Following the Money

In 1993, when the Legislature passed a bill giving responsibility for most of the medical care of the state's prison inmates to the University of Texas Medical Branch at Galveston and the Texas Tech Health Sciences Center in Lubbock, it seemed like a good deal for the state and its prisoners. As the dominant participant, UTMB already had a track record in running the state's only prison hospital, and Texas Tech, included as a minority partner with 20 percent of the action, appeared well positioned to handle the medical needs of prison units in west and north Texas.

But the most interesting part of the deal, and one that slid by lawmakers with little comment, wasn't who was handling the medical care; it was who was overseeing the handling of the medical care. Instead of having the medical schools contract directly with the prison system, the legislation called for UTMB and Texas Tech to create a third entity, the Correctional Managed Health Care Advisory Committee. Despite its name, there seems to be nothing advisory about the CMHCAC. Indeed, in some legislative documents it's described as the "board of directors" that supervises the administration of prison health care for the Texas Department of Criminal Justice. The board consists of two representatives each from UTMB and Texas Tech and two representatives from TDCJ, one of whom must be a full-time medical doctor. In short, the contract for health care is run by the vendors themselves, who outnumber their client four to two.

In theory, the Correctional Managed Health Care Advisory Committee is supposed to be a supervisory agency that plans and monitors health care, but the actual day-to-day work of providing care, hiring employees and so forth is done by the two medical schools. Nonetheless, the CMHCAC has its own five-person office in a Huntsville bank building. It's headed by two former TDCJ directors, James Riley and James Lynaugh, neither of whom has extensive medical experience. As executive director, Riley makes $118,400 a year; Lynaugh, the chief financial officer, pulls down $136,302 annually. They supervise one assistant director and two administrative associates. About a million dollars a year from the prison health care contract goes directly to this five-person department, and no one seems to be able to explain just what the state gets in return.

Somebody is always trying to make money from Texas's prisons, usually someone with connections to the prison administration. The most notorious recent case was that of Andy Collins, who as TDCJ director signed a $33 million contract to feed prisoners a soybean meat substitute called VitaPro while receiving $1,000 a day from VitaPro as a consultant.

Other deals have abounded. But few of them have shown the political sophistication that went into managed correctional health care. The peculiar arrangement in which vendors monitor their own contract has not escaped the attention of the state auditor's office, which has been looking at managed medical care in the prison system since last spring and which, after a four-month-long delay, released its audit last week.

The chairman of the TDCJ board, San Antonio lawyer Alan Polunsky, has been fuming about the TDCJ's lack of control of its health care providers for months. One of his concerns is the $668,000 in bonuses that UTMB paid 60 of its prisoner-care physicians last year. Some critics charge that the money should have either gone toward more medical care for prisoners or been a saving for the state. They also wonder exactly what the doctors were being rewarded for, and fear that it may have been for saving UTMB money by denying care to inmates. UTMB medical director Jason Calhoun defends the bonuses as both legal and ethical, and says the physicians were paid the extra money for productivity, not for denying care. Indeed, in UTMB's fiscal 1997 budget, the state's auditors identified $1 million that had been set aside for physician incentive bonuses, part of $1.6 million worth of items that they said "did not involve direct delivery of health care to [TDJC] inmates."

Polunsky objects strenuously to the bonus system. "It sends the wrong messages to the doctors," he claims. "It discourages them from providing meaningful treatment to the inmates."

Polunsky has even stronger words about the structure of the CMHCAC, declaring it "fundamentally wrong. The committee lacks accountability; it lacks accountability to the Legislature and to the TDCJ and ultimately to the taxpayers. It is the classic case of the tail wagging the dog. It makes no sense at all, but is the result of lobbying and politics."

Those politics are complicated, but they work something like this: James Lynaugh is a financial expert who worked closely with Lieutenant Governor Bob Bullock when Bullock was state comptroller. Although Lynaugh had no prison experience, he was installed as director of TDCJ in 1987 when then-governor Bill Clements was pouring money into the budget to build more prisons. Lynaugh fell out of favor with the TDCJ board during Ann Richards's governorship, and resigned in the fall of 1993. The board was divided about who to choose for its next director, and pressed James Riley, a former military-prison warden who had been working in health care for the TDCJ, to serve as interim director. Riley told the board he didn't want the job permanently, but he took it for several months until Andy Collins of VitaPro fame was selected.

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