Health Care Study:
Florida Department of Corrections

November 13, 2019
Prepared by:

Table of Contents

Executive Summary

1

Introduction

4

Current System Overview

6

Health Care Costs

23

Alternative Service Delivery Models

33

Alternative Service Delivery Models in the Florida
Department of Corrections

41

Executive Summary
This report examines the use of the following alternative approaches to the delivery of inmate health
care in the Florida Department of Corrections (FDC):


Insourcing, in which Department staff are directly responsible for managing health care and
delivering services in facilities, while still contracting out for services delivered by providers in
the community;



Outsourcing, in which the Department contracts a private company to provide health care
service management, staffing, and coordination of off-site care;



A hybrid insourcing/outsourcing approach which uses elements of both models; and



University medical school management of correctional health care.

The report describes the current provision of inmate health care services in the Florida Department of
Corrections and compares the cost-effectiveness of these alternative models in delivering inmate
health care services. Key report findings include:
Florida has a high incidence of chronic medical and mental health illness in the inmate population.
With the rapid growth in the geriatric offender population, growing awareness of the needs of
mentally ill offenders, and changing standards in the treatment of infectious diseases such as Hepatitis
C, the system has experienced growing pressure to increase the levels of service and program
performance. This in turn is driving the cost of health care in the prison system higher.
The Florida Department of Corrections’ (FDC) health care program design is consistent with
contemporary professional standards. Health care policies and procedures are based upon generally
accepted professional standards promulgated by the American Correctional Association, the National
Commission on Correctional Health Care, the Florida Agency for Health Care Administration
Licensure, and best practices developed in other state correctional systems. The FDC oversees delivery
of a comprehensive set of medical, mental health, and dental services for state prison system inmates.
The FY 2019-20 budget for health care services totals $566.9 million.
The FDC has previously used a hybrid approach in managing inmate health care. During the time in
which state employees were used to deliver facility health care services, the Department still
maintained an extensive network of contracts with practitioners, hospitals, and vendors to provide offsite health care services in the community.
The Department of Corrections has attempted outsourcing with mixed results over the years. While
privatization provided costs savings in the short-term, vendors were unable to provide consistent
service that met contract performance standards at the funding levels they had bid. This led to a
turbulent period of vendor terminations, transitions, and multiple attempts to attract additional
vendors. Service quality issues at the time produced high levels of staff vacancies, decreased access to
off-site care, increased inmate grievances, and costly litigation. In its most recent procurement, the
1

FDC received one responsive proposal for medical services after issuing multiple Invitations to
Negotiate.
The current contract for inmate health services follows a cost-plus model. Under the Department’s
contract with Centurion, the vendor is reimbursed for the actual costs of care provided and paid an
additional fee in the amount of 11.5 percent of program costs that cover administration and profit.
The annual contract is capped at $421 million for the three years from FY 2019-20 through FY
2021-22. Pharmacy services are not part of the contract but are instead managed directly by the
Department.
Florida’s spending on inmate health care is low relative to national averages but is comparable to per
diem spending levels in six of the ten largest correctional systems. Per inmate spending levels in
Florida are close to those of Texas, Illinois, Georgia, and Pennsylvania.
After declining in the period Fiscal Year 2010-11 through Fiscal Year 2014-15, inmate health care
costs increased by 36 percent over the past four years, an annual average increase of 9 percent. The
increases appear attributable to misalignment between contract funding and service requirements in
the initial outsourcing initiatives. Recent litigation on mental health services, Hepatitis C treatment,
and hernia repair accounts for nearly $39 million in increased funding in the Fiscal Year 2019-20
budget. The ongoing increase in the geriatric population also continues to increase demand for
medical services. The projected annual cost of providing health care for an inmate in a statemanaged facility is $6,511 for FY 2019-20.
Correctional systems with insourced delivery systems provide on-site care in prison with state
employees in 18 states, including three of the five largest state correctional systems. However, these
systems still contract for hospitalization, outpatient, and specialty services provided outside prison.
Outsourcing provides managed health care through contracted providers in 20 state correctional
systems. The two primary forms of outsourcing are 1) capitated models in which the vendor assumes
primary financial risk for required service delivery and is paid a per diem fee per inmate to cover all
program costs; and 2) cost-plus models in which the state reimburses the vendor for program costs
and assumes financial risk for required service delivery.
Hybrid models which combine different aspects of both insourcing and outsourcing to meet system
needs are used in eight states. Basic hybrid models privatize the management of health care in select
facilities while maintaining state management of health care in other system facilities.
University-managed systems rely on a state medical school or health sciences university to manage all
or some significant component of correctional health care services. Four correctional systems use the
university model, including the Texas prison system, the largest correctional system in the United
States.
Insourcing inmate health care services in Florida is feasible and would produce savings from the
current system. The FDC has the internal expertise and management infrastructure to adopt an
2

insourced model for inmate health care. However, recruitment and retention of health care staff would
be a significant challenge requiring substantial advance planning. The Department would also require
an improved approach in the management of off-site care. This could be accommodated by
contracting with an insurance company or health care organization to manage all off-site care,
utilization review, and claims management. Implementation of an insourced system could reduce
FDC health care spending by an estimated $46 million, primarily through elimination of vendor profit
and administration costs.
The current cost-plus approach used by the FDC appears to be the most realistic means available to
outsource on a system-wide scale. The cost-plus model is currently used by the FDC because the only
vendor in the last procurement cycle willing to work with the Department made it a condition of the
contract. By most reports, the current vendor is performing reasonably well under the current cost-plus
contract. However, this approach to privatization does not encourage efficiency and appears to be
the most expensive service delivery model, as the FDC must pay a significant fee to the vendor to
cover overhead and profit, in addition to paying all direct costs. However, the contract is capped at
$421 million for the next three years and will provide the FDC with an electronic medical record
system, which is a significant benefit.
A capitated approach to outsourcing could produce savings by incentivizing vendors to achieve
efficiencies, particularly in the management of off-site care. However, this approach to outsourcing
works best in a competitive procurement with multiple viable bidders competing on price and service
quality. There are very few vendors who can provide services on the scale required in Florida with a
record of acceptable service delivery. Moreover, the high degree of financial risk makes attracting
enough bidders to facilitate a competitive environment difficult. Assuming vendors willing to work in
Florida on a capitated basis, estimated annual savings of $5.5 million, largely in the management of
off-site care, may be possible.
A hybrid insourcing/outsourcing approach would require outsourcing services on a capitated basis for
a region or group of select facilities, while insourcing the rest of the system. This approach increases
administrative complexity and creates potential issues of equity in apportioning risk and inmates in
need of health care among multiple vendors and state facilities. It also assumes that credible vendors
are willing to bid on capitated contract services for smaller groups of contracts. If viable, the limited
experience with this approach in one of the few states that use this model suggests savings could be
achieved roughly equivalent to the level achieved with insourcing.
The university model of health care management has attractive features but requires active
cooperation from a medical school. Elimination of profit, reduced administrative costs, and
discounted pharmaceutical prices could produce potential annual savings of over $40 million.
However, no Florida medical school has indicated any interest in partnering with the FDC to manage
inmate health care. One potential approach to building interest in such a model could be partnering
with a university to take on one aspect of the correctional health care program, such as management
of off-site care for a region or group of facilities.
3

1.

INTRODUCTION

In July 2019, the Office of Program Policy Analysis and Government Accountability (OPPAGA), a joint
entity of the Florida Legislature, was required to solicit a contract with an independent consultant for a
Study of Correctional Health Care in the Florida Department of Corrections (FDC). The goal of the
study was to fulfill requirements of proviso language in the 2019 General Appropriations Act (Ch.
2019-117, Laws of Florida). The language states:

From the funds in Specific Appropriation 2754, the Office of Program Policy Analysis and
Government Accountability is directed to contract with an independent third party consulting firm to
conduct a review of inmate health care services in order to compare the cost-effectiveness of
alternative methods of delivering the services.
OPPAGA directed that the Study address the following key research tasks:


Describe the current provision of inmate health care services in the Florida Department of
Corrections.



Assess alternative models of delivering inmate health care services in the Florida Department
of Corrections.



Compare the cost-effectiveness of alternative models of delivering inmate health care services.

The proviso language required the review to consider at least the following options: (a) full insourcing
of inmate health services, (b) insourcing of outpatient health services provided within state operated
correctional facilities and outsourcing inpatient services, and (c) continuation of full outsourcing with
modified contract terms imposing appropriate cost controls.
Methodology
In support of our analysis, we requested FDC health care expenditure data, as well as information on
service delivery, utilization, and system performance. We also requested performance and activity
measure data, planning documents, management reports, and other documentation of operations
and programs.
We supplemented the written documentation and data provided by the FDC with information gained
from interviews with program administrators and on-site observation of daily operations at the key
FDC facilities identified below.

4

Exhibit 1: On-Site Facility Reviews
Facility

Location

Capacity

Mission

Florida Women’s
Reception Center

Ocala

1,345

Female offender reception, general
population, and in-patient mental health

Lake Correctional
Institution

Clermont

1,093

Male offender general population and
inpatient mental health

Lowell Correctional
Institution

Ocala

1,456

Female offender general population

Reception & Medical
Center (RMC)

Lake Butler

1,503

Male offender reception, 120-bed hospital,
34-bed infirmary, surgical unit, dialysis unit,
and inpatient mental health

Suwanee Correctional
Institution

Live Oak

1,502

Male Youthful Offender Unit, Close
Management Unit, inpatient mental health

The CGL team conducted an in-depth tour of all medical/mental health functions at each visited
facility. This included observation of sick call, dispensing of medication, observation of chemotherapy
and dialysis treatment (at RMC), and group therapy. We toured all health care facilities at these
institutions, including the 120-bed hospital at the Reception and Medical Center. Members of the
project team observed the intake process, sick call, and mental health service planning.
We selected these facilities, with input from the FDC Office of Health Care Services, to observe the
high level of health services and the operational challenges presented. Staff interviews included FDC
central office administrators as well as direct service contract staff. These interviews centered on the
challenges facing the FDC in delivering effective health care to the inmate population. Staff
interviewed were open and candid regarding the challenges and issues associated with the provision
of health care in the current system.

5

2.

CURRENT SYSTEM OVERVIEW

A review of different models to provide inmate health care begins with developing an understanding
of the current service delivery system. This first requires an analysis of the Florida Department of
Correction’s (FDC’s) health care program goals and how these goals produce the professional
standards and policies that guide the system. We next describe the FDC’s current system of
correctional health care services, utilization of services by the inmate population, and how inmate
population characteristics drive service requirements. The final section of the chapter describes the
history of the FDC’s evolving approaches to management of inmate health care services.

Standards
The FDC bases its health care policies and procedures upon generally accepted professional
standards promulgated by the American Correctional Association, the National Commission on
Correctional Health Care, the Agency for Health Care Administration Licensure, and best practices
developed in other state correctional systems. The Department regularly updates policies and
standards to reflect care guidelines recommended by the Centers for Disease Control and other
recognized public health research organizations.
The FDC organizes its health care policies in 162 Health Services Bulletins (HSBs). These bulletins
include multiple memos, information sheets, forms, orientation information, appendices for clinical
care, guidelines, fact sheets, and policies. These bulletins provide direction on topics such as chronic
illness monitoring (HSB 15.03.05), conditional medical release (HSB 15.02.14), and medical
emergency response planning (HSB 15.03.06). In addition to HSBs, the Department has 30 custodyrelated policies which pertain to services such as therapeutic diets, medical transfers, health services
for inmates in special housing, nursing sick call, and medication administration.
The FDC is responsible for providing a level of health care service to inmates consistent with
constitutional standards, as determined by the federal courts, in accordance with Sections 945.025(2),
and 945.6034, Florida Statutes. These standards, as established by the United States Supreme Court
in Estelle v. Gamble1, provide inmates the right to be free from deliberate indifference to their health
care needs and that inmates have a right to the same standard of health care as available in the
community. In subsequent rulings and case law, the courts have established three key elements of
constitutional health care in correctional facilities: 1) the right to access to care, 2) the right to care
that is ordered, and 3) the right to a professional judgement.2
A 1972 class action lawsuit against the FDC, Costello v. Wainwright, resulted in a finding that
inadequate health care in the correctional system amounted to cruel and unusual punishment. The
case further refined standards for health care delivery in the FDC and resulted in the creation of the
Estelle v. Gamble, 420 U.S. 97, 97 S. Ct. 285, 50 L.Ed.2d 251(1978)
B. Jaye Anno, Correctional Health Care: Guidelines for the Management of an Adequate Delivery System,
National Commission on Correctional Healthcare, (2001:43).
1
2

6

Correctional Medical Authority (CMA) to provide independent monitoring of health care services.3 The
responsibilities of the CMA include inspection of the delivery of medical and mental health services in
FDC facilities, annual reporting on inmate health care delivery to the Governor and the Legislature,
and monitoring compliance with consent decrees. More recent litigation that has informed the
development of FDC health care standards include Osterbock v. McDonough, Disability Rights
Florida, Inc. v. Jones, Hoffer v. Jones, and Copeland v. Jones.4 These cases addressed requirements
for mental health programs, Hepatitis C treatment, hernia care, and other services.

Services
Consistent with these standards, the FDC oversees delivery of a comprehensive set of medical, mental
health, and dental services for over 95,000 state prison system inmates in 145 facilities located in
four regions throughout the state.
Exhibit 2: Florida Correctional Institutions

Source: Office of Program and Policy Analysis and Government Accountability, Florida Correctional Facilities,
Report N0. 19-08, October 2019.

Costello v. Wainwright, 3 430 U.S. 3425, 51 L.Ed.2d 372, 97 S. Ct. 1191 (1977)
Osterbock v. McDonough 549 F.Supp.2d 1337 (M.D. Fla. 2008); Disability Rights Florida, Inc. v. Jones, Case No.
3:18-cv-179-J-25JRK; Hoffer v. Jones Case No. 4:17- cv-214-MW-CAS; Copeland v. Jones Case No. 4:IS—cv3
4

452RH/CAS

7

The Department’s Comprehensive Health Services Plan5 describes the specific services provided. The
FDC uses a managed care approach to provide these programs, contracting with a private vendor,
Centurion of Florida, LLC.
Medical. The medical program at FDC institutions focuses on primary care. These services include
sick call, infection control, immunizations, chronic disease clinics, health education, physical
examinations, screenings, and urgent care services. Centurion provides full and part-time physicians,
nurse practitioners, nurses and support staff in support of these functions at each state-run facility.
Like other states with large prison populations such as California and Texas, Florida operates a large,
licensed hospital to provide inpatient care within a secure facility. Under Centurion management, the
Reception and Medical Center (RMC) at Lake Butler supports 120 inpatient beds, as well as a licensed
laboratory, same-day surgery center, dialysis treatment, chemotherapy and radiation treatment.
Inmates in need of more serious or advanced treatment may receive care from specialists
subcontracted by Centurion, both in the facility or in the community. Inmates also receive inpatient
and outpatient care in community hospitals as needed for emergency care or if the RMC has no beds
available. Community hospitals are also utilized for specific types of specialty care such as orthopedics
or cardiac care. If facility vendor staff cannot provide the services an inmate needs, the inmate is
transported to a local hospital or provider’s office for offsite care. The FDC has agreements with
hospitals that receive a significant volume of inmates, establishing dedicated secure units to support
FDC patients. These include Memorial Hospital of Jacksonville and Larkin Community Hospital in
Miami. Use of other local community hospitals in non-secure wards requires 24 hour supervision of
the inmate patient by two department correctional officers.
A Centurion Utilization Management team reviews all requests for specialty consults and hospital
services, including those provided at the RMC. The team reviews and approves all hospital
admissions and discharges using evidenced-based clinical criteria to ensure efficient use of resources.
Mental Health. Mental health treatment consists of a range of services dependent upon the care level
required by the inmate. FDC policy establishes five levels of treatment, beginning with outpatient care
and progressing through more intensive, structured inpatient programs to stabilize and treat inmates
with more severe conditions. Inmates receiving inpatient mental health treatment all receive structured
out-of-cell therapeutic services. Mental health program staffing provided by Centurion, includes
psychiatrists, psychologists, licensed mental health professionals, nurses, and support staff. The FDC
manages a continuum of mental health services with each facility’s staffing scaled to meet its specific
program needs. The FDC also operates a Cognitive Treatment Unit at the Wakulla Annex for inmates
with dementia or traumatic brain injury.
Dental. Dental services include examinations, extractions, and emergency treatment at the time of
their admission into the correctional system. On an as-needed basis, inmates with less than six months
Florida Department of Corrections, Comprehensive Health Services Plan for the Continued Improvement of the
Delivery of Health Care for Inmates, 2019-2024 (2019)
8
5

of time to serve may receive decay control, limited cleaning, and denture repairs. Inmates with more
than six months to serve may receive dental exams with x-rays and periodontal screening. If clinically
indicated, inmates with at least four months of incarceration time remaining may be provided dentures
or non-emergent endodontic therapy. Advanced dental services are available on a limited basis
depending upon need. Centurion provides dentists, dental assistants and dental hygienists in support
of these services at all facilities except for reentry centers.
Pharmacy. The FDC manages the delivery of pharmacy services with 84 state employees, outside of
the Centurion contract. The State pharmacy staff dispense over 1.5 million prescriptions annually from
three regional pharmacies and the RMC in response to orders from medical staff at state prisons.6
Centurion staff then administer medications to patients. Nurses provide unit dose prescriptions of
prescribed medications at a pill line for general population inmates, at cell front for inmates in
confinement or close management, and bedside in the hospital. Inmates are also allowed to keep
common medications such as antihistamines or analgesics on their person (KOP) for use as specified
by the prescription. Finally, inmates in dorms, special housing, and work squads may be provided
over the counter medications (OTC) such as ibuprofen or antacid on an as-needed basis.
The FDC receives discounted medications for HIV/AIDs and STDs under the Florida Department of
Health (DOH) through the 340b program. The 340b program is a US federal government pricing system
that requires drug manufacturers to provide outpatient drugs to eligible health care organizations and
covered entities at significantly reduced prices. The 340b program provides discounts of up to 40
percent from market rate prices. The Department also participates in the Minnesota Multi-State
Contracting Alliance for Pharmacy (MMCAP), a purchasing organization for government institutions that
negotiates reduced pharmaceutical prices for member organizations.
Due to the level of drug price purchasing discounts achieved by the FDC, past efforts at potential
privatization of the pharmacy program have not shown savings, resulting in retention of the current
system of state management of the program.
Exhibit 3 summarizes the key services available to inmates and where they are provided.

