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Industry Report: Correctional Facilities

25 April 2017

Prepared by Christian Shepperd


Prisons have been around for thousands of years, but it wasnt until recently that the purpose of
prisons had evolved into more than a place for holding criminals. In our recent history,
correctional facilities have been created. These facilities could be considered a sibling of prisons,
as they serve a similar purpose. This report will explore the industry of correctional facilities,
including prisons and their history, the evolution of prisons, the pros and cons, and much more.
Following this article, the reader will have a full understanding of correctional facilities and the
role they serve in todays world.

Prisons vs. Correctional Facilities
Throughout this report the words/phrases prisons and correctional facilities will be used. For
this paper, they will have two separate definitions. Prisons will refer to an establishment that
incarcerates a convicted person, and a correctional facility will refer to an establishment that both
holds a felon and works to improve the person so that he/she can be an accountable citizen once

History of Prisons
Prisons have been around for thousands of years and are first documented as being used in the
ancient empires of Rome, Egypt, China, and Babylon (Correctional Institutions, 2016). From
there, they were firmly established during the Renaissance period of Europe. The United States
followed suit and had a steady establishment of prisons all throughout the eighteenth and
nineteenth centuries. In 1825, New York opened its first House of Refuge for juvenile
delinquents to combat its large homeless population (Correctional Institutions, 2016). The
opening of the House of Refuge in 1825 sparked the idea of government-funded prisons in the
United States. The United States now has three different levels of prisons: Federal, State and
City. All three serve the same purpose but are funded by a different level of the government
(Correctional Institutions, 2016). The idea of correctional facilities to developed over time when
officials realized the need to rehabilitate prisoners rather than simply house them.

History of Correctional Facilities

A correctional facility is only slightly different than a prison, the main difference being that a
correctional facility has a goal of reintroducing an inmate to society. OHollaren (2016) states,
The Correctional Facilities industry consists of operators that own or manager correctional
facilities and halfway houses. The halfway house idea was introduced in the second half of the
twentieth century; Correctional Institutions (2016) says, The ideological emphasis shifted from
punishment to rehabilitation of offenders. The idea is that inmates have been predisposed to
breaking societys roles due to an impoverished upbringing and, with enough teaching and
modeling, can become a productive member of society (Correctional Institutions, 2016).
Correctional facilities are relatively new in the criminal justice system, but they suffer from very
similar issues as prisons.

Major Players
Corrections Corporation of America
The Correctional Facilities industry is dominated by two public companies, the largest is
Corrections Corporation of America, owning 34.9% (OHollaren, 2016). Corrections
Corporation of America owns, operates, and manages 77 correctional and detention facilities. In
2015 the company saw a strong recovery with 8.9% growth in revenue and it continued in 2016
with a 2.9% growth (OHollaren). This growth was triggered by adding more correctional
facilities. Further, more emphasis is put on re-instating inmates to the public. This change of
focus has led to predicted growth for both companies, but more so for the GEO Group.

Source: OHollaren, Correctional Facilities

GEO Group, Inc.

GEO Group is the second leader in the industry with 27.1% of the market share (OHollaren,
2016). GEO owns and operates 83 detention and correctional facilities, slightly more than
Corrections Corporation. Like its competitor, a focus on correctional facilities led to massive
growth for the company with an 11.9% increase in revenue for 2015. The key difference is that
they are expected to grow even more as financial strains on federal and state prisons lead to more
use of private facilities like GEO (OHollaren, 2016).

Source: OHollaren, Correctional Facilities

Major Issues
Under Staffed
Packham (2005) states, The public is safe from harm by inmates but those who work and live in
the states prison system are not afforded that same protection. Part of this issue is an
occupational hazard. Although workers are surrounded by convicted felons, a large aspect of the
hazard can be attributed to severe under-staffing. At one point in a facility, there were 18
workers on staff compared to 1,139 inmates and only 13 available guards. At any moment,
inmates could easily gang up on the guards and over-power them. This is a theme throughout all
prisons and correctional facilities that make the job very dangerous and unappealing. It has been
estimated that the staffing levels are 22 percent below what is needed (Packham, 2005) that
number is very high for just one industry.

Crime within facilities

Another problem that facilities must face is internal organized crime, specifically in international
facilities. A study conducted by Erbolat et al. found that the problem of organized crime
combating in Kazakhstan Republics penal system is similar to that in the penal systems of all
former Soviet Union States (p. 310). This brings up an interesting point; the state of the
government can play a critical role in the effectiveness of a rehabilitation center. With a corrupt
government, crime within facilities becomes more prevalent and undermines the rehabilitation
process. When organized crime within facilities is taken care of, the rehabilitation of prisoners
can be much more successful.

