Is Privatization of State Hospitals A Viable Solution?

An article by Annie  Gilbertson KPCC news  of Califorma that appeared yesterday, “California counties look to private firm to run new state psychiatric hospital, again takes a look at a solution that has been lingering in the wings of state legislatures and policy wonks for several years now, and that is of getting out of the business of running and financing state psychiatric hospitals altogether by the good old mechanism of “outsourcing.” Outsourcing has a decidedly mixed track record, with some successes in various industries, massive job losses in others. In some industries such as major passenger airlines big and small, outsourcing has had disastrous results. Some readers may be able recall vital passenger airplane  maintenance duties being outsourced to private companies to avoid higher union wage costs. The outsourcing companies would save the airlines money by employing lower-paid and as it turned out less well-trained technicians and cut corners such as quality control, with mixed and sometimes catastrophic results. Even the ‘business’ of war in the George Bush years saw the use out “outsourcing” which is some military experts’ opinions and views were nothing more than employing American mercenaries to fight in questionable military operations in Iraq and Afghanistan. Remember the ill-fated romance with the firm Blackwater that turned out to be a mess?

The federal and state correctional systems have been utilizing corrections companies to run prisons for over two decades now. There are some very solid parallels between the prison “industry” and the state psychiatric hospital spheres. Both of these areas of operation of governmental entities have in the last several decades the huge costs of replacing dozens and dozens of aging, falling down, buildings and facilities built in the late 1800’s. I recall consulting at a state prison in my home state for several years. that prison was from the late 1800’s. Parchman prison in Louisiana is another very famous example of a prison from a different, not so ‘nice’ era.

So twenty to thirty years ago states and the federal governments began to experiment with contracting with private companies to build and operate large prisons. The lures were many: governments would rid themselves of the horrific periodic crises of huge fatal riots at old prisons, remember Attica? States would not be legally liable and spend large amounts of monies on lawsuits brought by inmates. It seemed like a good deal all around as jobs would spring up where these new companies would build their new prisons.

BUT there was a fatal flaw with these new companies. They sprang out of nowhere. There was no pre-existing industry in corrections and running prisons in this country anywhere ever unless you include the Earp brothers in Tombstone, or the Army during the Civil War or viewed Guantanamo in Cuba as a university for training prison administrators and guards and such. I have not seen advertisements on television extolling the job guarantee that comes with a degree in “Prisonology,” at the University of Guantanamo. The only other non-governmental entity in this country that I know of that does run a number of prisons rather efficiently apparently is the U.S. military at places such as Fort Leavenworth. So it turns governmental entities turned to newly formed companies in a nascent, previously nearly non-existent industry, at least in the civilian realm, to run critical and difficult businesses with little oversight. Granted some prison professional migrated to the private prisons, maybe after they retired from  their state or federal jobs I suppose. But I do not think there was a cadre of many experienced workers from a pre-existing industry.

And of course, the profit motive took over. It took only a few years before reports of abuse, poorer conditions than old aging prisons began to surface. The first of the private corrections companies were darlings of Wall Street and hot stocks. And then scandals began to surface. And now as the above-linked article notes, the feds and some states have been rethinking their pie-eyed cost saving dalliances with these private outfits and are pulling out of their deals. All of this was quite predictable and indeed a number of “old pro’s” in the corrections industry warned legislative bodies that this would be a bad idea and warned that service and profit sometimes do not fit together especially when governmental entities would not accept responsibility for oversight. This was one of the other fatal flaws as states wanted to distance themselves financially and administratively as far and fast as possibly from the horrendously difficult task of prison management.

So now we will watch some states experiment with the privatization of state psychiatric hospitals for the severely mentally ill. I think it will be an interesting phenomenon to watch evolve, witness the private hospital bosses do all the things hospitals have to do, maintain safety, feed house and clothe large numbers of inmates, preserve their rights, and extract profits that satisfy the wealthy backers of these huge enterprises or the shareholders. State hospitals as now structured do not answer to shareholders who want at least say,…5-10% annual dividends. I think that it a reasonable expectation even in this age of ultra-low interest rates and stocks returning low dividends. After all, state hospitals in some ways could be considered “blue chip,” industries and companies. The need for them is NOT going to go away. There will always be a certain percentage of the population who are severely mentally ill and horror of horrors, dare I say it, NEED total institutions for their care. A constant supply, an industry that likely will not disappear like the famous example of buggy whips. It sounds like a sound buy and hold investment. But state hospitals nowadays barely get by with their present stingy funding levels. Are state governments going to give these companies lots more money so their shareholders can have good dividends? I doubt it. I wonder where in the line of priorities the concept or any level of rehabilitation will come in. Will the privatized prisons be

And then, I wonder where in the line of priorities the concept or any level of rehabilitation will come in. Will the privatized state hospitals try earnestly to continue the recent movements in many states hospitals to devote resources toward lifelong recovery and support for psychiatric patients? I find that proposition and hope to be highly unlikely.

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Author: Frank

I am a older child, adult, geriatric teaching psychiatrist with over 30 years' practice experience in North Carolina, first at Duke as clnical teaching faculty, then in Western NC as a primary child psychiatry specialist. I have taught and supervised child psychiatrists and psychiatrists in training and many other mental health professionals and taught at two medical schools. I have served in many public and private practice settings. My primary interest is in observing and documenting the ongoing mental health reform efforts in the State of North Carolina and documenting its sucessess and failures at all levels. My favorite pastime among many others is spoofing my friends and kids with my deadpan sense of humor.

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