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Prison Health Costs Soar 150%

An audit points to no-bid contracts -- 77% of those awarded -- as a major cause of the five-year increase. State law allows the practice.

April 07, 2004|Tim Reiterman | Times Staff Writer

SACRAMENTO — The cost of healthcare contracts for California prisons climbed 150% over the last five years, and the vast majority were awarded without competitive bid, the state auditor reported Tuesday.

Hospitals, laboratories and clinics that provide health services to state prison inmates received $239 million last fiscal year from the Department of Corrections, compared with $96 million in 1998-99.

"One of the most serious concerns is that major contracts with outside providers are not competitively bid," state Auditor Elaine Howle said in an interview. "They need to get the prices down and need to do a much better job of contract management. They are overpaying on specific invoice.... They are not verifying that services they are paying for are provided."

The Corrections Department runs 32 prisons with 160,000 inmates, and healthcare is a major portion of the $6-billion budget.

Overall inmate healthcare spending -- including the cost of running prison hospitals and treatment centers -- almost doubled to $974 million since 1998-99. But spending on outside health contracts with doctors and others rose faster.

State auditors found that prison officials sought competitive bids for only 23% of the 1,149 contracts awarded in the last two fiscal years.

For the others, corrections officials relied on a 30-year-old law that allows health contracts to be rewarded without competitive bids.

Auditors noted that the law provided no criteria for determining whether contract costs were reasonable and that the department's negotiation practices were seriously flawed. For example, the department sometimes failed to document reasons it paid contractors more than its standard rate.

Responding to the audit, corrections officials said they would try to reduce contracting costs but defended the use of outside contracts to help fulfill their legal mandate to provide healthcare to inmates.

They noted that judges in three federal court cases had ordered the department to provide inmates with timely access to medical care.

"The length of time required to conduct a competitive bid" would put the department "at risk of not delivering necessary services in a timely manner," prison officials said.

They said that failure to deliver timely healthcare could expose the state to additional litigation and possible contempt of court citations.

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