Florida Department of Corrections, Comprehensive Health Services Plan for the Continued Improvement of the
Delivery of Health Care for Inmates, 2019-2024 (2019).
9
6

Exhibit 3: FDC Health Care Service Summary

Prison On-Site
Services

Community
Services

Medical
Primary care
Chronic care
Screenings
Urgent care
Inpatient care*
Medication
management
Specialty clinics
Surgery*
Dialysis*
Cancer treatment*
Long-term care
housing
Physical therapy
Respiratory therapy
Specialist visits
Emergency room visits
Surgery
Inpatient
hospitalization

Mental Health
Group counseling
Individual counseling
Medication management
Crisis stabilization
Infirmary
Transitional Care
Inpatient hospitalization

Dental
Examinations
Extractions
Cleaning
Dentures &
repair

Psychiatric emergency
care

Advanced
dental surgery

Pharmacy
Keep on Person
(KOP)
Unit dose
Over the
Counter (OTC)

*Available only at Reception & Medical Center
Source: Florida Department of Corrections, Comprehensive Health Services Plan, 2019-2024, May 13, 2019.

The Department manages this system through the Office of Health Services (OHS). The OHS sets
policy for the system, monitors contract performance, provides training, reviews grievance appeals,
assesses clinical-legal issues, manages the overall budget for health care services, and reviews
contractor spending. OHS has 62.5 employees assigned to these functions.

Inmate Patient Profile
The FDC provided health care to an average daily population of approximately 87,000 inmates in
state-operated facilities in FY 2018-19.7 This does not include health care services provided by
vendors that operate the seven private correctional facilities under contract with the Department of
Management Services (DMS)8. Over 28,000 inmates have been admitted to the state prison system in

Florida Department of Corrections, Bureau of Research and Data Analysis.
These facilities include Bay Correctional Facility, Blackwater River Correctional Facility, Gadsden Correctional
Facility, Graceville Correctional Facility, Lake City Correctional Facility, Moore Haven Correctional Facility, and
South Bay Correctional Facility.
10
7
8

the last 12 months.9 Each new admission receives a thorough health screening and assessment, which
may result in a prescribed treatment plan as indicated.
Inmates in U.S. prisons enter correctional systems with higher incidence of medical and mental health
issues than found in the general population. Chronic disease is prevalent with higher rates of
tuberculosis, HIV, Hepatitis B and C, arthritis, diabetes, and sexually transmitted disease compared to
the general population.10 Over half of prison inmates have a mental health disorder, and many of
these offenders also have a history of substance abuse.11
The Florida correctional system population exhibits these same characteristics. In FY 2018-19,
the FDC offender population included12:


57,826 inmates requiring treatment in chronic disease clinics



2,561 inmates diagnosed and treated for HIV



6,314 inmates diagnosed and treated for Hepatitis C



118 inmates with renal failure requiring dialysis treatment



4,000 inmates with hearing, mobility, or vision impairments or disabilities

In FY 2018-19, inmates had over 126,000 contacts with clinics for treatment of chronic
conditions, with the largest number requiring cardiac or respiratory treatment.

Florida Department of Corrections, Quarterly Inmate Admissions Reports, October 1, 2018 to September 30,
2019.
10 National Institute of Corrections, “Solicitation for a Cooperative Agreement—Evaluating Early Access to
Medicaid as a Reentry Strategy,” Federal Register 76, no. 129 (2011): 39438-39443; Ingrid Binswanger,
Nicole Redmiond, and LeRoi Hicks, “Health disparities and the criminal justice system: an agenda for further
research and action,” Journal of Urban Health 89, no. 1 (2012): 98–107; and Laura Maruschak, Medical
Problems of Prisoners (Washington, DC: US Department of Justice, Office of Justice Programs, Bureau of Justice
Statistics, April 2008), , https://ww.bjs.gov/content/pub/pdf/
11 Doris James and Lauren Glaze, Mental health problems of prison and jail inmates, (Washington, DC: US
Department of Justice, Office of Justice Programs, Bureau of Justice Statistics, September 2006) ,
https://www.bjs.gov/content/pub/pdf/mhppji.pdf/
12 Florida Department of Corrections, Bureau of Research and Data Analysis.
11
9

Exhibit 4: FY 2018-19 FDC Inmate Clinic Contacts
Type of Treatment
Cardiac
Endocrine
Gastro-intestinal
Immune System
Renal
Neurology
Cancer
Respiratory
Tuberculosis
Miscellaneous
TOTAL

Number of Clinic Contacts
49,775
17,719
19,729
8,516
12
5,342
1,785
12,166
6,316
4,723
126,083

Source: Florida Department of Corrections, Office of Health Services

Demographic characteristics of the population also contribute to health care service needs.
The FDC incarcerates nearly 5,000 female offenders. Incarcerated women report histories of
alcohol and drug abuse, sexually transmitted infection, sexual and physical abuse, and mental
illness, at a much higher rate than incarcerated men, and as a result require a more intensive
level of health care services. Moreover, female offenders also have gender-specific health
needs such as gynecological care that create additional demands for health services. 13 In FY
2018-19 female offenders in Florida accounted for 12.8 percent of clinic encounters for
chronic diseases despite representing 6.9 percent of the inmate population.14
The number of geriatric offenders in the correctional system also drives demand for health
care services. Due to higher risk lifestyle choices and infrequent or irregular access to health
care over their lives, many inmates physically age much more quickly than their chronological
age would suggest. The National Commission on Correctional Healthcare and at least 20
state correctional systems define as geriatric any inmate over age 50.15 Older prisoners cost
approximately three times as much as younger prisoners to incarcerate, largely due to health
care costs.16

National Commission on Correctional Healthcare, Women’s Health Care in Correctional Settings, 2019
https://www.ncchc.org/womens-health-care.
14 Florida Department of Corrections, Office of Health Services.
15 It's About Time: Aging Prisoners, Increasing Costs, and Geriatric Release. New York, NY: Tina Chiu, The Vera
Institute of Justice; 2010. March, https://www.vera.org/publications/its-about-time-aging-prisoners-incresingcosts-and-geriatric-release
16 Williams, B. A., Goodwin, J. S., Baillargeon, J., Ahalt, C., & Walter, L. C. (2012). Addressing the aging crisis
in U.S. criminal justice health care. Journal of the American Geriatrics Society,
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3374923.
13

12

As of June 30, 2019, over 27 percent of the FDC inmate population was age 50 or older. In
fact, the system housed 1,775 inmates aged 70 or over. The proportion of the Florida inmate
population that is geriatric exceeds that of the other three largest state correctional systems.
Exhibit 5: Geriatric Populations in Large State Correctional Systems

Texas
California
Florida
New York

Inmate
Population
145,019
129,417
95,502
52,344

Number of Inmates
Age 50+
31,876
30,298
25,732
10,140

Percent of Inmates
Age 50+
22%
23%
27%
19%

Sources: Texas Department of Criminal Justice, Fiscal Year 2018 Statistical Report;
California Department of Corrections and Rehabilitation, Offender Data Points Report, June
2018; Florida Department of Corrections, Bureau of Research and Data Analysis; Office of
the New York State Comptroller, New York’s Aging Prison Population, April 2017.

The total number of geriatric inmates housed by the FDC has grown by 77 percent over the
last ten years, despite a decline in the overall prison population during this period. Older
inmates, like older individuals in society, have much greater health care needs than younger
inmates. This change in the population has had a profound impact on the demand for health
care services in the state correctional system.

13

Health Care Service Delivery History
The FDC has a long and complicated history in contracting for the delivery of health care to
inmates. Exhibit 6 summarizes past FDC health care contracts. Exhibit 7 presents a timeline
for the Department’s experience with outsourcing.
Exhibit 6: FDC Health Care Contract Summary
Contract
Term

Vendor

Services

2001-2006

Wexford

Region 4 comprehensive health care

2006
2006-2007

Prison Health
Services (PHS)
Correctional
Medical Services
(CMS)

Region 4 comprehensive health care
Region 4 staffing (after termination of PHS contract)

2006-2009

MHM

Region 4 mental health

2009-2014

Corizon (formerly
CMS)

Region 4 mental health

2012-2016

Corizon

Regions 1, 2, & 3 comprehensive health care

2012-2017

Wexford

Region 4 comprehensive health care

2016-2017

Centurion (formerly
PHS and MHM)

Regions 1, 2, & 3 comprehensive health care

2017-2018

Centurion

Add Region 4 comprehensive health care

2018-2019

Centurion

Statewide comprehensive health care

2019-2022

Centurion

Statewide comprehensive health care

Source: Florida Department of Corrections, Bureau of Procurement

14

Exhibit 7: Florida Department of Corrections Health Care Contracting History

Source: Florida Department of Corrections

15

Prior to and through the period of the Costello v. Wainwright litigation during the 1980’s, the
FDC managed health care services within the prison system with state employees,
supplemented by individual contractors as needed. State-managed service included the
management and staffing of the RMC’s secure medical hospital. Private providers in the
community and local hospitals or clinics provided specialty treatment, outpatient care, and
inpatient hospitalization. The Department negotiated individual contracts and price
agreements with these private providers.
One of the issues the system faced was difficulty in keeping health care staff positions filled,
particularly in the Region 4, South Florida area. This is one of the primary challenges
associated with insourcing correctional health care and has been a significant factor in the
development of alternative approaches to staffing facility health care programs. That said,
vendor performance in filling positions has been similar to that experienced by the state.
During this time, the first private company managed care providers specializing in
correctional health care emerged onto the market, providing an alternative solution for
systems seeking to improve prison health care services and/or reduce costs. In 1996 both the
Correctional Medical Authority and the Office of Program Policy Analysis and Government
Accountability (OPPAGA) recommended that the FDC consider privatizing correctional health
care service for one region to better assess the viability and potential benefits of this
approach.17 The Department did not implement these recommendations, and in 2000, the
Florida Legislature enacted legislation on the issue. The bill required the FDC to issue an RFP
for inmate health care provided at all Region 4 correctional facilities, with an explicit goal of
achieving cost savings.18
The subsequent RFP attracted bids from 4 vendors and resulted in the award of a five-year
contract with Wexford Health Sources, Inc. for Region 4. The contract used a capitated
model in which the vendor assumes financial risk in exchange for enhanced discretion in
managing services to achieve efficiency. In this approach the vendor charges a per diem rate
multiplied by the average monthly inmate population as compensation. The contract also
called for 3 percent annual per diem rate increases.
Correctional Medical Authority (CMA) monitoring of health service delivery under the
contract consistently indicated significant vendor service issues, including lack of internal
management controls, poor or nonexistent tracking mechanisms, inadequate control and/or
tracking of specialty consultations, and an unacceptable pharmacy system.19 These issues
eventually resulted in the FDC assessing financial penalties against Wexford. For their part,
the vendor contended that the inmate population in the region contained a higher number of
Corrections Medical Authority 1995-1996 Annual Report; OPPAGA Report No. 96-22, “Review of Inmate
Health Services Within the Department of Corrections” (November 1996)
18 Chapter 2000-166, Laws of Florida
19 Florida Senate, Committee on Criminal Justice, Privatization of Prison Health Care Services, Issue Brief 2011213, October 2010.
16
17

inmates with medical and mental health issues than their bid assumed, and as a result
requested a 10 percent increase in the contract per diem rate. Litigation between Wexford
and the FDC followed. While Wexford prevailed in the lawsuit, which forced an increase in
payment, continued service quality issues resulted in the Department terminating the contract
in 2005.
The Department then issued a new Invitation to Bid (ITB) for Region 4 health care services
which produced three bids, including one from Wexford. The FDC awarded a five-year
contract to Prison Health Services (PHS) in January 2006. The PHS bid was more than $80
million less than the next lowest bidder.20 The vendor however soon indicated that they had
underbid the contract due to the lack of adequate information on service volume during the
bid process and requested an increase in contract compensation. In response to the
Department’s denial of this request, PHS provided notice and terminated the contract eleven
months after its commencement.
The Department issued a subsequent ITB for Region 4 in 2007 which received no proposals
that met the terms of the procurement. In response, the FDC reverted to an “insourced”
system in Region 4, providing institution-based health care services with state employees,
while contracting with a network of individual private providers for services provided in the
community. This mirrored the approach used by the FDC in managing health care services in
Regions 1, 2, and 3. Ultimately the number of contracts between the Department and private
providers would exceed 200 across the state.
In 2011 the Legislature directed the FDC to privatize all inmate health services statewide into two
contracts, one for Regions 1, 2, and 3; and a separate contract for Region 4.21 The legislation
specifically required that the contractor achieve cost savings of at least seven percent below the
Department’s FY 2009-10 health care expenditures.22 The Department issued an RFP for
comprehensive health services for all four regions, and in 2012 awarded contracts to Corizon, LLC for
Regions 1, 2, and 3; and a contract to Wexford Health Sources, Inc. for Region 4. The total value of
these contracts was $1.1 billion for Corizon for 2012-2016, and $237.9 million for Wexford for
2012-2017. The Department adopted a similar approach for these contracts as it had used for
previous comprehensive health care contracts, in which the vendor assumes all financial risk and
retains maximum flexibility in managing services; with compensation based on a per diem rate applied
to the average daily inmate population.
The transition to statewide privatization was difficult. State employee unions sued the Department to
block implementation of the contracts. The Department ultimately prevailed in court, but the case
delayed contract implementation until 2013. During that time, many state health care staff resigned in
Ibid.
Laws of Florida, Chapter 2011-69.
22 Florida Department of Corrections RFP, Comprehensive Healthcare Services in Regions I, II, and III,
Solicitation 11-DC-8324,
http://www.myflorida.com/apps/vbs/vbs_www.ad_r2.view_ad?advertisement_key_num=98603
20
21

17

anticipation of losing their positions, forcing the Department to rely on overtime and temporary staff to
assure continued services. 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. According to FDC staff, this in turn led to
serious performance issues in both contracts.
In response to these issues, the Department issued a new procurement solicitation for inmate health
care services in December 2015. The Department adopted a new procurement model, an Invitation
to Negotiate (ITN) for this solicitation. Under the RFP format, prospective bidders had limited
information on contract scope and very little opportunity for questions and discussion on the services
to be provided. Office of Health Services staff indicated that the prior vendors selected by the
Department through the RFP process attributed their difficulties in providing services at the prices they
bid to the lack of information available in the procurement process, which led them to underprice their
proposals. The ITN process differs from an RFP procurement in that it specifically allows for sharing of
information with the vendor and answering questions throughout the negotiation process. This
generally results in a better understanding of the client’s requirements on the part of the vendor.
The Department also made a substantial change in scope of work under the ITN approach. The scope
of previous RFPs was for the comprehensive delivery of inmate health services in specific FDC regions.
Through several rounds of RFPs this approach attracted a relatively small group of the same
companies. None of the companies selected had performed at a level considered satisfactory by the
Department. In a new approach under the ITN model, the Department defined scope by discipline,
issuing four ITNs for statewide medical services, statewide mental health services, statewide dental
services, and operation and administration of the Department’s inpatient hospital at RMC. By dividing
the scope of health care delivery in this manner the Department hoped to increase competition and
attract new vendors. The ITNs also specified provisions to increase accountability and oversight of
vendor performance.
As the Department entered into the ITN solicitation, Corizon provided notice that it was terminating
their contract for health care services in Regions 1, 2, and 3 effective May 2016. In response to FDC
concerns regarding staffing levels and vendor performance, Corizon indicated that the terms of its
contract were too constraining to address the Department’s concerns. This action forced the
Department to seek an emergency procurement to replace Corizon. The procurement resulted in the
selection of Centurion of Florida, LLC to provide services in the regions formerly under contract with
Corizon. However, because of the risk in assuming this contract, Centurion required the Department
to change the contract model to a “cost plus” approach. In this model, the vendor is reimbursed for
all expenses related to the provision of required services and paid a management fee in addition to
these costs. The cost plus approach effectively eliminates vendor financial risk. This initial contract with
Centurion established the management fee at 13.5 percent of service costs.
As the FDC initiated the ITN process, CMA inspections in 2017 documented serious performance
issues at the South Florida Reception Center, leading the Department to terminate Wexford’s contract
for Region 4. Due to the emergency nature of the circumstances, the Department added Region 4 to
18

the Centurion contract, resulting in the vendor assuming complete statewide responsibility for medical
and mental health service delivery up through the original terms of the Corizon and Wexford
contracts. This was an emergency action to assure continued service while the Department continued
its attempt to procure new vendors through the ITN process.
The ITN solicitations attracted limited vendor responses.






