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June 26, 2007

DiNapoli Urges Improvements in New York City
Management of Prison Health Care Contract

Contract renewal or rebid offers opportunities

New York City could better manage its $359.4 million contract with Prison Health Services (PHS) by implementing a number of recommendations made in an audit State Comptroller Thomas P. DiNapoli released today.

“New York City spends $120 million a year on health services for the inmates housed in city jails,” DiNapoli said. “Those are tax dollars. The City needs to work harder to ensure that PHS is meeting its contractual obligations and using those tax dollars effectively.”

PHS is in the final year of a three-year contract to provide medical, dental, mental health, and pharmaceutical services at 10 of the city’s 11 jails, which have an average daily population of about 14,000 inmates. Although the New York City Department of Correction operates the facilities, including nine at Rikers Island, the City Department of Health and Mental Hygiene (DOHMH) oversees the PHS contract.

DOHMH reviews inmate medical files daily to determine whether PHS is delivering services as stipulated in the contract, and reports on PHS’s performance on a quarterly basis. If PHS fails to meet performance benchmarks outlined in the contract, DOHMH can require PHS to put corrective action plans in place and levy fines under the contract’s liquidated damages provisions. In 2005, for example, DOHMH levied fines totaling $250,000, which is about five percent of PHS’s $4.75 million administrative fee for that year.

Auditors found that more than 25 percent (10 out of 39 in two quarters, and 12 out of 39 in one quarter) of PHS’s performance benchmarks for delivery of care were not met in consecutive evaluation periods. PHS failed to meet benchmark standards in areas including intake medical history and physical exams, dental services, and provision of some HIV-related services for new inmates.

Auditors noted specific problems in the following areas:

  • Performance Evaluation. In a review of the process by which DOHMH evaluates PHS’s performance, auditors found that the agency was accurately assessing the contractor’s work. In about half of the areas where corrective action was needed, auditors found that PHS performance had improved and did meet performance standards. But it sometimes took at least two quarters — six months — for services to improve to the contract benchmark levels.
  • Mental Health Documentation. An initial corrective action plan noted the need for more clinical supervisors, especially on weekends. But performance still did not meet benchmarks and a second corrective action plan noted the same staff needs.
  • Intake History and Physical Examination. After failing to meet performance benchmarks in these areas in the first quarter of 2005, a corrective action plan was put in place. But rather than improving, contract compliance fell in the two subsequent quarters.
  • Quarterly Reports. Auditors pointed out that DOHMH’s quarterly reports on contract compliance are not required to be issued within a specific timeframe, and are usually disseminated two to three months after the end of the quarter. Therefore, there is often a one-quarter delay in identifying where corrective action plans are needed and putting them in place. Auditors recommended that DOHMH take action to expedite issuance of the quarterly reports.
  • Corrective Action Plans. In some cases, corrective action plans may be needed even when benchmarks are met. For instance, in the Medical Follow-up Timeliness area, a compliance rate of 93 percent met the terms of the contract, but auditors noted that rate still meant that the contract requirement was not met in 5,600 instances in a nine-month period.

Auditors outlined a number of strategies to improve the overall effectiveness of the contract with PHS, including a review of indicators used and acceptable compliance rates, and working more closely with the Department of Correction on specific details of the contract.

The audit made several recommendations that, if implemented, would help the City get better value out of the contract through greater compliance by PHS. These improvements could occur through the balance of this contract, and during subsequent agreements with PHS or other vendors. Among the recommendations: expedite efforts to develop electronic medical records; periodically validate a sample of the Service Delivery Assessment Unit’s daily findings; expedite the development and implementation of corrective action plans; and develop an ongoing process for monitoring the effectiveness of corrective action plans.

With an extended or new contract required after December 31, 2007, OSC auditors note that the City should consider negotiating stronger liquidated damages provisions. The audit notes that existing penalties — which accounted for only about 5 percent of PHS’ 2005 administrative fee — may be insufficient as compliance incentives.

In its response to the audit, DOHMH agreed with some of the auditors’ findings. DOHMH officials noted that the agency used other standards beyond performance indicators to monitor contract compliance, and that a failure by PHS to meet benchmarks is not an indication that medical care was substandard or that inmates lacked medical services. The complete response is included in the audit.

Click here for a copy of the audit.



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