When you think of big business, you probably think of an industry like banking, but it turns out that one of the bigger businesses out there happens to be prisons — both private and federal. While we already know that financial institutions benefit from others, collecting tens of millions of dollars every year from inmates’ families in fees for basic financial services, the healthcare industry has also found a veritable goldmine by contracting services to prisons and jails across the country. 

A new report from The Guardian shines a light on the billion dollar business that is private healthcare at prisons across the country every year.

According to federal data, states spend about $8 billion a year on healthcare for prisoners, and more often than not these services are contracted to for-profit companies.

While the contracts and money flowing from prisons to private businesses are complicated, here are a few takeaways that we got from the Guardian’s report.

It’s a growing trend — More than half of all state and local prisons and jails have outsourced their healthcare to private companies.

In all, Dr. Marc Stern, an expert on correctional health at the University of Washington and former head doctor of Washington state prisons, estimates that this outsourced healthcare industry is now worth more than $3 billion a year.

In fact, federal prisons spending on outsourced healthcare increased by 24% between 2010 and 2014, according to the Justice Department.

That trend toward outsourcing services has translated into big bucks for service providers.

“Business for us is terrific,” Todd Murphy, a director of business development for Correctional Medical Group Companies, tells the Guardian.

It costs more — A survey of 69 prisons found that all paid more for medical services than the Medicare rates. In fact, some prisons spent as much as 385% more.

Murphy declined to provide The Guardian with details on how much the company charges for its services, but noted that “it’s typically not cheaper, but it’s always better.”

But not everyone sees it that way. While some companies would contend that higher fees result in better service, others say that isn’t happening.

“What makes it dangerous is we don’t put enough money into it, period,” Stern said. “When a private company comes in, we don’t give them enough money and they don’t provide good enough care. But that also happens in state-run prisons.”

It comes down to liability — Murphy tells the Guardian that many counties contract with them not to reduce costs, but to reduce liability and the comfort of knowing that if an inmate dies, the family would likely sue the company, not the county.

“We provide a full partnership to our county partners,” he said. “But the biggest thing we do is indemnify the county against risk and reliability, do everything we can to keep them out of trouble.”

Lawsuits against these private healthcare providers for wrongful death of a prison aren’t entirely unusual, The Guardian reports.

Over the past five years, one provider — Corizon — has been sued more than 1,300 times for, among other things, wrongful death, and sexual misconduct among employees.

Last year, the company and Alameda Country, where Corizon was contracted, paid a family $8.3 million after a prison died two days after being jailed on a warrant for failing to appear in court.

The family contended that had the inmate — who was suffering from a severe form of alcohol been withdrawal — been admitted by a registered nurse, not an unsupervised licensed vocational nurse provided by Corizon, the man’s symptoms would have been spotted and he may have lived.

Welcome to Jail Inc: how private companies make money off US prisons [The Guardian]

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