Medical Services ITN - produced two bidders, one of which (Wexford) dropped out of the
process, leaving the Department with one vendor, Centurion, to negotiate a contract. The
Department reissued the ITN to attract more responders, but again received only one proposal
from Centurion.
RMC Hospital ITN - resulted in one bidder, Centurion.
Mental Health ITN - resulted in two bidders, Centurion and Correct Care Solutions.
Dental Services ITN - attracted two responses from Centurion and Smallwood Prison Dental
Services.

Based on the results of the ITNs, in 2018 the Department negotiated a one-year contract with
Centurion in the amount of $375 million to provide statewide inmate health care services. The
contract has since been amended to extend the term to three years through FY 2021-22.

Current Service Model
As described above, the FDC currently contracts with Centurion to provide inmate health care services
at all FDC-operated facilities. Centurion supply the staff who provide treatment at the facilities,
coordinates the care of inmates who must receive specialist or hospital services outside the facility,
and manages the overall system of care through a system of regional administration, quality
assurance, and utilization management.
The current system, however, is not completely outsourced. The Department retains management of
the pharmacy system which provides medications to state inmates. Previous efforts to privatize this
function failed to demonstrate cost savings, and in fact would have increased the cost of medications
to the FDC. The Department’s low costs for pharmacy service is primarily due to price discounts it
receives for medications purchased through the Minnesota Multi-State Contracting Alliance for
Pharmacy (MMCAP), a purchasing organization for government institutions that negotiates reduced
pharmaceutical prices for member organizations. Other state correctional systems that participate in
MMCAP include North and South Carolina. The Department also receives substantial discounts on
medication for HIV/AIDS and sexually transmitted disease through interagency agreements with the
Florida Department of Health and five local health departments for treatment of offenders with these
conditions. Accordingly, the current service model is more accurately described as a hybrid,
combining out-sourced vendor management and delivery of health care services with an in-sourced
pharmacy program.
The contract is structured in a “cost plus” model. The vendor receives compensation in two
components: 1) reimbursements for all approved health care expenditures; and 2) a percentage of
19

actual expenses to cover administrative expenses and profit. In effect, the contract passes through the
cost of incurred health care expenses to the vendor, which receives a fee for administering the
program. The administrative fee in the current contract is 11.5 percent of incurred expenses. The
contract contains an overall annual cap on compensation paid out under the contract. The current
contract compensation cap is $421 million for the current fiscal year and each of the next two fiscal
years. Finally, as part of the services to be provided under the three-year contract term, the vendor will
provide the FDC with an Electronic Medical Records system (EMR). This system will modernize FDC
management of inmate health care information, enabling substantial efficiencies in patient care
management and providing advanced metrics on health care work processes and management. The
Centurion contract expires June 30, 2022.
The contract is “outcome-based” in that the vendor is held accountable through its level of
achievement on a series of performance measures detailed in the contract. The contractor reports on
their compliance with these performance measures quarterly. The level of compliance with
performance measure requirements determines whether any financial penalties may be assessed
against the vendor. While the vendor is reimbursed for actual expenses incurred, it may be subject to
financial penalties if mandated outcomes are not achieved. The contract contains 70 performance
measures and 135 pages of program standards covering every element of service and calls for an
overall compliance rate of 80 percent for each standard as applicable, consistent with CMA
standards. Each performance measure contains a specific financial consequence for non-compliance.
Contract monitoring reports provide the basis for imposing these penalties.
Exhibit 8: Centurion Contract Performance Metrics
Measure
No.

Description

PM-007 From the time an inmate
submits a sick call request
form until the request form
is triaged by an RN and
determined to be either
emergent, urgent or
routine, shall be no longer
than 24 hours.
PM-008

From the time the
request is triaged, sick
call requests
categorized as emergent
should be seen by a
Licensed Nurse as soon
as possible, not to
exceed 60 minutes.

Expectation

Measurement
Duration

Financial Consequence

80% compliance,
per institution

Quarterly

For performance below 80%,
consequences will be assessed
as follows: 70%-79.99%:
$2,000 per institution; 60%69.99%: $4,000 per
institution; Less than 60%:
$6,000 per institution

80%
compliance per
institution

Quarterly

For performance below
80%, consequences will be
assessed as follows: 70%79.99%: $3,000 per
institution; 60%-69.99%:
$6,000 per institution; Less
than 60%: $9,000 per
institution

20

Measure
No.
PM-009

Description

From the time the
request is triaged, sick
call requests
categorized as urgent
should be seen by a
Licensed Nurse within
24 hours.

Expectation

Measurement
Duration

Financial Consequence

80%
compliance per
institution

Quarterly

For performance below
80%, consequences will be
assessed as follows: 70%79.99%: $2,000 per
institution; 60%-69.99%:
$4,000 per institution; Less
than 60%: $6,000 per
institution

Source: FDC Contract C2930, Amendment 2.

The FDC and the vendor jointly determine the staffing required to satisfy these performance measures,
although this staffing pattern is not a part of the contract and vendor compliance is not monitored.
Centurion’s current staffing plan has 3,127.9 FTEs, assigned to the following disciplines:
Exhibit 9: Health Care Contract Staff by Discipline

Medical
Mental Health
Dental
Administration
Total

July 2019 Contract Staffing Plan
1,531.3
887.5
228.2
480.9
3,127.9

Percent of Total Staffing
49.0%
28.3%
7.3%
15.4%
100%

Source: Florida Department of Corrections, Office of Health Services

Staffing levels, however, are not a part of the contract. While maintenance of adequate staffing levels
is implicit in the required achievement of the contract performance measures, the contract does not
specify staffing requirements or hold the vendor accountable for maintenance of program staffing
levels. Provided they do not exceed the overall contract spending cap, the vendor is free to add staff if
necessary, to reach standards, or conversely not fill positions without consequence, if they are able to
meet the performance standards with lower staffing levels.

Office of Health Services
The FDC Office of Health Services administers the system’s health care program. Responsibilities
include development of policies, review of grievance appeals, budget management, contract
management, and operation of the state pharmacy program. The OHS has 175 authorized positions
assigned to Administration, Medical, Mental Health, Dental, Nursing, and Pharmacy offices.
Contract monitoring is a key OHS responsibility. The OHS has 18 monitors who perform contract
monitoring. There are three teams each consisting of an administrator leader, two nurses, one mental
health monitor, and one data analyst. On a state-wide basis there is one pharmacist and two dental

21

monitors. In addition, two teams of mental health professionals conduct risk management
assessments to identify potential issues and provide solutions in mental health program delivery.
Monitoring visits can be scheduled or unscheduled, announced or unannounced. The monitors use
several methodologies in monitoring contract performance including:






Desk review of any records or documents related to service delivery; this can be a random or
statistical sampling
On-site review on any records
Interviews
Reviews of grievances
Review of monitoring, audits, investigations, evaluations or other reviews of external agencies
(CMA, DOH, ACA)

OHS audit teams conduct facility reviews in the first and third quarters of each fiscal year, with each
facility self-reporting audit results in the second and fourth quarters. The Department changed its audit
instrument in 2019. Where previously there were 262 performance measures, the new audit system
contains 70 performance measures, consistent with contract requirements. These measures are
similar in nature to prior measures albeit reduced in number. The FDC reduced the number of
measures to facilitate more efficient monitoring of the contract.
These measures are Yes/No type compliance questions. The measures contain an outcome and an
expected compliance rate for each measure. Ten to 20 records are reviewed based on a random
sampling. Examples of monitoring metrics include:


Within 10 calendar days of arrival at a reception center, an inmate received on medication
from county jail will be evaluated by psychiatry.



A baseline Mammography study will be performed for female inmates at 50 years of age, and
every two (2) years thereafter until the age of 74.



Acute illness patients were assessed by a nurse every eight (8) hours, including vital signs, and
documented the evaluation on form DC4-684, Infirmary/Hospital Daily Nursing Evaluation.

22

3.

HEALTH CARE COSTS

This chapter describes the cost of correctional health care in Florida, including the different elements
of health care spending, trends, and key drivers of current and future costs. We also look at how
Florida costs for health care compare nationally.

Spending on Inmate Health Care
The FDC appropriation for inmate health care services in FY 2019-20 totals $566.9 million.
Appropriations for health care make up 21 percent of the FDC budget, ranking second behind
correctional staffing in magnitude of spending. Assuming a stable inmate population through the
current fiscal year, this will roughly equate to a cost of $17.84 per day per inmate, or $6,511
annually. Exhibit 10 summarizes the FY 2019-20 budget for inmate health care.
Exhibit 10: FDC FY 2019-20 Inmate Health Care Appropriations
Office of Health Services

Centurion Contract
Pharmaceuticals
OHS Employee Salaries & Benefits
Contracts
Other
TOTAL

FY 2019-20 All Funds
Appropriations
($ 000)
421,000.0
128,222.9
9,721.6
4,367.2
3,554.9
566,866.7

Source: Florida Department of Corrections

The state’s contract with Centurion for statewide facility health care services makes up 74 percent of
health care spending. FDC expenditures for infectious disease, psychotropic, and general medications
make up another 23 percent of the budget. The cost of state employees to administer the system and
manage the pharmacy program is roughly 2 percent of the budget.

23

Exhibit 11: Inmate Health Services Expenditures Components
FDC staff Other
1%
2%
Pharmaceuticals
23%

Centurion contract
74%
Source: Florida Department of Corrections

In FY 2018-19 Centurion expenditures under the contract for inmate health care totaled $355
million. Approximately 61 percent of expenditures were for health care staff in FDC facilities. Off-site
care by hospitals and specialist clinicians made up 30 percent of vendor spending, with supplies and
other expenses accounting for less than 10 percent of expenses.
Exhibit 12: FY 2018-19 Centurion Health Care Expenditures
Risk Management
Other
1%
2%

Supplies
6%

Off-Site Care
30%

Staff
61%

Source: Florida Department of Corrections
24

Comparison with Other States
A comparison of Florida’s spending with the most recent data available for other state correctional
systems shows FDC expenditures per inmate for health care in the bottom quartile of states with the
lowest spending levels. A comprehensive review of 2015 correctional system spending in 49 states23
by the Pew Charitable Trusts documented that annual spending on correctional health care ranged
from a high of $15,827 in California to a low of $2,173 in Louisiana.24
Exhibit 13: State Spending Per Inmate on Correctional Health Care in 2015

$18,000
$16,000
$14,000
$12,000
$10,000
$8,000

Median $5,783

$6,000
$4,000
$2,000
$0

CA NM MA OR MI MT ME AK NY RI CO KS WI SD HI OH UT AR FL MS OK GA SC NV LA

Source: Pew Charitable Trusts, Prison Health Care: Costs and Quality, 2017

Although California is an outlier, most of the states with relatively high spending levels are very small,
and their higher costs may reflect a lack of resources or economies of scale. Spending levels for the
ten largest correctional systems showed Florida ranked seventh. However, the degree of difference in
spending level among the six systems with the lowest average spending level was small. The data
shows Florida to have a somewhat lower spending level that is however still comparable to most large
state correctional systems, as shown in Exhibit 14.
Pew Charitable Trusts conducted a national survey of state correctional systems. All states except New
Hampshire responded to the survey.
24 Pew Charitable Trusts, Prison Health Care: Costs and Quality, October 2017,
https://www.pewtrusts.org/en/research-and-analysis/reports/2017/10/prison-health-care-costs-and-quality.
23

25

Exhibit 14: 2015 Correctional Health Care Spending – Ten Largest State Prison Systems
$18,000
$15,827

$16,000
$14,000
$12,000
$10,000

$8,287
$8,000

$7,047

$6,000

$5,023

$4,548

$4,077

$4,050

$4,000

$3,619

$3,610

$3,529

$2,000

na
izo
Ar

ia
rg
eo
G

Illi
no
is

id
a
Fl
or

s
xa
Te

ia
sy
lva
n

Pe

nn

hi
o
O

rk
Yo
N

ew

ig
ich
M

C

al

ifo

rn

an

ia

$-

Source: Pew Charitable Trusts, Prison Health Care: Costs and Quality, 2017

Cost Trends
More recent trends show the level of FDC spending on inmate health care accelerating since 2016.
As shown in Exhibit 15, the amount of funding allocated to inmate health care dropped by 9 percent
in the period from FY 2008-09 through FY 2014-15 but has since steadily escalated. The FY 201920 budget represents a 54 percent increase over FY 2015-16 spending.

26

Exhibit 15: Inmate Health Services Spending FY 2008-09 to FY 2018-19
$600.0
$497.4
$500.0
$400.0

$460.6
$410.8
$400.6 $414.7 $409.2 $386.1
$374.6 $384.1 $366.1 $367.8

$300.0
$200.0
$100.0
$FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Source: Florida Department of Corrections

Examining per diem spending levels factors in the impact of changes in the average daily inmate
population on total health care expenditures. This is a significant factor in evaluating cost trends as
the actual average daily inmate population in the Florida correctional system has declined by 6.7
percent since FY 2008-09 from an average daily population of 93,270 in state-operated facilities in
FY 2008-09 to 87,032 in FY 2018-19. The per diem cost trend, shows a steady decline through FY
2014-15, followed by significant increases.
Exhibit 16: Inmate Health Services Per Diem Costs FY 2008-09 to FY 2018-19
$20.00

$17.84

$18.00
$16.00
$14.00
$12.00

$14.13
$12.04 $12.07 $11.79
$11.41 $11.87
$10.96 $10.62 $11.04

$12.41

$10.00
$8.00
$6.00
$4.00
$2.00
$-

2
FY

0
1
2
3
4
5
6
7
8
9
09
9-1
0-1
1-1
2-1
3-1
4-1
5-1
6-1
7-1
8-1
200
201
201
201
201
201
201
201
201
201
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
F
F
F
F
F
F
F
F
F
F

008

Source: Florida Department of Corrections
27

The proportion of the FDC budget allocated to inmate health care reflects the increase in reported
spending in the last four years. Following several years of decline, by FY 2015-16 the Department was
spending 16 percent of its budget on inmate health care. The proportion of the budget allocated to
health care has grown more recently in parallel with recent increases in spending.
Exhibit 17: Inmate Health Services as a % of FDC Spending
25.0%
21.0%
20.0%
17.3%

17.4%

17.4%

18.1%

18.2%

17.6%

17.6%
16.2%

18.4%

19.3%

16.0%

15.0%

10.0%

5.0%

0.0%
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Source: Florida Department of Corrections

The two most notable factors from this review of spending trends are the significant decline in health
care spending from FY 2008-09 to FY 2015-16, followed by the rapid growth in spending that has
occurred since that time. This pattern does not follow the overall trend for health care costs in Florida.
Annual spending for health care per inmate in the FDC dropped by 12 percent from FY 2008-09 to
FY 2014-15. By contrast, according to the Centers for Medicare and Medicaid (CMS), the average
cost for personal health care in the state increased by 13 percent over the same period.25 In 2010,
annual per inmate spending on health care was approximately 60 percent of the average level of
spending on personal health care. By 2014, inmate health care spending had dropped to 48 percent
of the level of personal spending on health care.

