State chips away at prison privatization

Tuesday, Jan. 13, 2004 | 9:40 a.m.

CARSON CITY -- The state's experiment of letting private businesses operate full-scale state prison programs is slowly coming to an end.

The state Board of Examiners was expected to vote today on a contract to allow the state Department of Corrections to take over the medical care of female inmates at the Southern Nevada Women's Correctional Facility in North Las Vegas.

Corrections Corp. of America is now operating the prison under a contract in which the state pays $47.79 per day per inmate. That amount will be lowered to $33.08 per inmate per day when the state takes over the medical program March 1.

The cost is expected to be the same under state operation, said Lori Bagwell, chief financial officer for the state Department of Corrections.

The issue goes before the Legislative Interim Finance Committee for approval Jan. 28.

Prison officials said they can run the medical unit for the final four months of this fiscal year for $882,953 and for $2.8 million next fiscal year.

There are about 500 inmates in the North Las Vegas prison. The average cost would be $14.71 this year and $15.15 next fiscal year.

Assemblywoman Sheila Leslie, D-Reno, said she was glad the state is taking back the medical program. She said the state has discovered that private companies don't make as much money as they thought they would running prisons.

Corrections Corp. built the women's prison and signed a 20-year lease to operate it. But the state later purchased the prison for $24.1 million and allowed Corrections Corp. to continue to operate it under a contract that expires late this year.

The state will either go out to bid again for a private contractor or take it over. Prison officials have said they are considering a state-run prison.

The Corrections Department last year ended its contract with a private company that provided medical services to the state prison in Ely. Many of the same employees in the private company stayed.

Dr. Ted D'Amico, medical director of the Corrections Department, said there wasn't a hitch in the switch at the prison infirmary in Ely.

The state also spent $14 million building the 96-bed Summit View male juvenile detention center for serious offenders in North Las Vegas. It hired Correctional Service Corp. to operate the facility. But there were problems with escapes and with female officers have sex with male inmates.

Correctional Services pulled out in January 2002, saying it could not make money on the reformatory that was mothballed. Now Summit View will be re-opened Jan. 26 under state operations.

Robert W. McLellan was hired as the new superintendent and he has been hiring and training staff.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, said the state should always explore whether private companies can deliver the service more efficiently and at less cost.

"But sometimes they promise the moon and they deliver a more costly product," Buckley said.

In a related issue, Buckley and Gov. Kenny Guinn squared off in the Legislature on whether the Senior Rx program should be a private or government-run program. Guinn argued for the private operation of the program that provides free insurance coverage for prescription drugs for those 62 and older who have low incomes.

Buckley said first-year data showed that there were excessive costs charged by the insurance company and the state could have provided more coverage to more people. She said to Guinn's credit, he has promised to examine whether the administrative setup should be changed.

Michael Hillerby, chief of staff for Guinn, said Monday that the state has obtained a lower administrative cost from the pharmacy benefit manager.

He said there are a number of issues facing Senior Rx.

In the spring, Hillerby said, the state will go to bid, looking for other options on how to run the program. For instance, he said its administrative function could be combined with other similar state programs dealing with prescription drugs.

In this way the administrative costs could be reduced. allowing more money to flow into the program that now has 9,000 seniors enrolled and expects 12,000 by the end of next fiscal year, he said.

In addition, Hillerby said, the state will try to dovetail Senior Rx with the new federal Medicare program to make sure elderly residents receive the best deal.

The state will still have hundreds of contracts every year including those with doctors, architects, janitorial services, computer experts and others. But these contracts are to supply services to the state, rather than running a full program.