.
The state awarded the contract to Wexford Health Services, which was paid a rate that was supposed to result in cost savings to the state. But after numerous problems with performance, the state ended the contract in 2005 and brought inmate healthcare in house again.
In 2011, after then-Gov. Rick Scott promised to cut $1 billion from the Department of Corrections, legislators again ordered FDC to privatize inmate healthcare. Wexford Health Services and Corizon LLC won the bids, and the cost per inmate fell 12%, the auditors said.
To achieve the savings required by the state, the vendors “reduced spending by maintaining lower healthcare staffing levels” and that “led to serious performance issues in both contracts.”
Auditors said that the private contractors reduced staffing, dramatically decreased episodes of outside care for inmates, and the number of grievances submitted by inmates about the poor quality of healthcare service rose.
Department of Corrections inspectors raised concerns about “the level of medical and mental healthcare” and the state spending per inmate fell to one of the lowest in the nation, the audit said.
Stories of horrifying inmate care also started emerging and healthcare contractors began to draw hundreds of lawsuits.
In 2010, Randall Jordan-Aparo, an inmate who suffered from a genetic blood disorder was denied medical attention and, when he complained, officials at Franklin Correctional Institution forced him into an isolation cell and gassed him until he could no longer breathe. In 2016, Darren Rainey, a 50-year-old mentally ill inmate at the Dade Correctional Institution, died after being locked in shower by prison guards as punishment, and scalded with hot water for an hour.
When Department of Corrections pushed back amid mounting reports and troubling inspections, Corizon and Wexford claimed “they were not provided enough information to accurately project costs, which resulted in the service issues that developed,” the audit says.
Corizon terminated its contract with the state in 2016 and, in 2017, when inspections showed “serious performance issues at the South Florida Reception Center,’’ the state terminated Wexford’s contract.
By 2016, the state had to scramble to find new health care contractors and it put out requests for bids multiple times, trying to attract potential vendors. It found only one bidder, Centurion.
“There was essentially no competition” and that is “the worst of both worlds,’’ Becker said. “You have no competition. Costs go up, and you’re also paying administrative and profit to a vendor.”
Centurion was the sole bidder to respond, and is now in a three-year contract through 2022 to provide all healthcare services to inmates throughout the state. But it’s expensive.
The annual contract costs $421 million a year, and allows the company to pass on all healthcare costs to the state and charge an 11.5% fee for administration and profit, auditors said.
“The situation has stabilized currently,’’ Becker said. “There’s a general consensus Centurion is doing a good job compared to the last two contracts.”
But because of the absence of competitive market options in Florida, he recommended the state consider transitioning to having a university medical school manage inmate healthcare or returning health care to an in-source model run by the state.
An in-source model could save the state $46 million by “eliminating the administration and profit paid to the vendor,” he said. A university model could save about $40 million a year. But there are also drawbacks, such as attracting sufficient talent and staff to resume a state-run health care program.
Sen. Jeff Brandes, R-St. Petersburg, chair of the Senate Appropriations Subcommittee on Criminal and Civil Justice, said he wants to consider the options.
“We’re locked into a three year agreement with the current provider, but we need to put all the options on the table and explore the university option,’’ he said. “There is potentially other benefits for that and we’ve seen it work in other states.”
The University of Texas and Texas Tech, for example, started handling prison healthcare as part of that state’s attempt to get out from expensive litigation. “It’s been tremendously successful,’’ Becker said.
New Jersey and Georgia use similar programs and Illinois and Virginia are looking into it. But Connecticut discontinued its university partnership after the university wanted to get out of it.
Florida ranks at the low end in terms of per inmate care, with the median cost nationally at $5,783 and Florida at $4,050, which is comparable to most large states in the country, Becker said.
When the state privatized all prison healthcare services in 2012, it led to a 9% decline in spending from 2009 to 2014. But since 2014-15, costs have soared by 54%, the audit shows.
Healthcare now consumes about 21% of all Florida prison costs, the same as most other states. But in Florida, the increase is driven by “misalignment between funding levels and service needs,’’ Becker said.
Also driving healthcare cost is the growing aging prison population, one of the highest in the nation, with the average age at 37-38, the audit shows.
In the last 10 years, the number of inmates over age 50 has grown by 77 percent, despite a decline in the overall prison population. As of June 30, 2019, over 27 percent of the FDC inmate population was age 50 or older, more than any other state.
The audit also noted that Florida had a higher rate of chronic medical and mental illness among inmates, which exacerbates the pressure for medical services. Drug costs are also increasing, substantially for Hepatitis C drugs. While the drug cost increase is not unique to Florida, auditors noted that because the private contractors withheld treatment for Hep C and hernias, it complicated conditions for many inmates making their cost exponentially more expensive today.
Inch, the FDC secretary, described the audit as “pretty accurate” but said it was up to the Legislature to decide which direction it wants to go.