Applying Cost Containment to a Public Correctional Medicine System

Abstract

Funds allocated as the result of a 1994 class action lawsuit involving the Utah Department of Corrections (UDC) established adequate funding for the provision of health care for Utah’s incarcerated population. However, inflationary pressures along with increases in population size began to squeeze limited budgets and resulted in a $2.3 million dollar deficit by the fiscal year 2001. In response, UDC’s Bureau of Clinical Services rigorously assessed this situation and began to forge a new direction for health care delivery that utilized private sector and other fundamental cost containment techniques. Those techniques included enforcement of strict pharmaceutical formularies, analysis of staffing patterns and productivity, flattening of the administration, creation of a pyramidal line of authority, and intense scrutiny and monitoring of all contracts. These efforts resulted in $250,000 saved in pharmaceutical costs, a 10% increase in staff productivity, reassignment of two senior-level administrative staff, and establishment of a physician bureau chief with authority over all administrative and clinical decisions. These reforms have resulted in $690,000 being cut from existing contracts (including pharmaceuticals) and a cumulative $1,474,000 savings (7.5%) from the previous year. It was concluded that despite the environment of escalating health care expenses, cutting costs can be realized while at the same time maintaining quality care and meeting the stringent criteria for National Commission on Correctional Health Care accreditation statewide.