Centers for Medicare and Medicaid Services, Health Expenditures by State of Residence, 2017,
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-andReports/NationalHealthExpendData/NationalHealthAccountsStateHealthAccountsResidence.html.
25

28

Exhibit 18: Annual Community and Inmate Per Diem Spending for Health Care, Florida 2010-2014
$9,000
$8,076.0
$8,000
$7,301.0

$7,408.0

$4,394.6

$4,405.6

$7,635.0

$7,688.0

$7,000

$6,000

$5,000
$4,303.4
$4,000.4
$4,000

$3,876.3

$3,000
2010

2011

2012

Community Spending per Individual

2013

2014

Spending per Inmate

Source: Centers for Medicare and Medicaid; Florida Department of Corrections

The primary factor driving this reduction in per inmate spending appears to be the privatization of
inmate health care and subsequent decline in the quantity and quality of care provided during this
period. The health care contracts with Wexford and Corizon in total reduced the cost of services by
11.2 and 12.9 percent respectively from the Department’s FY 2011-12 and FY 2010-11
expenditures. Implementation of these contracts resulted in reductions in staffing, dramatic decreases
in episodes of outside care, and increases in the number of grievances submitted by inmates about
the poor quality of health care service. CMA inspections noted extensive system-wide areas of
concern with the level of medical and mental health care provided.26 Both vendors later claimed they
were not provided enough information to accurately project costs, which resulted in the service issues
that developed. Both vendors were unable to provide the level of service required by the Department
and did not complete the terms of their contracts.

Correctional Medical Authority, Annual Report and Update on the Status of Elderly Offenders in Florida’s
Prisons, 2014-15, 2015-16,
https://fleog.sharepoint.com/sites/CMA/Documents/Forms/AllItems.aspx?originalPath=aHR0cHM6Ly9mbGVvZ
y5zaGFyZXBvaW50LmNvbS86Zjovcy9DTUEvRWdpbjdpWDNUTHhHanR5ekU2bzVCNEFCRElBbGVpVTI2VjBZcT
dPMDlsNW5qdz9ydGltZT1LSy1SNTZ0YjEwZw&id=%2Fsites%2FCMA%2FDocuments%2FCMA%2FAnnual%20R
eports%2FCorrectional%20Medical%20Authority%20%2D%202015%2D2016%20Annual%20Report%2Epdf&p
arent=%2Fsites%2FCMA%2FDocuments%2FCMA%2FAnnual%20Reports.
26

29

Cost Drivers
After declining in the period FY 2010-11 through FY 2014-15, inmate health care costs increased by
36 percent over the next four years, an annual average increase of 9 percent. Several factors appear
to be driving this trend, including a misalignment between contract funding and service requirements,
litigation, the increasing number of geriatric inmates, and increased pharmaceutical spending.
Misalignment between Contract Funding Amounts and Service Requirements. As described above, the
Corizon and Wexford contracts reduced state funding for inmate health care. However, this lower
funding level did not support a minimally adequate level of service. Accordingly, the reduced levels of
spending achieved under these contracts are not an appropriate basis for comparison for
contemporary budgets. Increases in funding from the levels required by these contracts need to be
viewed in the context of restoring resources to get back to acceptable program performance levels.
Spending on inmate health care by the FDC in FY 2017-18 totaled $460.6 million. Although this
represents a substantial $93 million increase from FY 2015-16, using a longer timeframe produces a
different conclusion. As shown in Exhibit 15, the FY 2017-18 spending level is only $46 million more
than the Department experienced in FY 2009-10. This represents annual growth of 1.3 percent over
the eight year period compared with an annual increase in the cost of medical care nationally of 3.6
percent from July 2009 through June 2018.27
Much of the apparent increase in spending for inmate health care is attributable to an artificially low
baseline spending level experienced by the Department after privatization. Costs went down to levels
that could not sustain an adequate level of service. Subsequent increases in spending largely represent
a return to levels necessary to support required service levels. Using a longer historical period to
evaluate spending levels shows that recent growth in spending levels since FY 2015-16 represents a
moderate overall rate of growth in the context of Department spending on health care prior to the
privatization initiative of 2013. Further, misalignment between service needs and services provided by
the vendors led to a backlog of medical/mental health issues, contributing to subsequent litigation
and increased health care spending.
Litigation. Consent decrees and judgements from ongoing litigation on the adequacy of health care
services have escalated Department resource needs. The following exhibit summarizes litigationrelated increases in the Department’s FY 2019-20 budget from the most significant cases that the
Department has settled.

U.S. Bureau of Labor Statistics, Chained Consumer Price Index for Medical Care, All Urban Consumers,
1999-2019.
27

30

Exhibit 19: Impact of Litigation on FY 2019-20 Inmate Health Care Budget
Case
Disability Rights Florida, Inc. v.
Jones; Year 2 implementation of
Inpatient Mental Health consent
decree

Disability Rights Florida, Inc. v.
Jones; Copeland et al v. Jones;
Keohane v. Jones; additional
staffing

Description

Funding Increase
($ millions)

308 staff phased in through the year, including
Psychiatric staff, Nursing, Psychologists, Mental
Health Professionals, Behavioral Health
Technicians and clerical support for expansion of
the Suwanee inpatient mental health units.

$16.6

139 staff needed to comply with litigation related
to hernia treatment (2 FTEs), gender dysphoria
treatment (3 FTEs), the treatment of inmates with
disabilities (40 FTEs), as well as additional mental
health positions (94 FTEs) included outpatient and
inpatient services.

$13.4

In addition, this funds market rates adjustments
needed to fill certain positions, such as
psychiatrists and psychologists.

Hoffer et al v. Jones; Hepatitis C
treatment

16 FTEs to provide labs and other medical tests
such as Genotyping, Liver Ultrasounds, and
Endoscopies. Up to 45,000 screenings and
subsequent follow up tests for those testing
positive. This does not include the cost of
medication.

$8.7

Source: Florida Department of Corrections

Increasing Number of Geriatric Inmates. The number of inmates over the age of 50 has increased
from 14,486 on June 30, 2009 to 25,732 on June 30, 2019, an increase of 78 percent over the ten
years. As in the community, geriatric patients are disproportionate users of health care. As shown
below, despite composing 27 percent of the total inmate population, elderly inmates make up most
hospital admissions, inpatient days, outpatient events, and prescriptions dispensed. Department data
indicate that when admitted to a hospital, geriatric inmates have a 22 percent longer length of stay
than inmates under the age of 50.

31

Exhibit 20: Department of Corrections FY 2018-19 Health Care Utilization
50 Years & Older
Number
Total Population

% of Total

Under 50 Years
Number

% of Total

25,732

26.9%

69,770

74.1%

1,496

53.7%

1,290

46.3%

Inpatient Days

10,084

63.7%

5,736

36.3%

Outpatient Events

18,319

57.8%

13,370

42.2%

746,931

57.3%

573,917

42.7%

DOH Prescriptions Dispensed*

18,937

52.3%

17,241

47.7%

Cardiovascular Clinic Contacts

15,163

55.0%

12,360

45.0%

5,290

58.5%

3,751

41.5%

Hospital Admissions

FDC Prescription Dispensed

Endocrine Clinic Contacts

*DOH dispense prescriptions for HIV/AIDS and STDs under the 340b program
Source: Florida Department of Corrections

Nearly every prison system in the United States faces this same issue of increasing health care costs
driven by the growth in the geriatric inmate population. As described earlier, the size of this population
in Florida appears larger and growing at a faster rate than that of other large state correctional
systems. This trend will continue to place strong upward pressure on inmate health care spending.
Drug Costs. Another significant cost driver is the increasing cost of prescription medications. The FY
2019-20 budget contains a $34.6 million increase for Hepatitis C medications, bringing total
Department spending for these drugs to $48.4 million in the upcoming fiscal year. Price increases for
other medications account for a $13.9 million increase in the budget. Higher drug costs are a
significant growth factor in other state correctional systems as well. For example, increased spending
on medications accounted for 33 percent of the growth in spending by the Virginia Department of
Corrections from FY12-FY17.28

Joint Legislative Audit and Review Commission, Commonwealth of Virginia, Spending on Inmate Health Care,
2018.
32
28

4.

Alternative Service Delivery Models

This chapter examines alternative models for delivering correctional health care and their relative
utility for the FDC. Models reviewed include insourcing inmate health services, insourcing of
outpatient health services provided and outsourcing inpatient services, continuation of the current
model of full outsourcing with modified contract terms imposing appropriate cost controls, and
management by a third-party public health institution or agency.

Insourcing
An insourced approach to inmate health care management retains management and staffing of the
health care services program internally in a state correctional agency and provides as much treatment
as possible within the secure facilities of the correctional system. However, not all health care can be
provided within a prison. An inmate in need of treatment by a specialist not on staff at the prison will
require off-site care with a physician contracted to provide that care, or a contracted specialist to
come on site. Similarly, diagnostic procedures that require equipment not maintained in a prison
health care unit such as an MRI, will require outpatient care outside the correctional system. Finally,
advanced procedures such as heart surgery must be provided in community hospitals that can safely
support such treatment. As a result, a completely insourced inmate health care system is not feasible,
and in fact virtually all correctional systems since the 1970’s have relied on some level of contracting
to provide required inmate health care.29 Accordingly, for the purposes of this analysis, an
“insourced” model refers to an approach that maximizes the use of government management and
staff in the delivery of services, but still retains the use of contracts for specific services and treatment.
The degree to which a correctional system may rely on insourcing depends upon available resources.
Systems that maintain prison hospitals or ambulatory surgical facilities, such as the Federal Bureau of
Prisons, Texas Department of Criminal Justice, and California Department of Corrections and
Rehabilitation have the capability to provide more services in-house. Florida falls in this category as
well. The availability of internal resources reduces the need to take inmates out into the community for
health care, diminishing a significant burden on custody staff.
Today, 18 state correctional systems use a primarily insourced model for health care delivery.
Exhibit 21: States with Insourced Delivery Systems
Alaska
California
Connecticut
Hawaii
Iowa
Nebraska

North Carolina
North Dakota
Nevada
New York
Ohio
Oklahoma

Oregon
South Carolina
South Dakota
Utah
Washington
Wisconsin

Source: Pew Charitable Trusts

29

Pew Charitable Trusts

33

Insourcing is used by large correctional systems (California, New York, Ohio) as well as systems with
very small inmate populations (Alaska, Hawaii, North Dakota), in every part of the United States.
While these systems do contract for inpatient and outpatient care in the community, services in
correctional facilities are primarily provided by state employees. The typical exception is for advanced
mental health treatment. In almost all cases, psychiatric services are provided by independent
contractors, as state personnel systems do not accommodate hiring specialized professionals in high
demand.
An insourced system requires substantial internal expertise in correctional health care management
and service delivery. Maintaining effective performance in an insourced system requires that a
correctional system establish professional care protocols, retain a staff complement with adequate
capacity and expertise, and design rigorous systems for monitoring cost and quality of services
provided. If these requirements are met, insourcing can meet required standards for correctional
health care and provide the following benefits:


Stability. Use of government employees as service providers and managers provides greater
assurance of continuity and consistency in staffing and service approach. The benefit package,
particularly for retirement, for a state employee is typically superior to the benefits offered by
private companies and acts as an incentive for long-term careers as a correctional system
employee. Administrators in insourced systems such as California, Alaska, and Washington
report relatively low turnover rates for facility health care staff. A recent report from Arizona
indicates health care workers may prefer employment with a state agency, as opposed to a
vendor.30
Insourcing also avoids the disruptive transitions in management and employment status that
can occur in the change from a government-run health care program to one managed by a
private contractor, or in the transition from one vendor to another. In Florida, prior to each
privatization initiative, the Department suffered a significant loss of experienced health care
staff due to uncertainty regarding their employment status and future compensation level
under a vendor. During each subsequent change in vendors, facility health care staff had to
transition to a new employer and in most cases lost benefits they had accrued with their prior
employer. Moreover, such transitions are highly complex events that place added strain on
assuring continuity of adequate care. An insourced system avoids these issues.



30

Accountability. The lines of accountability for assuring adequate health care delivery are quite
clear in an insourced system, running directly from state employee facility staff and managers
up through central office administrators. Contracting, however, transfers operational control to
vendors, even while the state retains ultimate liability and responsibility for providing services.
This adds a layer of complexity to system management. Similarly, lines of communication and

Marc Stern, Federal Rule 706 Expert, Case 2:12-cv-00601, Report to the Court in the Matter of Parsons v.

Ryan, et al., October 2, 2019.

34

direction are straightforward in a government-run system. Coordination with custody staff is
simpler when both health care staff and correctional officers are in the same command
structure. Moreover, vendor staff are not directly accountable to state administrators, which
can hamper responsiveness.
Problems inherent with insourcing relate to the relative lack of flexibility of government organizations
compared to the private sector regarding personnel management. If, for example, a facility
experiences chronic high staff vacancy levels, a private vendor generally has the discretion to quickly
adjust salary levels or offer signing bonuses to adjust to market conditions. Private vendors generally
have more sophisticated staff recruitment systems and a wider range of incentives in attracting
employees. Staff with specific skillsets for critical functions such as utilization review and quality
assurance may not be readily available within government. Vendors also may quickly redeploy staff as
needed to meet operational needs. Finally, private vendors have much greater discretion in
terminating staff that do not meet performance standards. State agency deficiencies in hiring and
deploying staff to meet correctional system needs is one of the most often cited arguments for
privatization.31
Another issue with insourcing is that while state agencies may have some expertise in managing facility
health care staff and programs, the degree of difficulty associated with effective management of all
the various facets of health care delivery is substantial. Few correctional systems have the level of inhouse administrative resources and experience required to coordinate outside care and manage
multiple contracts with outside providers. Specialized functions such as utilization management and
invoice review are far outside the core competency of most state correctional agencies and add a
layer of complexity that many systems may have difficulty in managing.

Outsourcing
An outsourced service model relies on a contracted vendor to manage and provide inmate health
care services for the state correctional system. In its purest form, the state turns over all aspects of
health care service delivery to the vendor.
Until the late 1970s, every state provided prison health care directly in an insourced delivery model.
However, widespread litigation following Estelle v. Gamble produced judgements that required many
states to immediately address significant deficiencies in correctional health care, often requiring that
additional clinicians and nurses be hired as soon as possible. Private companies were formed to meet
this need. In Illinois for example, in order to meet the need to hire additional staff required under the
Lightfoot v. Walker consent decree, Illinois Department of Corrections administrators actively solicited
a physician’s group to help them meet their needs. The company formed by these physicians
ultimately became Correctional Medical Services, one of the first companies to specialize in
correctional health care, and one of the founders of Corizon Health.

31

Pew Charitable Trusts.

35

These early companies soon moved beyond simply providing staffing to provide comprehensive
services on a managed care model to both prison systems and jails throughout the United States.
Today, 20 states provide most of their inmate health care services using an outsourcing model.
Exhibit 22: States with Outsourced Delivery Systems32
Alabama
Arizona
Arkansas
Delaware
Florida
Idaho
Illinois
Indiana

Kansas
Kentucky
Massachusetts
Maryland
Maine
Missouri
Mississippi
New Mexico

Tennessee
Vermont
West Virginia
Wyoming

Source: Pew Charitable Trusts.

The approach to service delivery in these states differs in terms of the range of services provided, the
extent to which they provide system management in addition to clinical services, and whether one or
multiple vendors provide services throughout the system. For example, Maryland contracts with
separate private companies to provide different services: medical, dental, behavioral health, and
pharmaceutical. Illinois has contracted with different vendors to provide comprehensive services to
different regions of the state. Massachusetts requires vendors to use a state-managed hospital and
pharmacy procurement system. Florida purchases medications and provides pharmacy services with
state employees.
There are many specific approaches to outsourcing. The basic distinction lies in how to manage risk,
both in terms of service quality and cost. Most outsourced contracts follow either a capitated or costplus approach.
Capitated Contracts. The most common approach to outsourcing is the use of a capitated contract.
In this model, the state and the vendor agree to a fixed per-person payment rate for all individuals
under their care. This vests all risk with the vendor. The intent of the model is to leverage vendor
expertise to provide required services at a lower, stable cost.
The fixed per-person rate covers direct care at the facility as well as any specialty or off-site services
that may be required. The vendor is responsible for providing contracted services for the number of
inmates covered at the agreed rate, regardless of the actual cost. The capitated rate must cover all
regular projected costs, a risk premium to cover potential additional liabilities, and a fee to cover
administrative costs and profit. If the vendor can reduce costs, it can directly increase profits. If,
however, the rate does not account for projected expenses and risks, or if the number of persons
covered under the contract falls, the vendor stands to lose money. The state, for its part receives a
predictable, stable price for inmate health care.

