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Despite increased state supervision, expert says private prison health care comes at a cost

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Zullo described the cost-saving nature of privatization as "one of the great myths that's been debunked by recent literature."


Last year, a state prisoner complained of chest pain and difficulty breathing. According to a Detroit Free Press report, 37-year-old John Stein at the Cotton Correctional Facility at Jackson went to the prison healthcare unit. A short time later, he was sent back to his cell. There, he collapsed and died.  


A $50 million lawsuit has been filed against the Michigan Department of Corrections and a private company hired to handle inmate health care, Corizon Health. 

The Tennessee-based company has contracts for more than 500 prisons and jails across the nation. According to a company press release last year, Corizon Health has been the health care provider for the Michigan Department of Corrections since 1998. Its contract last year expanded to include mental health and pharmacy services.


According to a Prison Legal News report from last year, Corizon has faced penalties in the past for not meeting the level of service specified in the contract. A past audit found Corizon was not keeping track of care for all the prisoners with chronic health conditions. Meanwhile, the Department of Corrections only completed 50 percent of the required audits of Corizon's performance.


Roland Zullo, an assistant research scientist at the Economic Growth Institute at the University of Michigan who studies privatization, joined Stateside to discuss Corizon's history and track record with MDOC. 


For Zullo, the heart of the issue when it comes to relying on a private company for inmate care is the contract itself. He said Corizon Health is paid a fixed amount by the state every month to provide care, which is to say that the contractor will be paid the same amount whether they treat one or 100 inmates that month. 


"Under that kind of payment system, the contractor is rewarded, actually, for cutting costs," Zullo said. "And, in health care, the easiest and most direct way to cut costs is just to deny care." 


It follows that there would be concerns about whether care is being properly administered to inmates in such a system. Zullo said this concern is further complicated by the nature of the medical care. To oversee the contract, you need to understand the medical side, too. 


"This is one of the difficulties with health care, because to really monitor health care, you have to have someone external to the contractor who understands medicine, who can evaluate what a doctor has decided upon, and then sometimes rule against what a doctor has decided upon. And this is why monitoring this kind of contract is so expensive and difficult," Zullo said. "So, yes, there's a contract, and the contract lists all kinds of great detail on what the contractor is supposed to provide, but actually overseeing whether or not those decisions are being made is expensive and very hard to do."  


Marti Kay Sherry, a Michigan Department of Corrections contract manager, also joined Stateside to weigh in. She oversees the Corizon Health contract with MDOC and provided some insight on what kind of safety oversights are in place.  


"With [MDOC] Director [Heidi] Washington, we have established a new contract monitoring unit," Sherry said. "One of the things that I do as a contract manager is that I monitor the Corizon contract. We have with the new contract that started in June, 2016, we have 24 service-level agreements. We have assessed all of them. We're current and up to date with those." 


Sherry said there are also a variety of staff positions, including nurses and a clinical monitoring team, that play a role in ensuring contract requirements are met. 


At the same time, Sherry said Corizon has amassed over $1 million in penalties with MDOC and has been put on "course corrective plans" since the beginning of the new contract. This action appears to be making a difference, according to Sherry. 


"What we have seen since the start of the contract is... that the credits are decreasing, and we hope to continue that pattern, but for now we are still assessing them," she said. 


In the end, Sherry said that Corizon is the "best value for the state," but Zullo said that the cost-saving side of privatization is "one of the great myths that's been debunked by recent literature." 


When studies began on privatization, it appeared that there were savings to be had by using private contractors rather than public employees. However, more recent research suggests otherwise, according to Zullo. 


"The difference, really, is that the early research didn't adjust for what we were getting for what we were paying for. When you think about any kind of outsourcing, it's not simply cost; it's value," Zullo said. "And value is what we pay, but also what we get in return for what we pay. And when you begin to adjust for the fact that you receive a different kind of service under a private contract model, then typically the public sector comes out ahead in providing public value." 


While Zullo did call for more study on the topic, he said, "I'm quite confident that the state could save tens of millions if it moved to a pure public system." 


Listen above for the full conversation.  


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Stateside is produced daily by a dedicated group of producers and production assistants. Listen daily, on-air, at 3 and 8 p.m., or subscribe to the daily podcast wherever you like to listen.
Sarah Leeson is a production assistant for Stateside and a University of Michigan grad. After spending four years studying communications, writing, and French, Sarah is happy to discuss anything concerning social networks, mass media, or crêpes. She also worked on the Michigan Daily as a columnist, contributing poignant stories about her own misadventures at home and abroad.
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