The Big House, Inc.

D. Muska

Governor Kenny Guinn’s recent attempt to privatize health services in Nevada’s prisons terrified medical workers at the Silver State’s government-run correctional facilities. The State of Nevada Employees Association declared all-out war on the proposal, a largely sympathetic media toed the union’s line, and legislators of both parties either ignored or demonized the notion of privatized health care in Nevada’s prisons. In what came as no surprise to close observers of Nevada’s political scene, when the legislative session concluded the governor’s privatization proposal was dead. But when compared with the nation’s undeniable privatized-corrections trend, Guinn’s plan to allow companies to take over medical services at Nevada’s prisons was quite modest. Privatized prison construction and operation have been adopted by the federal government and a growing number of states—and studies clearly show that corporations can both build and manage correctional facilities more cheaply than the public sector.

The Privatization Path

Twenty years ago, there were no privatized prisons in America. But the deregulation and privatization movement that began in the 1970s eventually turned states’ interest toward private-sector involvement in corrections. In 1984, Hamilton County, Tennessee awarded the first local prison-privatization contract. The next year, Kentucky awarded the first contract at the state level. The pace of prison privatization quickened, as the justice system began to incarcerate more and more criminals. Between 1984 and 1997 the population of local prisons rose 100 percent and the population of state facilities rose 213 percent. With inmate populations booming, companies such as Corrections Corporation of America (CCA) have a steady stream of new customers. "More states than ever," writes Reason Public Policy Institute Director of Economic Studies Adrian T. Moore, "are making use of private corrections—25 states, as well as the District of Columbia and Puerto Rico, have a private facility in operation or under construction." According to a 1997 study, private prisons in the United States house more than 85,000 inmates. That’s still only 4 percent of the nation’s total prisoners, but the corrections industry’s annual growth rate is 25 percent.

Cutting Costs

Why are states privatizing their prisons at such a rapid pace? Because companies can constrain prison costs better than public corrections departments. There is now a substantial body of research which shows that private prisons give taxpayers a break. In 1995, Charles W. Thomas, director of the Private Corrections Project at the University of Florida, told Congress: "Clear and convincing evidence from the United States and elsewhere shows that privatizing criminal corrections facilities results in better public service at a lower cost than government operation." Why does the private sector keep costs down? As Moore writes, "When governments contract with the private sector, efficiency and innovation do not come about because private firms have some magic pixie dust, unobtainable by the public sector, to sprinkle about. It is competition that creates efficiency and innovation, because competition punishes inefficiency and inertia." Prison-construction costs are typically about 30 percent less for the private sector, and operational costs are approximately 10 to 15 percent less.

The Resistance

As Guinn’s mild prison-privatization proposal demonstrated, corrections employees in the public sector are not about to sit idly by while their counterparts in the private sector impress elected officials and taxpayers alike. The most common charge made against corrections corporations is that the profit motive means their services are inadequate—that companies care more about the bottom line than inmates. But the quality of services at private prisons is not inferior to government-run facilities. "Private operators," writes Moore, "knowing they could be replaced if they fail to deliver, have strong incentives to provide quality service." In a comparison of one private prison vs. several government-run facilities using 333 quality criteria, University of Connecticut sociologist Charles Logan concluded "the private prison outperformed the state and federal prisons, often by quite substantial margins, across nearly all dimensions." Other studies support Logan’s findings, including examinations of private prisons in the United Kingdom and Australia. Furthermore, private prisons are typically accredited by the Commission on Accreditation for Corrections at a much higher rate than public prisons.

Since corporations have contracts to operate prisons, when quality is not what it should be officials can deal with the problem more quickly than they can at government facilities—after all, it’s much easier to change a contractor than to change a bureaucracy. But CCA and other public corporations have an extra incentive: the stock market. When six inmates escaped from a CCA facility in Ohio last July, the company’s stock plummeted 25 percent in three weeks. The twin terrors of bad publicity and shareholder alarm prompted CCA to fix things, fast. "Without waiting for a committee to convene, investigate, or develop recommendations," wrote Moore and fellow Reason analyst Sam Staley, "CCA implemented a number of security enhancements," including a new gun tower, more razor wire between fences and a doubling of perimeter patrol vehicles.

Women in Prison

Although Nevada is hardly fertile ground for privatization proposals—the state’s powerful unions and numerous free market-hostile legislators see to that—the Silver State does have one private prison. The Southern Nevada Women’s Correctional Facility (SNWCF), now in operation for almost two years, is run by CCA. In 1995 Nevada turned to the company for help in managing its overcrowded female prisons. The state is currently paying a fee to CCA for each inmate housed each day, and is also in the process of buying the building, which CCA constructed. The company has a five-year contract to manage the facility. The SNWCF offers inmates GED programs, as well as parenting classes and drug abuse counseling. Last year the Las Vegas Sun’s Steve Kanigher reported that the prison "is considered a model occupant by local office-holders and prison officials." That sentiment was echoed by Nevada Department of Prisons official Glen Wharton, who told the Associated Press that the state "has a good working relationship with the Corrections Corporation of America … . It’s going well."


Last year, Nevada’s male inmate population rose 7.4 percent. Its female inmate population rose 19 percent. The Silver State now incarcerates over 8,000 prisoners, and as long as the state’s general population continues to grow, prison overcrowding will only worsen. In light of the compelling evidence that corporations can keep corrections costs low while providing comparable—or even superior—care, Nevada’s elected officials should look to the private sector for the state’s prison needs.

D. Dowd Muska is a contributing editor for Nevada Journal, the Nevada Policy Research Institute’s monthly magazine. He can be contacted at