32

Pew Charitable Trusts.

36

A capitated approach requires that the vendor be able to accurately assess the health status of the
inmate population, their need for service, and risk factors that may drive up costs. Absent this
information, the vendor in a competitive procurement may underbid the contract. The long-term
consequences of underbidding are typically either unanticipated requests for additional contract
funding, reduced services, or termination of the contract. Outsourcing initiatives in Florida using a
capitated model have encountered all these issues.
Cost-Plus Contracts. In this approach the vendor manages health care services but passes through all
costs of these services to the state, plus an additional charge for administration and profit. The state
assumes all financial risk, while at the same time ceding management control over the program to the
vendor. Florida, Pennsylvania, Montana, and Vermont report using the cost-plus model.33
This model is often used in systems that either lack data to provide projections of future costs or which
have high perceived risks for unforeseen costs. Where the capitated model encourages an aggressive
approach to managed care, the cost-plus is more akin to a “fee-for-service” model. The vendor
simply manages the health care program and passes along the cost to the state. The primary
advantage to the state is the transparency provided in that it reviews and approves all expenses. The
contract can also more explicitly focus on service quality and performance as primary objectives. The
disadvantage is that it provides little incentive for the vendor to control costs.
In either outsourcing approach, the primary challenge for the state is monitoring the contract to
ensure compliance with performance requirements and other contract provisions. In effect outsourcing
changes the focus from managing health care operations and services, to managing the contract and
vendor performance.
Outsourcing Benefits and Challenges. Both approaches to outsourcing can provide benefits to clients,
as well as certain issues. Commonly described benefits of outsourcing include:

33



Professional Expertise. For systems that lack internal resources or professional staff,
outsourcing provides a means to leverage the professional expertise of a vendor that
specializes in correctional health care. Health care is not a core competency of many
correctional systems, particularly in areas such as utilization review, quality assurance, network
management, and electronic medical records systems. Contracting for health care services
provides a relatively straightforward strategy to import these skills, improving performance and
allowing correctional administrators to focus on other issues.



Economies of Scale. Outsourcing can allow small correctional systems to access the
economies of scale and more flexible procurement systems used by large, national companies
in purchasing pharmaceuticals and supplies. This however is not a significant benefit for larger
systems.

Pew Charitable Trusts.
37



Staffing. As described in the section on insourcing, private companies often have much more
flexibility in setting salary and benefit levels to reflect market conditions in specific areas, and
so can more effectively recruit and hire health care staff. This is particularly true in specialized
areas such as mental health treatment. To the extent that civil service systems slow hiring or do
not offer competitive salary levels, outsourcing provides a potential means to better keep
service provider positions filled.



Cost Savings. At least in the case of capitated contracts, outsourcing provides strong
incentives for vendors to reduce costs in order to assure profits. The competitive bidding
environment for an outsourcing procurement also tends to promote efficiency and attention to
cost savings strategies.

Challenges associated with outsourcing generally revolve around managing performance goals in
context with the imperative to control costs. With the capitated model, the vendor will always have the
incentive to reduce costs to increase profits. To the extent that cost reduction is achieved through
reduced services rather than increased efficiency, the model does not support overall correctional
system goals. The disconnect between the vendor responsible for providing care and the state which is
legally accountable if care is not adequate can lead to system dysfunction and contract failure. State
systems that have experienced serious service issues with outsourced services under capitated
contracts include Arizona, Virginia, Illinois, Idaho, and Florida. These issues include excessive number
of staff vacancies, failure to refer inmates for off-site treatment, and long wait times for on-site
treatment. Strong contract monitoring systems with clear performance metrics are essential to manage
these issues.
The cost-plus approach by contrast presents issues of efficiency. The state pays the vendor to manage
the system without any offsetting incentives to achieve efficiencies in service delivery. The state must
maintain staff to monitor vendor performance against the contract and in addition will typically have
an administrative office to provide overall program direction. The vendor however also has a cadre of
administrative staff to oversee and coordinate service delivery, in some cases duplicating positions
maintained by the state. In a cost-plus contract the state pays for its own administrative staff, covers
the cost of the vendor administrative staff assigned to the contract, and then pays the vendor a fee to
cover overhead and profit.
A recent review of the Arizona Department of Corrections highlighted this issue. “The vendor has
monitors to make sure they comply with the Performance Measures and other requirements of the
contract; the Arizona Department of Corrections has monitors to do the same. The vendor has a
contract manager and statewide medical director; the Arizona Department of Corrections has a
contract overseer and a medical director. The vendor has staff to follow and manage the costs of the
contract; the Arizona Department of Corrections has staff to follow and manage the costs of the

38

contract. The vendor has lawyers to draw up, modify, and deal with issues related to the contract; the
Arizona Department of Corrections has lawyers to do the same.”34

Hybrid Insourcing/Outsourcing
A hybrid service delivery model combines different aspects of both insourcing and outsourcing to meet
system needs. As noted earlier, all insourced correctional systems rely on some use of contracts to
provide community outpatient services, specialist care, and hospitalization. Hybrid systems go beyond
this limited approach to develop more blended systems. Basic hybrid models include outsourcing all
care that takes place outside of a secure correctional facility, privatizing the management of health
care in select facilities while maintaining state management of other facilities, mixing facility vendor
and state staff under the management of state health care administrators, and designating specific
disciplines such as mental health, pharmacy, or dental as either state or vendor managed within the
context of a outsourced or insourced system.
Historically, hybrid models have evolved as systems experimented with outsourcing on a limited basis
to address specific systemic or facility issues. Currently the eight states that use hybrid models which
mix state employee and vendor management of health care include Colorado, Louisiana, Michigan,
Minnesota, Montana, Pennsylvania, Rhode Island, and Virginia.
The variety of different approaches to hybrid insourced/outsourced models and the relatively small
number of states that use this model makes it difficult to draw conclusions as to specific advantages or
disadvantages to the approach. Rather, it appears that each state has attempted to develop a
customized approach to best meet its unique needs. Michigan for example had a specific challenge in
contracting with clinicians and managing off-site care. Their model uses state employee nurses and
dentists, while contracting for doctors, psychiatrists, and off-site care with a capitated approach.
Colorado uses state employees to provide on-site services but outsources all off-site care. Virginia
outsources all health care at select facilities that are difficult to staff or that provide specialized services
such as dialysis, while insourcing health care services in its other facilities.

University Management
A final alternative model for the delivery of inmate health care is contracting system management to a
state medical school or health sciences university. The model is like more conventional outsourcing
but removes the cost of profit and relies on existing university administrative infrastructure to reduce
expenses. Currently Texas, Georgia, and New Jersey contract with state universities to manage inmate
health care. In these cases, the state approached the medical schools for assistance in response to
lawsuits mandating improvement in the delivery of inmate health care services. Connecticut,
Louisiana, and Massachusetts have also recently experimented with forms of this approach, ranging
from full university management of inmate health care services, to providing certain specified services.

34

Stern.

39

Illinois and Virginia maintain more limited contracts for use of state medical school hospitals with
secure inpatient units.
This model offers several advantages to state correctional systems. Affiliation with a recognized
medical school signals a commitment to service quality and provides state correctional health
programs with increased credibility. Medical school partnership also provides much improved access
to qualified clinicians. Recruiting physicians to work for a state medical school is often easier than
recruiting a physician to work for a prison health care company. In New Jersey, the vacancy rate for
correctional facility physicians dropped well below 10 percent following establishment of a contract
with Rutgers University.35 University medical schools also generally have well-developed quality
assurance programs, excellent access to contemporary data on best practices in treatment, and welldeveloped electronic medical records programs. The contracts are generally structured in a cost-plus
model, but absent the private vendor profit margin, thereby reducing cost. Finally, affiliation with a
university can facilitate access to 340b discount pricing on pharmaceuticals. As described earlier the
340b program provides outpatient drugs to covered entities at significantly reduced prices.
For universities, the primary benefit of such a relationship is the delivery of treatment to a historically
underserved population, inmates. The fact that nearly all inmates eventually reenter the community
also makes treatment of chronic and infectious diseases in prison a significant component of a
comprehensive approach to public health promotion. Also, the inmate population, with its high
incidence of pathology provides a medical school with unique professional training opportunities.

R. Reeves, A. Brewer, L. DeBillo, C. Kossof, and J. Dickert, “Benefits of a Department of Corrections
Partnership with a Health Sciences University: New Jersey’s Experience,” Journal of Correctional Health Care,
2014. Vol. 20(2),
https://www.researchgate.net/publication/261035318_Benefits_of_a_Department_of_Corrections_Partnership_
With_a_Health_Sciences_University_New_Jersey's_Experience/link/5592c71a08ae1e9cb42978ef/download.
40
35

5.

Alternative Service Delivery Models in the FDC

This chapter assesses the application of each of the service models described in Chapter 4 to the
delivery of inmate health care services in the Florida Department of Corrections (FDC). There is no
consensus in current research on which model is most effective in supporting effective system
performance while containing costs.36 Instead, it appears that each model can work well depending
upon the specific characteristics of the correctional system. This analysis examines the degree to which
each of these alternatives provides an effective approach to managing the issues and needs of the
FDC.

Insourcing
The feasibility of insourcing inmate health care services in the FDC is well established through the
history of the Department. Except for an outsourced contract for Region 4 facilities from 2001-2007,
the FDC managed a largely insourced system until the privatization of the system in 2013. The
effectiveness of insourcing as a future service delivery model for the Department depends upon the
Department’s internal resources to effectively manage and support this approach.
FDC Internal Capacity to Support Insourcing
Requirements for successful management of an insourced correctional health care system include
internal subject matter expertise, readily available data on key system metrics, an effective
management infrastructure, and understanding of program spending and cost drivers.
Subject Matter Expertise. The lack of in-house clinical and management experts in correctional health
care is a primary factor motivating correctional systems to privatize their health care delivery systems.
The FDC does not have this problem. Senior leadership in the Department’s Office of Health Services
(OHS) has extensive correctional health care management experience dating back to the period of
FDC insourcing of health care, and has taken an aggressive, hands-on approach to monitoring
contractor performance. Staff are well-versed in contemporary professional standards and best
practices as prescribed by the National Commission on Correctional Health Care and the American
Correctional Association.
On the clinical side, OHS employs a Chief of Medical Services, a Senior Physician, a Chief and
Assistant Chief of Dental Services, a Chief of Mental Health Services with two Assistant Mental Health
Chiefs, a Chief of Nursing Services, and a Chief of Pharmacy Services. The Department also has a
Chief Clinical Advisor that serves as the final professional authority for clinical decisions.
The Department appears to have ample in-house management and clinical expertise to support an
insourced delivery system.

36

Pew Charitable Trusts.
41

Data. Modern health care systems rely heavily upon ready access to data to facilitate effective patient
treatment and for use of performance analytics to more effectively manage system outcomes. This
requires systemwide use of an Electronic Medical Record (EMR) system. Unfortunately, the FDC relies
on a legacy system of non-integrated databases that do not communicate with each other, are
cumbersome to use and maintain, and that falls far short of contemporary standards. This can impair
treatment (e.g. lack of standardization of the record, issues with continuity of care) and quality reviews.
With an EMR, information required for quality reviews, statistics, and audit data could be easily
gathered. Currently, due to the number of audits (e.g. American Correctional Association (ACA), legal
settlement agreement monitoring) staff spend a great deal of time gathering information to provide to
the auditors. This paperwork burden could potentially be reduced with an EMR. In addition, an EMR
would allow for benefits such as easier scheduling, alerts regarding the need for follow up
appointments, and medication specific protocols so that required laboratory examinations are not
missed. The lack of an EMR would impair the effectiveness of any future insourced system, but also
handicaps the Department in managing vendors in any type of outsourced model.
Under the current Centurion contract, the vendor has committed to developing a comprehensive EMR
for the Department within its contracted annual budget of $421 million for each of the next three
years. This project will commence in June 2020 and should be completed by June 2022. Continued
support and development of this project will be a key to future improvements in system performance
and should be a top Department priority.
Management Infrastructure. The OHS has well-developed systems for oversight, policy
development, and contract monitoring. The 18 staff assigned to contract monitoring could
readily be reassigned to operational oversight and compliance in an insourced system. The
Department’s existing Quality Management (QM) program would also transition well to
insourcing. The QM program supports ongoing reviews performed by institutional and
regional staff to ensure efficient operations by the contractor. Activities include chart reviews of
clinical functions such as chronic illness clinics, care reviews, medication/treatment
administration, dental care, and mental health care; as well as site visits to monitor and assure
proper health care system performance.
The Department also maintains a Behavioral Risk Management Team to provide operational
stabilization and clinical integrity of the mental health delivery system. Multidisciplinary
committees established at the institution, region, and statewide levels make recommendations
for program service improvements, and evaluate corrective actions. It appears that the
Department has ample administrative infrastructure to support management of an insourced
system.
The primary administrative impact of insourcing would be in personnel management. The
Department’s Office of Human Resources would require 12 additional positions to support the hiring
and personnel actions required to add and maintain over 2,000 new staff. This estimate is based on
the increased workload across all areas of Human Resources and Staff Development and the number
42

of positions dedicated to these functions that were abolished after privatization. These staff would be
assigned to recruitment, labor relations, classification, payroll, and staff development. The estimated
annualized cost of these additional staff is $774,371.
Exhibit 23: Additional FDC Human Resource Staff Required for Insourcing
Title

Duties

FTE

Human Resource
Specialist
Personnel Services
Specialist
Personnel Services
Specialist
Personnel Technician
III
Research & Training
Specialists
Human Resource
Manager
TOTAL

Manage position movement, shift changes,
supervisor changes and classification
Labor/Employee Relations

1

Salary/Benefit
Annual Cost
$ 67,086

1

$ 59,546

Recruitment

4

$ 238,186

Payroll

2

$ 114,191

Staff Development

3

$ 205,073

Staff Development

1

$ 90,288

12

$ 774,371

Source: Florida Department of Corrections, Humans Resources Bureau

Insourcing could also potentially affect procurement workload, depending upon the approach taken
by the Department in managing those contracts for off-site care that would still be required in an
insourced model. The Department’s past practice of establishing and managing over 200 individual
contracts for off-site services created substantial internal procurement and management workload. An
alternative approach, centralizing coordination and management of off-site care under a single
contract is discussed later in this analysis.
Budget Management. Lack of information on spending components and inadequate understanding of
cost drivers is a significant risk faced by systems transitioning from an outsourced model to insourcing.
While capitated models provide low risk and predictable funding requirements for clients, they do not
typically offer any detail on their actual costs for the components of service they provide, such as
outpatient treatment, hospitalization, and medication. This deprives correctional systems of detailed
knowledge of the characteristics of their spending requirements.
However, the cost-plus model used in the current Centurion contract provides near total transparency
on costs, as the Department reviews and approves every expenditure made by Centurion under the
contract. This provides excellent data on spending trends and equips the Department with an
understanding of projected costs in an insourced system.

