Private companies want prison health contracts but state wouldn't save money

Mike Ward at the Austin Statesman reports that private contractors are still seeking a piece of Texas' prison healthcare spending: "Efforts by private companies to get a piece of Texas' nearly $1 billion prisoner health care system are quietly continuing behind the scenes as company representatives make sales pitches to lawmakers and seek changes in state law to authorize privatization," he reported today. Key legislators sound a little grumpy that the proposals - which have not been fully vetted - are being pushed so aggressively this late in the session.

Some of the companies seeking contracts are Correctional Medical Services Inc and Physicians Network Association. out of Lubbock. What's more, "Another Lubbock firm has approached some lawmakers in recent weeks about the possibility of providing care for prisoners in a local hospital, according to a lawmaker who was privy to the private discussions. And other firms have expressed an interest in contracting to provide medical, dental and mental-health care at some or all of Texas' prisons."

Grits has argued in the past that privatizing healthcare makes no economic sense for private companies if proposed cuts to provider reimbursements are enacted. Company officials have said they could only turn a profit "if funding levels remain close to the current appropriation levels." However, both the House and Senate budgets would set prison health provider pay at Medicaid rates, which would make the contracts dramatically less lucrative. Earlier this year, legislators announced their intention to slash reimbursement rates by up to 24% after a state auditor's report criticized UTMB for overcharging, though we probably won't know until after the conference committee whether that move will stick. Further, Texas' past experience with privatization has made legislators and corrections officials more cautious about low-balled bids:

Though state prison officials have indicated that they will probably seek information from potential bidders to determine whether privatization would provide savings, they and legislative veterans say they are wary of pushing ahead for privatization based on experiences with past prison outsourcing projects.

For example, the Texas Department of Criminal Justice has several times hired private companies to provide substance-abuse treatment programs in state prisons, only to face rising costs after the contracts started because the companies lowballed their bids and could not continue providing the services at the low prices.

"Many times when you hire private vendors, you find the only way they can provide the services cheaper is by paying their people less or providing less service," Madden said. "With medical care, that's exactly what we don't want to get into."

It would be foolish to rush into this move with no planning or prep time, much less vetting by stakeholders. Perhaps the subject might be appropriate for an Interim Study by the House Corrections Committee, but it would be a mistake to jump into this now based solely on representations by industry lobbyists.