No one escapes accountability for the neglect and abuse people are experiencing, including the Governor.
We'll be paying attention.
Let that be a heads-up to whomever picks up that contract, too. You will have a formidable prisoner rights lobby to go up against by the time you move in. I'd suggest you work with instead of against us.
Valitas locks in contracts worth $100 million
St. Louis Business Journal - by Angela Mueller
Friday, March 19, 2010 | Modified: Monday, March 22, 2010, 6:00am CDT
Although the loss of two major contracts cost Valitas Health Services Inc. more than $100 million in revenue last year, the company is already recovering lost ground.
Revenue at Valitas, which provides health-care services to inmates in correctional facilities, dropped 17 percent in 2009 to $730 million. However, President and Chief Executive Dick Miles expects the Creve Coeur-based company to be back above the $800 million mark in 2010, coming close to matching Valitas’ record-setting revenue of $880 million in 2008.
In the past 12 months, Valitas has landed multiyear contracts worth more than $100 million in annual revenue. This includes a statewide contract to provide medical services to all Tennessee prisons, a deal that will bring in more than $50 million a year. Valitas was also awarded a contract worth about $4 million annually with the jail system in Galveston, Texas.
Valitas’ pharmacy subsidiary, PharmaCorr, earned two contracts worth a combined $20 million with the state prison systems in Oklahoma and Louisiana. The company’s Genesis Behavioral Services subsidiary was awarded a contract worth $15 million annually to provide mental health services to prison inmates in the southern region of Florida.
Valitas’ main subsidiary is Correctional Medical Services Inc. (CMS). In the past, PharmaCorr and Genesis provided additional services to existing CMS clients. These new contracts represent the first time Valitas has unbundled the pharmacy and mental health components.
“There are other states looking at these type of pharmacy-only or mental health-only contracts, and we are open to bidding on those,” Miles said.
Valitas, which has 300 local employees and 6,300 total employees, recently extended its existing statewide contract with Missouri for four years. The company also extended statewide contracts in Indiana, Idaho, Delaware and Maine.
Valitas could have another major contract waiting in the wings. For the first time, Arizona has issued a request for proposals to outsource health-care services for its correctional facilities. Miles estimated the contract would be worth about $100 million annually. Valitas’ staff members have been touring correctional facilities in Arizona to understand the scope of the contract, and the company is preparing a bid to submit by the April deadline.
The pressure on states’ budgets across the country is prompting more states to consider privatizing health-care services at their correctional facilities as a way to save money, Miles said. Health-care services at about 60 percent of correctional facilities, whether state prison systems or city or county jails, are managed by government agencies. The remaining 40 percent outsource health care to private companies such as Valitas.
“There’s a lot of room for growth,” Miles said. “States that have not looked at privatization in the past, like Arizona, are looking at it, which is a good thing for us.”
Valitas competitor America Service Group Inc. (ASG), a publicly traded company based in Brentwood, Tenn., also has its eye on the Arizona contract. In a recent conference call with investors, ASG President, Chief Executive and Chief Operating Officer Rich Hallworth called Arizona’s RFP a “watershed event.”
“We look for other states to follow suit in the next year or two,” Hallworth said. If Arizona is able to record savings from outsourcing health care in its prisons, Hallworth expects it to “open the floodgates” for other states to consider privatization.
“If they show savings, it’s going to be very difficult for other governors not to have to answer to taxpayers and legislators about why are they spending extra money,” Hallworth said. ASG reported $610.5 million in 2009 revenue.
The overall correctional facilities industry is expected to continue to grow as inmate populations continue to increase in prisons and jails. Industry research firm IBISWorld has forecast that the correctional facilities industry will generate revenue of $22.7 billion in 2010, representing an increase of 2.5 percent from 2009.
In 2008, more than 7.3 million people in the United States were under some form of correctional supervision, including inmates in prisons and jails and individuals on probation or parole, according to the U.S. Department of Justice. Of that number, 1.6 million were prison or jail inmates, up 25.2 percent from 1998.
Valitas currently provides health-care services in 336 correctional facilities across the country, treating more than 274,000 inmate patients each day.
Miles said the company is interested in diversifying its offerings, either through adding services or acquiring existing companies. Valitas specifically is looking at adding services focused on transitional living programs that help former inmates re-enter the community.
Chicago-based Beecken Petty O’Keefe & Co. increased its stake in Valitas in January 2008 to become the majority owner.
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