43

Impact of Insourcing Inmate Health Care Performance and Cost
As the Department appears to have the internal capability to manage an insourced health care
program, an argument can be made for insourcing as a superior model of service delivery if it
provides improved performance and/or lower costs in the core functional areas of inmate health care:
on-site facility health care services and treatment, off-site care, and pharmacy services.
Facility Health Care Services. The central element of the inmate health care services provided on-site
is the health care staff who manage the program and provide treatment. As of July 2019, Centurion’s
staffing plan included 2,953.4 FTEs. The key dimensions of an analysis of the FDC’s ability to
transition to insourced inmate health care include staff retention and recruitment, staff resources
requirements, and staffing costs.
Staff Retention/Recruitment. When a correctional health care vendor transition occurs, the employees
of a prior vendor typically remain. If the state chose to insource, it is likely most current staff would
prefer to remain. Anecdotal reports indicate that many current facility health care staff are former
state employees who transitioned to working for vendors with the implementation of privatization. FDC
management indicates that many of the staff would welcome an opportunity to return to state
employment. Facility managers reported that staff have told them they would take a pay cut to return
to state employment. State employment, particularly due to the health insurance and retirement
benefits, appears to be an attractive option for at least some vendor staff. The Reception and Medical
Center (RMC) in fact lost many medical staff when the first outsourcing occurred as state employees
left to find employment in other state agencies.
However, the fact is that the vendor currently pays higher salaries than the state for many staff
positions, and still has trouble competing with local hospitals and community health care providers in
hiring staff. Centurion has particular difficulty in recruiting and retaining nursing and mental health
staff. During our visit to Lowell Correctional Institution, we noted the facility staffing plan called for
four psychiatrists and two psychiatric nurse practitioners. Instead the facility had two full time
psychiatrists working on the inpatient program and one psychiatric nurse practitioner splitting time
between the inpatient and outpatient programs.
The challenge of recruiting and retaining staff will be a significant concern in an insourced service
delivery model. If insourcing appears a viable option, the FDC needs to devote significant attention to
a strategy to address the issue of recruiting and retaining professional staff. Financial pay differentials
and bonuses may be required to sustain required staffing levels. In addition, the FDC would require
development of a sophisticated recruitment strategy that includes nursing schools, social media, and
community job fairs. A major difficulty will be in hiring and maintaining qualified professional
physician and psychiatric staff. Realistically, many of these positions will require salary levels well
beyond what is available to a state employee. As a result, even under an insourced service delivery
model, many of these positions will have to be contracted out to individual practitioners.
Staffing Levels. Current facility staffing levels have been determined by the current vendor, in
consultation with the Department, as the number needed to enable achievement of the service level
44

and program outcomes required by the contract. A high level review of current facility staffing does
not indicate any apparent opportunities to reduce employee levels, given the number of inmates
served and the level of services required. To test this conclusion, we compared overall health care
program staffing levels in Florida with national staffing trends.
A 2017 nation-wide review of health care staffing in state prisons documented a median staffing level
of 40.1 FTEs per 1,000 inmates37. The July 1, 2019 staffing plan for Centurion shows total contract
staffing of 2,831.4 employees. Adding in OHS management and pharmacy staff of 168 positions,
total correctional health care staffing in Florida is 2,999.4 staff. Based on the FDC’s reported average
daily inmate count of 87,032 for FY 2018-19 in state-operated facilities, this equates to 34.5 FTEs
per 1,000 inmates in 2019, 14% below the national median number of FTEs per 1,000 inmates in
prisons nationwide.
Correctional Medical Authority (CMA) audits for FY 2017-18 included 16 institutions with a total
inmate population of 24,333.38 These facilities had 16 physician positions. This equates to one
doctor for every 1,520 inmates. CGL team member physicians, recognized as national experts in
correctional health care, indicate a more typical ratio in most prison systems would be one doctor for
every 800 inmates. CMA noted understaffing as a concern in their annual report as indicated by
failure to follow up on diagnostic testing on a system wide basis, and recommended reviewing staffing
levels for physical health staff including physicians, mid-level practitioners, and nursing staff as a
possible cause of these failures.
Health care staffing is a complicated issue and the observations noted above are not conclusive
regarding specific FDC staffing needs. However, a high level review shows no evidence of
opportunities to reduce facility health care staffing under an insourced model. This is further
supported by the increased staffing required of the Department under recent litigation to raise service
levels to meet constitutional requirements. Prior to any change in service delivery models, the FDC
should commission a detailed analysis of facility health care staffing to determine the level and
composition of staffing required to meet performance expectations.
However, a transition to an insourced model would enable the elimination of many vendor
administrative positions which are paid for under the contract. In most cases these positions either
duplicate existing department OHS staff positions, have duties which can be absorbed by OHS, or
would no longer be necessary. We reviewed Centurion regional and statewide administrative staffing
and identified 37.5 statewide administrative positions that could potentially be eliminated under an
insourced model:
Statewide Dental Director
Regional Dental Director-Region I
Regional Dental Director-Region II
37
38

FTE
1.0
0.5
0.5

Pew Charitable Trusts
CMA
45

Regional Dental Director-Region III
Regional Dental Director-Region IV
Quality Management Program Director
Data Analyst
Administrative Coordinator
Administrative Assistant
Offender Based Information Specialist
Continuous Quality Improvement Program Director
Continuous Quality Improvement Program Coordinators
Pharmacy Director
Reentry Director
Regional Reentry Coordinators
Data Analyst
Administrative Coordinator
Administrative Assistants
Referral Specialist
Human Resource Administrator
Senior Human Resource Business Partner
Human Resource Business Partner

0.5
0.5
1.0
0.5
1.0
2.0
1.0
1.0
4.0
1.0
1.0
4.0
1.0
1.0
7.0
3.0
2.0
1.0
3.0

Elimination of these positions under an insourced service model would save an estimated $3.2
million. We do note that some vendor administrative FTEs should be retained, including those
assigned to the electronic medical record (EMR) project, Information Technology, Utilization
Management, Health Education, Infection Control, and Regional Mental Health.
Staffing Cost. Assuming the same level of facility staffing as provided under the current contract, the
cost to the state of these staff will change somewhat, given the FDC’s lower salary scale and higher
benefit package. To determine the impact of such a change, using the payroll titles that were used by
the FDC when it last insourced health care services, we attempted to convert existing vendor staff titles
to comparable Florida state position titles. Using the midpoint of the pay grades as a salary
assumption and applying the state’s benefit package for Career and Selected Exempt Service (SES)
employee categories, we developed an estimate of the annual cost of the current facility vendor staff if
converted to state employees. We then added a 2 percent differential to address potential issues of
recruitment and retention in a competitive market for health care workers. We made a separate
calculation for the cost of senior clinical positions such as psychiatrists on the assumption that these
positions would have to be contracted out to meet market compensation levels.
The results of this analysis show a projected cost of insourced facility health care staffing of $199.2
million. This compares to a Fiscal Year 2018-19 payroll and benefit cost for vendor staff under the
Centurion contract of $209 million. Adjusting the Centurion payroll amount to take out the
administrative positions recommended for elimination reduces Centurion’s cost to $205.7 million,
approximately $6.5 million or 3.3 percent above projected insourced costs for the same staffing plan.
While this cost estimate will require further refinement, the level of cost difference is consistent with
reports of the variance between vendor and state salary and benefit levels. The following tables
summarize our projected cost of insourcing current vendor health care staff.
46

Exhibit 24: Projected Cost of Insourcing Facility Staff
Contract Title

State Title

FTEs

State Salary

Salary + Benefits

State Cost

Medical
Administrative Assistant

Secretary Specialist

67.0

$

28,303

$

40,541

$

2,716,253

Advanced Registered Nurse
Practitioner
Assistant Health Services
Administrator
Clerk

Advanced Practice Registered
Nurse
Executive Nursing Director

80.8

$

67,502

$

96,691

$

7,812,595

1.0

$

67,502

$

96,691

$

96,691

Clerk Specialist

36.0

$

25,029

$

35,852

$

1,290,668

Director of Nursing

Executive Nursing Director

69.0

$

67,502

$

96,691

$

6,671,647

Registered Nurse Supervisor

Registered Nurse Supervisor

20.0

$

67,502

$

96,691

$

1,933,811

Health Support Aide

Health Support Aide

45.0

$

24,282

$

34,781

$

1,565,158

Licensed Practical Nurse

Licensed Practical Nurse

348.6

$

35,330

$

50,607

$

17,641,445

Medical Technician

Health Support Technician

282.5

$

28,303

$

40,541

$

11,452,859

Health Information Specialist

Health Information Specialist

1.0

$

37,000

$

52,998

$

52,998

Medical Director

Medical Executive Director

92.2

$

155,854

$

223,246

$

20,583,249

Medical Records Clerk

Clerk Typist Specialist

88.4

$

26,049

$

37,313

$

3,298,452

Medical Records Supervisor

59.0

$

38,217

$

54,742

$

3,229,798

Assistant Director of Nursing

Health Information Systems
Supervisor
Registered Nurse Supervisor

15.0

$

67,502

$

96,691

$

1,450,358

Registered Nurse Educator

Registered Nurse

1.0

$

45,039

$

64,513

$

64,513

Registered NurseInfusion/Chemotherapy
Emergency Medical
Technician
Respiratory Therapist

Registered Nurse Specialist

3.0

$

56,185

$

80,479

$

241,437

Health Support Specialist

1.0

$

33,628

$

48,169

$

48,169

Respiratory Care Specialist

4.2

$

43,401

$

62,167

$

261,101

Laboratory Technician

Laboratory Technician

4.0

$

30,878

$

44,230

$

176,920

Clinical Risk Manager

Clinical Associate

1.0

$

63,635

$

91,150

$

91,150

Lead Inventory Coordinator

Clerk Specialist

4.0

$

25,029

$

35,852

$

143,408
47

Contract Title

State Title

Nurse Manager

Registered Nurse Supervisor

Registered Nurse/CQI

FTEs

State Salary

Salary + Benefits

State Cost

7.0

$

67,502

$

96,691

$

676,834

Registered Nurse

372.5

$

45,039

$

64,513

$

24,031,155

Secondary Screener

Clerk Specialist

10.0

$

25,029

$

35,852

$

358,519

Executive Nursing Director

Executive Nursing Director

1.0

$

67,502

$

98,284

$

98,284

Hospital Administrator

Program Administrator

1.0

$

79,624

$

114,053

$

114,053

Infection Control Nurse

1.0

$

67,502

$

96,691

$

96,691

Phlebotomist

Advanced Practice Registered
Nurse
Med Tech 1

4.0

$

37,000

$

52,998

$

211,993

Resp. Therapist Supervisor

Resp. Care Specialist

1.0

$

43,401

$

62,167

$

62,167

Registered Nurse-CQIMedication Practice
Scheduler

Registered Nurse

1.0

$

45,039

$

64,513

$

64,513

Clerk Specialist

6.0

$

25,029

$

35,852

$

215,111

Transcriptionist

Clerk Typist Spec.

2.0

$

26,049

$

37,313

$

74,626

subtotal

1,630.2

$

106,826,627

Mental Health
Advanced Registered Nurse
Practitioner/Physician
Assistant- Mental Health
Behavioral Health Activity
Technician
Certified Nursing Assistant Mental Health
Mental Health Clerk

Advanced Practice Registered
Nurse

32.70

$

67,502

$

96,691

$

3,161,781

Behavioral Specialist

44.00

$

48,894

$

70,035

$

3,081,556

Medical Technician 2

34.80

$

38,839

$

55,632

$

1,936,009

Clerk Specialist

96.40

$

25,029

$

35,852

$

3,456,122

Mental Health Director

Psych l Services Director

16.00

$

80,584

$

115,429

$

1,846,859

Mental Health Licensed
Practical Nurse
Mental Health Professional

Licensed Practical Nurse

68.20

$

35,330

$

50,607

$

3,451,367

Human Services Counselor

290.60

$

41,036

$

58,780

$

17,081,606

Mental Health Registered
Nurse

Registered Nurse Specialist

100.80

$

56,185

$

80,479

$

8,112,286

48

Contract Title

State Title

FTEs

State Salary

Salary + Benefits

State Cost

Mental Health Administrator

Program Administrator

1.00

$

79,624

$

114,053

$

114,053

Mental Health Assistant
Director of Nursing
Mental Health Director of
Nursing
Reentry Specialist

Senior Registered Nurse

4.00

$

67,502

$

96,691

$

386,762

Registered Nurse Supervisor

4.0

$

67,502

$

96,691

$

386,762

Human Services Counselor

29.70

$

41,036

$

58,780

$

1,745,780

$

44,760,944

Mental Health subtotal

722.20

Dentist

Dentist

72.35

$

105,214

$

150,709

$

10,903,786

Dental Assistant

Dental Assistant

126.75

$

29,505

$

42,264

$

5,356,901

Dental Hygienist

Dental Hygienist

26.50

$

37,000

$

52,998

$

1,404,454

$

17,665,141

Dental subtotal

225.60

Infection Control

Registered Nurse Specialist

4.0

$

56,185

$

80,479

$

321,916

Dental Director North

Senior Dentist

1.0

$

111,646

$

159,921

$

159,921

Dental Director South

Senior Dentist

1.0

$

111,646

$

159,921

$

159,921

Regional Director of Nursing

Executive Nursing Director

4.0

$

67,502

$

96,691

$

386,762

Electronic Health Record
Project Manager
Electronic Health Record
Liaison
Electronic Health Record
Information
Technology/Offender Based
Information System Specialist
Information Technology
Support Specialists
Information Technology
Support Lead

Program Administrator

1.0

$

79,624

$

114,053

$

114,053

Health Information Specialist

2.0

$

37,000

$

52,998

$

105,997

Health Information Specialist

4.0

$

37,000

$

52,998

$

211,993

Government Operations
Consultant
Government Operations
Consultant

4.0

$

59,119

$

84,683

$

338,730

1.0

$

64,687

$

92,658

$

92,658

49

Contract Title
Regional Director of Nursing
– Mental Health
Mental Health Nurse
Educator
Mental Health Educator
Nurse Educator

State Title

FTEs

State Salary

Salary + Benefits

State Cost

Executive Nursing Director

1.0

$

67,502

$

96,691

$

96,691

Registered Nurse Specialist

1.0

$

56,185

$

80,479

$

80,479

Reg. Mental Health
Consultant
Registered Nurse Specialist

1.0

$

80,584

$

115,429

$

115,429

1.0

$

67,502

$

96,691

$

96,691

31.0

$

2,744,531

2,609.0

$

171,997,243

Administration subtotal
TOTAL

Professional Contract Positions Required Under Insourcing
State Title

FTE

Contract Salary

Cost

Optometrist

9.0

$ 165,605

$

1,490,445

Physician

16.2

$ 253,625

$

4,108,725

Orthopedic Surgeon

1.0

$ 299,048

$

299,048

Psychiatric Director

1.0

$ 317,408

$

317,408

Psychiatrist

23.1

$ 317,408

$

7,332,125

Psychologist

46.6

$ 165,605

$

7,717,193

Psychology Intern

4.0

$

76,616

$

306,464

Residents

4.0

$ 110,325

$

441,300

Regional Psychiatrist

1.0

$ 431,453

$

431,453

Regional Psychologists

4.0

$ 165,605

$

662,420

Regional Psychologists - Sp. Projects

1.0

$ 165,605

$

165,605

110.9

$ 440,840

$ 23,272,186

Total Contracts
State Employee & Contract Position Costs
Total State Insourcing Cost for Personnel
Total State Insourcing Cost for Personnel

$195,269,429
$3,905,388
$199,174,817
50

Pharmacy. Insourcing would entail no change in pharmacy services as the Department already
manages this function. Based on past attempts to privatize, insourcing is the most cost-effective means
to provide the service.
Off-site care management. Coordination and management of off-site care was a substantial
challenge for the Department when the system was insourced. A 2005 performance review of the
Department found the following and recommended that the Department contract out management of
all off-site care to a professional managed care firm39:
•

Office of Health Services (OHS) staff managed over 170 major contracts

•

Most contracts were with providers with long-term relationships with the Department, were
exempt from bidding, and were renewed annually

•

Staff were primarily oriented toward maintaining service levels, not necessarily toward holding
contractors accountable

•

Contract terms did not provide adequate monitoring terms or performance measures

•

Monitoring of contractor performance by regional staff was perfunctory

•

Contractor invoices were generally processed by clerical staff without meaningful review

OHS managers acknowledged the system of contracting and coordinating off-site care used by the
Department was cumbersome to administer and did not achieve effective performance. Insourcing
management of off-site care using this same system would defeat the purpose of increasing
operational efficiency.
A 2017 study of this issue by the consulting group North Highland projected that in the event of
insourcing, a restoration of the Department’s former status quo method of managing contracts for offsite care would likely increase costs by 20 percent. In order to maintain costs at the more efficient
level achieved under the outsourced health services contract, North Highland recommended that the
Department contract with a managed care organization such as a Preferred Provider Organization
(PPO) or Third Party Administrator (TPA).
Health care network administration and these related functions are not a core competency of
correctional systems. These are complex functions that require a high degree of technical expertise in
a very specific field to perform well. This is a classic example of specialized work that can be
performed more efficiently by private organizations with appropriate skillsets and experience. Serious
consideration of any insourcing scenario should incorporate outsourcing of off-site health care
services to achieve maximum efficiency.

39

MGT of America, Performance Review of the Florida Department of Corrections, 2005.

