Highlight on California: the price of privatizing psychiatric care

California may privatize a state mental health hospital as a cost saving measure. However, critics are worried that Correct Care Recovery Solutions, the selected contractor, will achieve cost savings through dangerous reductions in care quality. The California Mental Health Services Authority—the consortium of California county mental health agencies—is proposing a facility which would serve around 250 civilly-committed patients. Additional beds are needed due to a persistent and historically high need for the most dangerous and severe of the state’s mentally ill.


The current network of state hospitals houses people who are charged with crimes but found mentally incompetent to stand trial or not guilty by reason of insanity. In June, the waiting list for hospital beds reached a five-year high of 700 individuals. The average wait time for an individual not found competent to stand trial is two months, but many are forced to wait several months.  Those patients found incompetent to stand trial who do not have access to a bed are forced to wait in county jails, typically in Los Angeles County.  In county jails, patients have access to basic mental health care but long-term psychiatric treatment is often delayed. Other patients, those who are civilly-committed, are housed in local psychiatric hospitals.


The costs are significant regardless of where patients are housed. It can cost between $600 and $1,300 a day to house civilly-committed patients in local psychiatric hospitals in Los Angeles County. When patients are eventually transferred to state hospitals, counties are still obligated to pay for the care provided to patients, and the state bills about $650 per patient, per day. In 2015, Los Angeles County, alone, spent $55 million on patient care in state mental health hospitals.

Correct Care

The contractor, Correct Care, says it can cut the state’s cost by 10 percent. However, the promise of cost savings through privatization has a complex history. The Department of Justice (DOJ) announced in August 2016 that it would end its use of private prisons noting that private facilities are both less safe and less effective than government run facilities. Soon after, the Obama Administration announced it would take steps to move away from the use of for-profit (private) immigration detention facilities. Privatization of state psychiatric facilities poses similar problems to those which led to the administration’s policy on prisons and immigration facilities.

Privatized State Hospitals: South Florida State Hospital

If California moves forward with its plan, the state will not be the first to privatize a state mental health hospital. The South Florida State Hospital was one of the first in the U.S. to be privatized.  The Florida hospital was managed by a division of GEO Group—a private prison contractor—until 2014, when Correct Care Solutions bought the unit. Following three deaths in the facility, in 2011, Florida’s Department of Children and Families investigated the hospital. In one of the deaths, a heavily medicated patient was found dead in a bathtub with water so hot the patient’s skin sloughed off his body. Investigators determined that Correct Care was addressing the problems. However, between 2011 and 2015, investigators verified 19 more claims that staff abused, neglected, or failed to properly supervise those in their care. Some of those instances of abuse and neglect included a technician throwing a patient to the ground and a patient jumping to his death from the eighth floor of a parking garage. Those opposed to privately run mental health institutions cite understaffing as a key cause of such abuse and neglect.

State-run hospitals

The state-run hospitals are not immune from criticism and instances of patient harm. In 2014, 3,500 patient-against-patient assaults were recorded in California. Metropolitan State Hospital in Norwalk admits the type of civil-commitments which would be transferred to the hypothetical Correct Care facility. Between 2011 and 2015, the California Department of Public Health investigators found at least 55 deficiencies at Metropolitan related to a patient’s harm, abuse, neglect, and restraint.


There is no dispute that California requires additional mental health hospital beds. However, regardless of who will operate additional mental health facilities, lawmakers and stakeholders in California must be careful that the wellbeing of patients is not exchanged in a bargain for a lower rate.