California prison healthcare proposal pads a Texas company’s profits first and foremost

It came from out of nowhere: a” too-good-to-be-true” proposal that would purportedly slash costs for California’s prison healthcare system through the expanded use of telemedicine. Now suddenly, without any appropriate vetting or study, this proposal is being touted as a sound, fully baked solution.

It is not.  Instead, it’s a sales proposal from a for-profit Texas corporation with only six employees, and with financial problems of its own.  This company is looking to sell California hundreds of million of dollars in telemedicine equipment along with a whole lot of empty promises.

The private company, NuPhysicia, is an offshoot of the University of Texas Medical Branch (UTMB) – a public university in Texas that took over care of Texas inmates in 1994. UTMB owns 35% of NuPhysicia, created to sell versions of its prison telemedicine system inside and outside of the state of Texas. Recently, NuPhysicia presented its paper:“Assessment and Evaluation: California’s Opportunities for Improved Inmate Health Care Quality and Cost Controls.”  Susan Kennedy, Governor Schwarzenegger’s chief of staff, gushed it is a “wholesale reform of the prison healthcare system,” that promises savings of $1.2 billion annually.

Sounds good? Here’s the problem:
The cost savings promised in the NuPhysicia proposal are grossly inflated.  The $1.2 billion dollar savings estimate in this proposal may actually be closer to the $35 million/year that was actually saved in Texas.  A 2006 LAO report estimates an even lower annual savings for California — about $17 million dollars/year. And those savings don’t account for the added costs of settling lawsuits that may result from the poor-quality of care that would result from the plan.

Under the NuPhysicia plan, inmates would spend, an average, 8 minutes per visit with an offsite doctor who sees them via a video hookup.  This is acceptable for delivering certain types of specialty care to remote parts of the state, but not for providing the type of primary care that on-site doctors deliver.

Compromising care in order to save money has the opposite effect — it leaves the state open to an endless cycle of litigation by inmates, continued federal control of the prison health care system, and higher cost solutions created by court appointees.

To add a veneer of credibility to its proposal, NuPhysicia has recommended transferring all of prison healthcare from the California Department of Corrections and Rehabilitation (CDCR) to the University of California (UC). While UC doctors, students and faculty on nine campuses conduct cutting-edge medical research, the UC system has no relevant experience to take on what the NuPhysicia delivery model proposes.  UC would face extreme financial and legal exposure, NuPhysica has much to gain by attaching itself to the prestigious institution; UC has much to lose by going down that road.

Texas has been the testing ground for the NuPysicia healthcare delivery model that is being proposed for California.  Given their maternal relationship with NuPhysicia, UTMB might wish it could throw the baby out with the bath water. According to UTMB’s executive vice president and finance and business officer, William R. Elger, they stand to lose between $65 and $105 million in 2010 -11 on the academic-prison partnership.  This is because the program is underfunded by the state. “It’s not working for us, and it’s not working for the state.”

Before jumping in feet first, California needs to conduct an independent, unbiased study in order to consider real solutions for the future of prison healthcare. Our leaders should not be persuaded by a slick sales pitch.  Especially one will make millions for a Texas company before California sees a cent of savings.

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