51

In this approach, the correctional system contracts with outside health care or insurance company to
manage its offsite care network for a flat, fixed fee per inmate on top of actual utilization. The PPO or
TPA would then administer the Department’s hospital and specialty provider network, provide claims
adjudication and processing, conduct utilization management reviews, and develop data analytics on
network performance.40 Network efficiencies and negotiated discounts could more than offset the cost
of the contract. This approach has been used successfully in the Virginia Department of Corrections.41
Based on the North Highland analysis, this approach should enable the Department to maintain
offsite care costs at approximately the same level as now experienced under Centurion management.
Administration. Given the history of OHS with insourced system management and the experience of
the current senior management, the reconfiguration of its responsibilities from a policy
direction/contract monitoring role, to insourced system manager can be accommodated with existing
resources, augmented by select retained vendor administrative positions and contracting out for offsite
care management. This approach will require ongoing investment in development of internal
management resources.
Custody Support. Whether the medical program is insourced or outsourced, effective provision of
correctional health care services requires support from across FDC operations. While correctional
officer staffing levels present many serious issues across the entirety of FDC operations, shortfalls in
staffing can have a serious impact on access to care. As of November 4, 2019, the FDC had 2,305
correctional officer vacancies, placing severe stress on operations in nearly all its facilities. The project
team’s limited review of FDC facility operations indicated that the availability of correctional officer
staff to escort inmates to treatment is a significant issue. The demand on staffing for outside
transportation can also be substantial. For example, movement and supervision of severely mentally ill
offenders in need of hospitalization requires the assignment of three officers, 24 hours per day, seven
days per week. Facility administrators and staff appear to appropriately prioritize custody support for
health care but are handicapped by chronic shortages in correctional officer staffing.
Technology. Telemedicine has huge potential application in the FDC, particularly in the delivery of
psychiatric services. However, while telepsychiatry is available, there are limitations in availability.
Many facilities have network bandwidth problems that severely limit telemedicine capacity. For
example, at Lowell Correctional Institution, the technology to allow for the provision of telepsychiatry
was available for outpatient treatment only. Staff at the facility were unable to utilize telepsychiatry on
the inpatient units due to technology infrastructure issues.
The FDC should augment its cable and wiring infrastructure to accommodate a robust telemedicine
program. This type of upgrade will be needed to support the electronic medical record (EMR) system
as well. Some of the advantages of an EMR going forward will be expedited electronic submission of
North Highland, Health Services Study of the Florida Department of Corrections, FY 2017-18, 2017.
Stephen Weiss, “Medical Care Provided in State Prisons – Study of the Costs,” Joint Commission on Health
Care, October 5, 2016, at http://jchc.virginia.gov/4. Medical Care Provided in State Prisons CLR.pdf
40
41

52

medical orders, improved accuracy and access to patient records, and monitoring of the delivery of
health care services statewide. There will also be potential operational efficiencies as clinicians and
nurses directly enter data into the system instead of handing off encounter forms to a data entry
operator/medical records clerk. Again, this is an issue that should be addressed irrespective of the
future service delivery model adopted by the Department.
Implementation. The timeline for actual implementation of a transition to insourcing needs to address
the short-term transition of current vendor staff to state employment as well as development of a longterm strategy to address the long-term challenge of recruiting and retaining health care staff in a
competitive labor marker.
Assuming that most vendor staff would transition to state employment if offered, FDC Human
Resource staff indicate that the hiring and onboarding of these employees would take approximately
60 days. This process would entail establishing standardized selection criteria and guidelines for each
position title, verifying staff credentials and conducting background checks. The Department would
bring on six temporary Personnel Technicians to facilitate the transition at a one-time projected cost of
$238,794.
The next phase in the implementation process would be filling remaining vacant positions, which will
require an aggressive recruitment campaign using Jobs.myflorida.com, colleges and universities job
placement programs, social media advertising/ Indeed.com, and regional/local job fairs. The final
step would be development of a long-term strategy to address future recruitment and retention issues.
Planning an effective approach to address recruitment and retention is the biggest challenge facing
the FDC in the implementation of insourcing. In the past, the Department has experienced issues in
keeping health care positions filled and attracting a stable pool of applicants. Vendors have
experienced the same issues. A transition to insourced health services will require an intensive review
of possible strategies to address this issue over an extended time period. While the FDC has
successfully managed transitions from insourced to outsourced services and multiple transitions to
different vendors without serious operational disruptions, a change to an insourced service delivery
model will require more intensive preparation to assure successful implementation.
Cost-Effectiveness. This analysis has examined the impact of insourcing on the primary components of
the inmate health care delivery system. To summarize, insourcing appears to reduce staffing costs by
$3.3 million through eliminating vendor administrative positions and $10.4 million by converting
contract positions to state employees. With the use of a contracted provider to manage off-site care,
costs for these services should be equivalent to the level experienced under Centurion. Pharmacy costs
would remain unchanged. The Department already pays the actual costs of ancillary items such as
laboratory expenses, supplies, and equipment, under the current cost-plus contract and these
expenses would remain unchanged. The administrative burden of hiring and retaining over 2,000 new
staff would create additional ongoing human resource expenses for the Department, totaling $774.3
thousand along with a one-time cost of $238.8 thousand to manage the initial hiring/transition
process.
53

The final and most significant savings element associated with in-sourcing is elimination of the
administration/profit fee paid annually to the vendor. The rate for this fee under the contract is set at
11.5 percent of reimbursable expenses, which are essentially the direct expenditures for service on
behalf of the FDC. The FDC is reimbursed for direct expenditures for service and pays a fee in the
amount of 11.5 percent of these expenses to the vendor to cover overhead and profit. The
administrative/profit fee paid against Centurion’s contract for Fiscal Year 2018-19 totals $37.3
million. Insourcing eliminates this expense.
In summary a transition to an insourced model of inmate health care delivery could reduce FDC
annual spending by $46.2 million.
Exhibit 25: Projected Savings Impact of Insourcing

Elimination of Vendor Administrative positions
Convert Vendor positions to state employees
Eliminate vendor administration/profit fee
Additional HR costs
Total Savings

$
$
$
$
$

$ millions
3.2
6.5
37.3
( 0.8)
46.2

Source: CGL analysis

The FDC has the internal capability and expertise to manage inmate health care delivery. Insourcing
the delivery of on-site facility health care serviced throughout the correctional system is feasible,
although the FDC would face substantial challenges in recruiting and retaining staff. The Department,
however, would require substantial improvement in management of off-site care. This could be
accommodated by contracting with an insurance company or health care organization to manage all
off-site care, utilization review, and claims management for the FDC. The resulting approach would
move the FDC closer to a hybrid insourcing/outsourcing model.

Outsourcing
As described earlier, the FDC has experimented with a variety of different approaches to outsourcing
over the last eighteen years. Early efforts to use outsourcing to drive health care costs lower appear to
have had some success, but also produced substantial problems in service delivery, including reduced
staffing levels, dramatic decreases in episodes of outside care; increases in health care grievances;
and a proliferation of litigation.
These performance issues have been addressed in more recent contracts. However, growth in
program spending has accelerated. The overall utility of outsourcing as a future service delivery model
for the Department depends upon achieving a balance between efficiencies in cost management and
adequate program quality.

54

FDC Internal Capacity to Support Outsourcing
Effective management of an outsourced health care system requires that a correctional system take a
pro-active stance toward accountability and oversight of the vendor. The FDC over the course of its
experience with privatization has developed a sound management infrastructure for outsourcing.
Components of this infrastructure include:


Policies – the Office of Health Services has a comprehensive set of policies, bulletins, and
procedures to provide clear direction to a vendor on the expectations and parameters for
health care delivery.



Contract – the outcome-based format of the contract establishes clear standards and metrics
that directly relate to policies and service quality objectives.



Monitoring – FDC monitoring teams and protocols provide a ready means to assess vendor
performance and enforce contract terms. Its QM program provides clinical reviews of service
delivery systems and outcomes. Department monitoring is also supplemented by external
reviews of service delivery by the Correctional Medical Authority.

The FDC, both through the Office of Health Services and its administrative bureaus, supports effective
use of outsourcing. The one notable area of need is timely access to data documenting program
activity and performance. The lack of an electronic medical record (EMR) system hampers
management access to quality reviews, statistics, and audit data and requires a labor-intensive
process to gather data for review. The plans for EMR development under the current contract with
Centurion will ultimately address this need.
Outsourcing Impact on Cost and Performance
The impact of outsourcing on health care service cost and quality depends upon the outsourcing
model employed, The FDC has used both risk-based and cost-plus models in its history with
privatization. This analysis first examines the impact of the current outsourcing model.
Cost. The FDC’s current contract with Centurion follows a cost-plus model. The Department
reimburses Centurion for direct health care costs up to a designated cap, including staffing, and pays
the vendor a fee to cover its overhead and profit. The contract has recently been amended to provide
a three-year extension at an annual funding cap of $421 million for each of the contract years. As
described earlier, the increase in funding for FY 2019-20 covers over 460 additional staff required to
comply with the terms of recent litigation, maintenance of current staffing and service levels, an 11.5
percent administrative fee, and development of an EMR system.
After several years of significant increases in health care spending, the FDC is now assured of annual
contract spending that will remain stable at no more than $421 million for each of the next three
years. The contract will not entail any additional administrative workload or cost on the Department.
Other than additional potential costs associated with litigation and increased costs for
55

pharmaceuticals, the Department should experience relatively constant overall health care costs under
this contract through FY 2021-22.
Exhibit 26: Actual and Projected Cost-Plus Health Care Annual Contract Caps, FY 2017-2022
($ millions)
FY 2017- FY 201818
19
Centurion Contract Cap
$321
$375
Source: Florida Department of Corrections

FY 201920
$421

FY 202021
$421

FY 202122
$421

Average Annual
Increase
6.2%

Performance. Service quality levels attained under this contract approach should be comparable to
the Department’s experience with Centurion over the last two years. This experience has been
relatively positive, particularly when contrasted with the FDC’s experience with prior contractors.
Central office and facility administrators indicated improvements in service have been achieved under
the cost-plus model. This is a feature of the cost-plus approach, in that the vendor has no incentive to
reduce services to lower costs and manage risk. Any additional costs that may be incurred to achieve
required service levels are simply passed on to the client. However, there are two areas where
modifications in the model could facilitate improved service quality, staffing and performance
measurement.
Maintaining adequate facility staffing levels is a critical component of health care service quality. Most
cost-plus contracts make detailed facility staffing plans part of the contract and monitor vacancy
levels. The FDC contract with Centurion is somewhat unique in that it does not specify or require
monitoring of facility staffing levels. As an outcome-based contract, in the current model vendor
performance is assessed solely based on program results. This assumes that these performance
measures completely convey the quality of vendor services provided.
The impact of staffing levels on services however is so significant that it arguably should be tracked,
and the vendor held accountable for providing agreed levels. This can be seen in recent consent
decrees entered by the Department where the plaintiffs have required that the Department add specific
numbers and types of staff to facilities, rather than only require attainment of specific outcome
measures.
A reliable facility health care program that consistently produces good results requires a stable cadre
of full-time professional staff. Vacancies need to be filled in a timely manner. However, under the
Department’s current cost-plus approach, the vendor may choose to use registry, temporary contract,
or locum tenens staff to fill vacancies for extended periods of time rather than recruit and hire
permanent replacements. This has an impact on service quality, as temporary staff do not generally
provide the same level of performance. Additionally, under this approach costs are typically higher
than hiring replacement staff. Tracking and holding the vendor accountable for compliance with an
agreed staffing plan would provide the department with an additional, valuable tool for managing
vendor performance.
56

Another approach to improving vendor performance under the cost-plus model would be to shift the
focus of the current contract measures away from process or compliance measures, to more
qualitative metrics. Internal monitoring should be linked to the quality management program. FDC
monitoring teams are now attempting to evaluate identified problems and to train staff so that there
can be improvement. Many health care organizations are utilizing lean manufacturing and six sigma
techniques in their quality improvement programs. The California prison system has a robust six
sigma and quality improvement program utilizing these techniques.
The following compliance monitoring items should be considered in addition to current compliance
questions.


Percent of all types of scheduled appointments (nurse sick call, physician on-site
appointments, off-site consultations and diagnostic testing, dental appointments, mental
health appointments, mental health programming) kept with reasons for no show



Time to triage health service requests



Time to nursing assessment appointments for health service requests



Percent of patients who require nurse sick call for a health request and who are evaluated with
72 hours



Percent of ordered doses of medication that patients receive in a timely manner



Percent of patients who failed to receive their first dose of ordered medication within 24 hours
of the order



Percent of patients who failed to have intake screening done within 24 hours



Percent of patients who failed to have intake physical examination within a week



Number and percent of patients who missed intake screening



Percent of patients in need of screening who obtained tuberculosis screening



Percent of patient admitted to infirmaries who have an nurse intake note within two hours of
admission



Percent of patients admitted to infirmaries who have a provider admission note within 24
hours and have a discharge summary completed the day of discharge



Percent of off-site diagnostic test results and consultation reports that are scanned to the
record within 3 business days



The number and percent of patients who failed to meet time tables for specialty care
appointments as determined by clinical necessity
57



The number and percent of urgent appointments occurring within 14 days and routine
appointments occurring within 45 days



Percent of patients who receive immunizations as indicated by the Advisory Committee on
Immunization Practices (ACIP)



Percent of patients with diabetes who have hemoglobin A1c at 7 or below (considered good
control)



Percent of patients with diabetes who have hemoglobin A1c above 9 (considered poor
control)



Percent of patients with hypertension who have blood pressure controlled below 140/90



Percent of diabetics who have an annual eye examination



Percent of diabetics who are annually screened for nephropathy (with micro-albumin)

Compliance measures can be displayed on a shared intranet as a dashboard as is done in
California.42 Dashboards are a concise display of compliance type process measures that are a
component of the quality program. Integrated into the electronic record system, this approach will
free up quality improvement and monitoring time for other purposes.
One additional quality monitoring function should include safety/sanitation/administrative checklist
tours that verify that every institution has adequate clinical space, supplies, equipment, and sanitation.
These rounds can result in scoring and corrective action plans.
A second additional function of the quality management program is to institute clinical quality review.
Almost all physician care at the institutions is primary care. Board certified primary care physicians43
(or at a minimum, physicians who completed residency training in primary care) should perform
clinical quality record reviews. These should include mortality reviews, sentinel event reviews, and
potentially preventable hospitalizations. Health organizations nationwide, including the Mayo Clinic,
have robust mortality review processes that assist in improvement of clinical care and process
improvement.
Nursing reviews should also be performed for potentially serious complaints on health requests; for
emergency evaluations; and for care on the infirmary unit.
These clinical quality reviews should have an aim of identifying opportunities for improvement and
detection of systemic errors. These reviews can also provide professional performance evaluations
(peer review). The clinical quality reviews and compliance monitoring should be incorporated into

The California prison dashboard can be found at https://cchcs.ca.gov/reports/#dashboard
A primary care physician is a physician who completed residency in internal medicine or family practice. In
some cases physicians who completed residency in emergency medicine is adequate.
42
43

58

the quality improvement program. The program should track the number of clinical quality reviews
that result in identification of opportunities for improvement.
A process improvement strategy like the lean manufacturing or six sigma model would provide the
data needed by the quality management team to reduce cost and improve quality.
Alternative Approaches to Outsourcing. The primary alternative to the cost-plus outsourcing model is
the capitated approach in which the vendor is paid at a per diem rate per inmate to manage all
health care services. This approach shifts all financial risk to the vendor and has the greatest potential
for achieving cost savings as it incentivizes the vendor to maximize efficiency in order to achieve
profits. In fact, the primary basis for the Department’s initial adoption of an outsourcing model was
potential cost savings. The capitated contract approach used by the Department in its initial approach
to outsourcing was entirely consistent with this goal.
Impact of Capitation on Cost. A change to a capitated model could reduce costs if potential vendors
in the market perceive an opportunity to leverage their expertise to achieve efficiencies in service
delivery. The two primary areas to achieve potential efficiencies with a significant impact on cost are
staffing and off-site services. Due to the transparency of the Department’s current cost-plus contract,
current levels of expenditures in these areas is readily available.
Fiscal Year 2018-19 expenditures for staff salary and benefits under the Centurion contract totaled
$209 million. This amount will increase with the additional staff provided in the FY 2019-20 budget
to address litigation requirements. Comparisons with national data on health care staffing suggests
that current facility health care staffing levels are below levels maintained in other states.44 Our highlevel review on facility staffing plans and onsite operational reviews provided no indications of excess
or inefficient use of staff in the system.
Under a capitated approach, the vendor can reduce staffing costs by eliminating positions, leaving
vacancies open, or reducing compensation and benefits levels. Eliminating positions and keeping
vacancies open directly reduces services, while lowering compensation levels would exacerbate issues
in maintaining adequate staffing. None of these measures is advisable and all would likely have a
very negative impact on service quality. In fact, any shift to a capitated outsourcing model would likely
need to be accompanied by strong contract monitoring provisions that provide a means to hold the
vendor accountable for maintaining required staffing levels. Accordingly, significant cost savings from
current contract levels in the area of facility staffing levels are unlikely in a change to a capitated
approach.
Off-site health care services under the Centurion contract totaled $109 million in FY 2018-19.
Approximately 52 percent of this amount was for inpatient hospitalization, 23 percent for outpatient
services, 14.6 percent for specialist care, and 4.9 percent for emergency room treatment. While