Providing Healthcare
Healthcare is a major concern for several
reasons. Sanitation levels are below the
public average in a prison setting due to
overcrowding. Providing healthcare to
thousands of inmates who cannot provide
payment is very expensive. With close
quarters, like those in a prison, it is difficult
to prevent the spread of disease. Lambert et
al. (2016) conducted research on the disease
Tuberculosis (TB) from 2002-2013 in
correctional facilities; they found that there
were 5,084 infections recorded among
juvenile and older men and 4,934 among
adult men. That is one disease recording
close 10,000 infections. With just one disease
doing that much damage, the healthcare
expenses can be enormous when all diseases are considered. Lambert et al. (2016) found that
incarcerated populations continue to experience TB at a substantially higher incidence than in
the general population (p. 2234). This amount of infection also puts workers at risk of higher
infection rates as they are surrounded by the same conditions. All this makes healthcare a major
concern for these facilities.

Source: Hutton, Results of 29 State Survey

The purpose of Correctional Facilities
Providing Opportunities
The purpose of rehabilitating is to allow prisoners the opportunity to exit prison and become a
part of society and provide more opportunities within prison itself. One such opportunity is
called electric monitoring (EM). Electric monitoring is a live surveillance of offenders while they
live at home. To receive this opportunity, prisoners must first show they are reliable. It is also a
source of rehabilitation, as it obliges offenders to follow certain rules a critical concept to be
learned (Henneguelle, Monnery, & Kensey, 2016). This watchfulness has been very successful
as the likelihood of committing another crime drops by 20 percent: 66 percent of ex-prisoners
are reconvicted compared with 46 percent of ex-EM offenders (Henneguelle, 2016). The
continued development of EM will continue to reveal the difference between the percentages.

Source: Hennegulle, Better at home than in Prison?

As stated earlier, correctional facilities are based on the idea that there are people predisposed to
committing crime due to an impoverished upbringing that lacked the rules of society. While the
ideal situation is to completely avoid an impoverished upbringing, the correctional facilities
provide an excellent solution once a crime is committed. An example of the advantages lies in
Nazaryans article Unmaking a Murderer; he states that Corey Arthur has done significantly
better when deprived of freedom by the state. He is much more informed, articulate and
compassionate (p. 36). Through the programs provided, Arthur has earned certificates in
many crafts and earned a legal research certificate. He can also present himself in letters and in
person as a respectable man (Nazaryan, 2016). By providing the inmates with classes and
psychiatric treatment, inmates can recover and re-enter society.

Correctional facilities are a relatively stable industry with the two major players: Corrections
Corporation of America and GEO Group, both experiencing growth in the last two years. There
is a clear swing in the industry towards rehabilitating inmates as prisons continue to overflow.
The goal of rehabilitating is to create a productive member of society out of the inmates, who can
enter the world once their sentences are up and not risk returning. The industry is in a critical

period as it adjusts to the new expectations of rehabilitation and attempts to overcome its leading
issue of overpopulation.

"Correctional Institutions." Encyclopedia of American Industries. Farmington Hills, MI: Gale,
2016. Business Insights: Essentials. Retrieved from GALE Database

Henneguelle, A., Monnery, B., & Kensey, A. (2016). Better at Home than in Prison? The Effects
of Electronic Monitoring on Recidivism in France. Journal of Low & Economics, 629-
667. Retrieved from EBSCOhost Database

Hutton, M. D., Cauthen, G. M., & Bloch, A. B. (1993). Results of a 29-state survey of
tuberculosis in nursing homes and correctional facilities. Public Health Reports, 108(3),
305314. Retrieved from NCBI Database

Kainar, E. Erbolat (2015). The Problem of Combating Organized Crime in the Penal System of
Republic of Kazakhstan and other Countries, Journal of Advanced Research in Law and
Economics, 210-320. Retrieved from ProQuest database

Lambert, L. A., Armstrong, L. R., Lobato, M. N., Ho, C., France, A. M., & Haddad, M. B.
(2016). Tuberculosis in Jails and Prisons: United States, 2002-2013. American Journal of
Public Health, 2231-2237. Retrieved from EBSCOhost Database

Nazaryan, A. (2016). Unmaking a Murder. Newsweek. Retrieved from EBSCOhost database

OHollaren, K. (2016, November). IBISWorld Industry Report 56121. Correctional Facilities in

the US. Retrieved from IBISWorld database

Packham, J. (2005, July). Correctional Officers make plea for Additional Employees. Journal
Record Legislative Report. Retrieved from LexisNexis Academic Universe