44

Pew Charitable Trusts

59

Centurion does provide utilization and invoice review, the fact that these costs are simply passed
through to the FDC indicates at least a potential for an incentivized vendor to identify savings.
There are no studies of the relative impact on health care costs in correctional systems of a cost-plus
versus capitated approach to off-site care management. However, there has been substantial research
on the impact of managed care programs compared to fee-for-service plans under Medicaid, which is
in many respects analogous to the capitated health care program management versus the cost-plus
model. One meta-review of the research on this topic found that managed care plans in 24 studies
showed savings ranging from 1 percent to 20 percent from fee-for service plans.45
The median of the savings identified in these studies is 10.5 percent. Applying this rate of savings to
all the off-site care paid for under the Centurion contract in FY 2018-19 results in potential savings
under a capitated model of $11 million. How much of the savings achieved under the contract are
passed back to the client versus retained as profit is an open question. Assuming the vendor passed
50 percent of the savings achieved back to the client, this model could achieve a potential cost
reduction of $5.5 million.
Impact of Capitation on Service. The risk assumed by the vendor in the capitated model places added
stress on service quality. Adverse utilization experience or cost exposure incentivizes reduction in
services to mitigate the negative financial consequences for the vendor. This describes much of the
FDC’s experience with capitated health care outsourcing from 2001-2017.While privatization
provided costs savings in the short-term under the capitated model, vendors were unable to provide
consistent service that met contract performance standards at the funding levels they had bid. This led
to a turbulent period of vendor appeals for additional funding, contract terminations, and multiple
vendor transitions. For its part, the FDC experienced reduced facility staffing levels, reduced access to
off-site care, increased inmate grievances regarding health care services, and ultimately significant
costly litigation.
To avoid this scenario, any change in outsourcing approaches needs to be accompanied by a very
robust system of contract monitoring, thorough vendor understanding of program service
requirements, and a realistic sense of program funding needs. The capitated Wexford and Corizon
contracts which the FDC entered in 2013 produced substantial cost savings, but also had a
pronounced negative impact on service quality. Future outsourcing initiatives need to balance these
objectives.
Impact of Modified Contract Terms. An alternative to cost-plus or capitated models is to incorporate
cost containment mechanisms into the current framework. The Department’s current cost-plus contract
does include an overall cost containment measure in the annual cap that it places on total
compensation to the vendor. This provides the Department with certainty regarding overall contract
expenditures. Additional cost containment measures commonly found in correctional health care
contracts are variations on approaches to lower vendor risk. If the vendor is responsible for managing
The Lewin Group, Medicaid Managed Care Cost Savings: A Synthesis of 24 Studies. Prepared for America’s
Health Insurance Plans, (March 2009).
60
45

all health care costs, as under the capitated model, they typically must include a substantial risk
premium as insurance against adverse experience. By sharing or reducing this risk, states can
reasonably expect lower per diem cost proposals. Vendors can effectively price the more routine care
and will not build in the additional cost to cover the major cases that might occur. Common
approaches to mitigating vendor risk include:


Stop Loss – Require the vendor to cover off-site care costs subject to a stop-loss cap, either on
a per case basis or in aggregate. This eliminates the risk premium that vendors must build in
to cover catastrophic losses and shifts risk to the state. In effect the state self-insures the
vendor.



Shared Risk – The vendor and the Department establish a framework for sharing off-site care
costs above a certain threshold, typically on a per case basis. For example, the vendor may be
100 percent responsible for care up to $50,000 per case, share 50 percent of the cost up to
$100,000, and the state assumes responsibility for costs above $100,000. This approach
diminishes vendor risk on an escalating scale, while preserving some incentive for their
management of costs up to a catastrophic level.



Condition Exemptions – Many states will exclude the cost of care for certain treatments or
conditions to reduce vendor risk. Common exemptions include the cost of treatment of
HIV/AIDS, Hepatitis C, hemophilia, or organ transplants.

These approaches all entail a trade-off in the price reduction to the state realized through reducing
vendor risk and the increased cost to the state in assuming some level of responsibility for catastrophic
or high treatment cost cases. The projected impact of any of these measures on cost relies upon how
vendors use these provisions in pricing their services in a competitive bid process. Any cost savings
again would accrue only to the off-site care expenses covered under the contract. A further 5 percent
reduction in the contract price covering off-site care would lower up-front contract costs to the
Department by an additional $5.5 million. These savings would be offset at least to a partial degree,
depending upon the level of shared financial risk assumed by the Department.
Implementation. The Department has signed a contract extension with Centurion that covers the next
three years, through FY 2021-22. Adopting a new outsourcing model would require development of
an ITN or RFP, evaluation of responses, and negotiation of a contract. Based upon the Department’s
experience with the ITN process, the entire process to select a vendor under a new outsourcing model
could take approximately 12 months, allowing time for ITN development, solicitation, evaluation,
negotiation, and rebidding if necessary. At the same time, the Department would provide Centurion
with notice of intent to terminate the contract, a minimum of 60 days.
Outsourcing Competitive Environment. Outsourcing works best in a procurement environment where
there is ample competitive pressure on potential bidders to produce better quality proposals at lower
prices. Competition is unfortunately limited in Florida. The high degree of financial risk makes
attracting enough bidders to facilitate a competitive environment extremely difficult. This degree of risk
also makes the use of capitated contracts a strong disincentive for potential vendors.
61

In its ITN process, the Department made multiple attempts to attract additional vendors in order to
create competition on price and service level for a capitated outsourcing model. The process
culminated in only one vendor proposing to contract with the Department to provide its required
services. Further, that vendor required the Department to adopt a cost-plus model to minimize its risk
exposure.
There are few vendors who can provide services on the scale required by FDC, which also diminishes
competition. Nationally, there are only three vendors that have managed entire state correctional
health care systems: Centurion, Wexford, and Corizon. The FDC has substantial negative experience
with both Corizon and Wexford. Centurion was the only responsive bidder to the FDC’s most
outsourcing procurement. This level of vendor interest makes obtaining competitive proposals unlikely.
Based on this experience, any discussion of alternative approaches to outsourcing appear to be
hypothetical. The size of the system, the level of risk inherent in assuming responsibility for cost and
service management, and the very limited number of vendors capable of delivering this service
diminishes competition to a level where the benefits produced by outsourcing are substantially
reduced.
The current cost-plus approach appears to be the only means available to the FDC to privatize on a
system-wide scale. Efforts to achieve savings by instituting shared risk provisions or stop losses in a
future contract will likely result in higher vendor cost proposals as they factor increased risk into their
budgets. Because there is no competition for this contract, the FDC has little choice but to accept the
current contract approach if it wants to continue to use outsourcing. By most reports, the current
vendor is performing reasonably well, and quality of care has improved under the current cost-plus
contract. However, this approach to privatization does not incentivize efficiency and requires the FDC
pay a significant administration/profit to the vendor in addition to paying all direct costs.

Hybrid Systems
Because there are several different forms of hybrid systems, it is important to define the form to be
reviewed here. As described earlier, the FDC in effect has always operated a hybrid system. During
that time where the Department provided on-site services with a largely state employee workforce, it
still maintained an extensive network of contracts for off-site care. In this report, we have defined this
approach as a form of insourcing. Similarly, the current service model is a hybrid in that the
Department manages its substantial pharmacy program with state employees while contracting for all
other services. In this report, we have defined this approach as outsourcing.
As used here, a hybrid system refers to an approach where the Department manages some facilities
with state employees and their own network of off-site contracts, while also outsourcing other facilities
in the correctional system to vendors that provide comprehensive health care services. The
Department in effect used this approach during that time in which Region 4 health care services were
outsourced while all other facilities provided services with FDC employees.

62

Cost. The primary factor in favor of a hybrid approach is the fact that smaller contracts, centered on a
region or facility, should be more manageable for smaller firms than a large statewide contract, and
therefore may attract more competition, which should have a favorable impact on price and service
quality. The counter-argument is that the smaller contractors that bid on these contracts may lack the
economies of scale to achieve efficient procurement of services such as pharmaceuticals. Moreover,
the smaller population bases of these contracts provide less margin against risk of catastrophic cases.
The cost of high cost cases may be better managed against a larger population base in order to
spread the risk across a broader revenue base.
There is very little research on the cost performance of this hybrid model versus more conventional
insourcing and outsourcing approaches. The one study that has been conducted examined the cost
performance of privately contracted health care for correctional facilities relative to state-provided
healthcare in the Virginia correctional system. Approximately 50 percent of the state’s prison
population is housed in facilities that receive outsourced health care services from two vendors, Armor
Correctional Health Services and Mediko Correctional Healthcare. Outsourcing was used for these
facilities primarily because of their specialized mission, providing intensive, specialized health care
services such as dialysis, advanced infirmary care, and specialized behavioral health services.46
Because of these services, these facilities require larger numbers of more specialized health care
professionals. The Virginia Department of Corrections used a capitated outsourcing model in
contracting for all health care services in these facilities.
The Virginia Joint Legislative Audit and Review Commission conducted a sophisticated statistical
analysis of correctional health care spending over three fiscal years in outsourced and insourced
Virginia Department of Corrections facilities, controlling for inmate demographics including age and
race, as well as health characteristics such as mental health status and chronic disease diagnoses. The
analysis found no evidence that outsourced facilities had lower costs for inmate health care than
facilities that provided services with Virginia Department of Corrections staff. Insourced facilities in a
hybrid system experienced the same levels of health care cost as the outsourced facilities.47
Applying the results of this study to Florida, a hybrid system which relies both on insourced and
outsourced capitated health care can be expected to have a cost profile in which contracted facilities
have the same level of cost as insourced facilities. With no difference in cost between outsourced and
insourced facilities, the system would in effect have the same overall cost as an entirely insourced
model. Our previous analysis showed that insourcing would provide approximately $46.2 million in
savings from the current cost-plus model used by the FDC. The Virginia study of health care costs in
that state’s correctional system suggests that a hybrid system would have a similar cost profile and
consequently, would provide the same level of savings. This assumes that private companies would be
willing to bid on smaller capitated contracts for regions or groups of facilities.

46
47

Virginia Joint Legislative Audit and Review Commission.
Ibid

63

Performance. The primary issue with hybrid systems is establishing a fair allocation of healthy and sick
inmates for the different insourced and outsourced facilities. In Florida’s experience with a hybrid
model, the vendor responsible for outsourced health care in Region 4 charged that the FDC was
sending them the sickest inmates, allocating healthier inmates to insourced health care programs in
state-managed health care programs. This seems unlikely, particularly given that the Reception and
Medical Center, operated by the FDC, housed the sickest inmates in the system. However, the issue of
cost shifting between facilities and regions becomes significant considering the extreme difficulty in
achieving an even distribution of inmate health care needs among facilities managed by different
vendors. Perceived inequities in health care requirements can create contract disputes, or efforts by
vendors to reduce service levels to compensate for these perceived inequities.
The administrative complexity of managing multiple vendors can also make partial outsourcing on a
facility basis a less effective approach. The transfer of inmates between facilities managed by different
companies and state employees necessarily requires a higher level of coordination to assure continuity
of care.
The Virginia Department of Corrections addressed this issue by explicitly assigning outsourced health
care contracts to facilities with specific health care missions. These vendors had an expectation that
they would serve populations with more intensive health care needs and structured their proposals
accordingly. This suggests that transparency and access to population and utilization data are
effective means to address this issue. As with other models, a robust system of quality assurance
monitoring, focused on qualitative performance metrics provides the best approach to assuring
adequate service quality under a hybrid model.
Implementation. Transitioning to a hybrid system is a more complex process than implementation of
other models. The multiple approaches to health care delivery require that the Department develop a
plan to both insource programs at facilities or regions to be determined, and at the same time
conduct a procurement process for capitated contracts at other facilities or regions. The resulting
transition to different management models in different parts of the state would also be challenging.
A phased approach would require a longer implementation period but would facilitate management
of these issues. In the first phase, the Department would develop a plan that identifies which facilities
or regions would be insourced or outsourced. The next step could be procurement and
implementation of capitated outsourcing in the facilities or regions designated. If successful, the
Department could then proceed with implementation of insourcing in remaining facilities or regions.
Alternatively, if the outsourcing initiative fails to attract bidders at anticipated prices, the Department
could proceed with insourcing of the entire system. The entire process could take up to 12- 16
months.

University Model
In this model, the FDC would develop partnerships with one or more of the state’s medical schools
such as the University of Florida, Florida State University, or the University of Miami. The structure of
64

such a partnership could be similar to the Department’s current cost-plus contract but could be
initiated as a pilot program covering a smaller number of facilities. The university health system would
be responsible for management and staffing for onsite care in the facility and assume responsibility for
offsite care and prescription drugs. This can be done as a contract with each agency as is done in
Texas or by development of an independent entity that then contracts with the prison system as is done
in Georgia.
Among other state correctional systems using this approach, Texas has the most comprehensive
system, with two universities, the University of Texas Medical Branch and Texas Tech University,
managing the delivery of all inmate health care. The Texas correctional health care system is widely
recognized as one of the most effective in the United States and provides services with a lower cost per
inmate than Florida. New Jersey also contracts with the state university medical program for
comprehensive health care delivery. Several other states including Ohio and Illinois have partial
contracting agreements. The University of Ohio contracts with the Ohio prison system for specialty
care and telemedicine care for HIV. The University of Illinois at Chicago medical school contracts
with the Illinois Department of Corrections for HIV and hepatitis C care via telemedicine.
Cost. The cost structure of a university-operated model using the same approach as Texas, combines
elements of the outsourced cost-plus and insourced models. Facility health care staff would be
employees of the university medical system, with a compensation cost comparable to that of an
insourced model. For off-site care, the University would provide managed care services to coordinate
contracted services in addition to providing services at university-operated inpatient and outpatient
facilities. Costs should be comparable to levels achieved through outsourced models. As a public
sector organization, a university model would still charge an administrative fee to cover indirect and
overhead costs, but this would not include the profit built into the administrative fee paid under the
FDC’s current cost-plus contract. The University of Texas Medical Branch charges the Texas
Department of Criminal Justice a 2.75 percent fee to cover administrative costs. This compares with
an 11.5 percent administrative fee charged by Centurion under the FDC’s current outsourcing model.
Substituting this rate for the administration/profit fee of paid by the FDC would reduce this fee from
$37.3 million to $8.1 million.
Because a University operates the entire medical program, it is also possible to obtain 340b pricing
for all pharmaceuticals. Significant savings can accrue when the entire pharmacy budget is subject to
340b pricing. Department pharmacy expenditures in 2018-19 were $85 million of which
approximately 60% were for “infectious disease drugs”. Part of the infectious disease component
would be for Hepatitis C drugs which are not part of the 340b pricing discount currently received by
the FDC through the Department of Health. This discount allows from 23 – 40 percent discounts on
outpatient medications. Due to the consent agreement on Hepatitis C, many more additional inmates
can be expected to require treatment, increasing demand for the medications. The projected cost of
Hepatitis C drugs in the FY 2019-20 budget is $49.2 million. Applying a 23 percent discount factor
to these drugs alone would reduce costs by $11.3 million.
Potential savings provided by University Management model total $40.5 million, as shown below.
65

Exhibit 28: Projected Savings Impact of a University Management Model

340b discount for Hepatitis C drugs
Reduce vendor administration/profit fee
Total Savings

$ millions
$
11.3
$
29.2
$
40.5

Source: CGL analysis

Performance. As discussed earlier, the quality of care under the University model appears to be high.
University medical school programs also have more professional prestige than state prison systems
and can be expected to have more success in recruiting and retaining professional staff. The other
significant benefit to a University program is that medical schools credential physicians appropriately,
requiring physicians to work only in areas for which they have residency training. A University
program can also effectively coordinate the use of telemedicine including primary care.
Implementation. FDC managers indicated they have approached several of the state’s medical
schools but have been unable to generate any interest in the concept of university-managed
correctional health care. Absent cooperation from one of the state’s university medical programs, the
potential application of this model in Florida is moot.
In order to further this concept in Virginia, the state legislature has considered legislation creating a
pilot project in which Virginia Commonwealth University (VCU) would build on its current relationship
of providing inpatient hospital services to the state correctional system, to assume authority for
comprehensive management of health care delivery at one prison. The Department of Corrections
and VCU are currently in discussions for further development of the concept. A similar approach in
Florida could pilot an interim model in which a university agrees to take on one aspect of the
correctional health care program, such as management of off-site care for a region or group of
facilities.
The implementation of such an approach is realistically a long-term alternative at best. However, as
more states experience problems with conventional outsourcing with private vendors, interest in this
concept will likely grow.

66