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PLN associate editor mentioned in articles re CCA business pratices

Nashville Business Journal, Jan. 1, 2011.
PLN associate editor mentioned in articles re CCA business pratices - Nashville Business Journal 2011

No place like prison: Inside a CCA facility

Nashville Business Journal by Brian Reisinger, Staff Reporter

Date: Monday, November 28, 2011, 1:45pm CST

Brian Reisinger
Staff Reporter - Nashville Business Journal

There’s no place like prison to do business.

There’s probably no place like prison as far as much of anything goes. But trust me: When it comes to places of business, a high-security facility with hundreds of criminal offenders, security checkpoints brimming with weapons and mazes of heavy locked doors stands out.

It’s a fact that illustrates both the achievements and challenges of the private prison industry and Corrections Corp. of America (NYSE: CXW), the Nashville-based company that remains the industry's dominant player.

CCA, which is the subject of a story out Friday for full subscribers, counts among the prisons it operates the Metro-Davidson County Detention Facility out on Harding Pike. Two colleagues and I got the chance to tour the facility earlier this year, and all the things that make private corrections so interesting — whatever you think of it morally — were on full display. A photo gallery, taken during that tour, is available here.

Of course there are heavy locked doors, secure checkpoints and so on. But there are less tangible things that get at the heart of debate over the industry as well. Down one long corridor, words in bold red emblazon white brick walls, proclaiming the company’s values. Among the declarations: "Accountability" and "Innovation."

It’s a credit to companies like CCA that they’ve convinced state and federal officials across the country they can deliver on both. We can provide all the security and high standards you require, they say, with the nimble efficiency of the private sector.

But that’s also the source of a good deal of consternation.

Critics argue that in a country already bent on locking people up, putting the private sector in the mix simply incentivizes incarceration. Activists like Alex Friedmann of Nashville go to great lengths — contributing to books and documentaries, staging protests and so on — to drive home the idea that private enterprise also puts business practices into question when human lives and public policy are at stake.

On our tour, we strode through a range of hallways and rooms as CCA touted its rehabilitation programs. One area featured inmates who receive intensive substance abuse treatment, many of whom said they’re glad for the opportunity.

The company has made a strong push in recent years to show how such programs factor into its facilities. But CCA and the industry still face criticism, from lawsuits to public advocacy campaigns, claiming that making money and securing human lives are irreparably at odds.

In Friday’s story, we explored how that game is changing.

Rising inmate populations used to fuel industry growth regardless. But in a time when government cost cutting can mean both privatization — an opportunity for CCA to make its case — and less gumption for incarceration overall, the industry is different.

One thing will always be true: It’s not just another day at the office.


With states cutting costs, prison firm CCA aims to lock in new customers

Premium content from Nashville Business Journal by Brian Reisinger, Staff Reporter

Date: Friday, November 25, 2011, 5:00am CST

Executives with Nashville’s Corrections Corp. of America are eager.

After all, what better time for a company that pitches prison privatization as a cost savings than when government officials across the country are scrambling to find more money? Capitalizing, though, will require deft navigation of a game where the rules are changing.

Governments traditionally spent ever-increasing amounts on prisons, whether privately or publicly owned, during boom times. But today, in the face of the first decrease in overall state prison spending in a decade, the path forward is much less certain. Still, the publicly traded prison operator (NYSE: CXW), which recorded revenue of $1.29 billion for the first three quarters of 2011, remains confident.

"I think the fiscal environment allows for … innovative discussion," President and CEO Damon Hininger said in an interview.

But it’s also a market shifting away from assumed growth, making it instructive for other businesses that work with the government.

SLIDESHOW: Inside CCA's Metro Davidson County Detention Facility

As of 2009, the most recent data available from the U.S. Department of Justice, the state-level inmate population was at 1.4 million people and had declined 0.2 percent from the previous year — small, yes, but the first decrease in at least a decade.

Though an increase in federal prison rolls prevented a decrease in the overall inmate population, the state-level dip means steady, incremental growth isn’t something to depend upon, experts say. Some states may bite on privatization, while others may pause and rethink the return on investment of some incarceration policies, possibly exploring options like early release programs, alternative sentencing or inmate transfers.

As Hininger says, CCA believes it can leverage tight state budgets by pitching private operation — and increasingly, ownership — of prisons as a cost saver in new markets. And even without new inmates, roughly 93 percent of state and federal inmates are in publicly operated prisons, leaving business to chase for years to come.

Much of the investment world remains bullish. Jeff Nahley, an investment banker and Nashville managing director of Signal Hill of Boston, said it's a "fair question" what impact reforms might have, but that "the market is so under penetrated by the private sector" that the industry remains a solid bet. CCA’s stock price has risen steadily in the past year and is nearly $50 per share — just shy of the stock’s all-time high.

However, those who see profiting off of incarceration as immoral also see an opportunity.

Alex Friedmann, associate editor of Prison Legal News and a Nashville-based critic of CCA who argues the profit motive encourages incarceration and shoddy practices, thinks more states will study reform options and bring more scrutiny to the company’s practices.

"The recession is creating opportunity for the industry, and also problems for the industry," he said.

The most extreme case is in California, where the state was ordered by the U.S. Supreme Court to reduce its inmate population by 23 percent, to 110,000. That’s a specific case involving questions of prison conditions, but any remedies that involve decriminalization could serve as a template for or spur other states, Friedmann said.

In the short term, said Kevin Campbell, an industry analyst with Avondale Partners of Nashville, CCA can win over cash-strapped states by pointing to its record and scale (it’s by far the industry’s largest player). Campbell said CCA’s strategy of owning more facilities is weaker without more inmate growth, but even if widespread reform kicks in and inmate populations dwindle, he considers it "inevitable" that some sort of crime will spur a backlash.

Activists want to shift such public sentiment, and CCA battles their accusations of benefiting from law-and-order policies by touting its rehabilitation programs and saying it doesn’t lobby or weigh in on debates affecting incarceration. Regardless, Hininger and Tony Grande, the company’s chief development officer, said tapering inmate populations is a good thing and don’t view it as an unavoidable business dilemma because of how much market share remains untapped.

"I think they’re setting themselves up and thinking about it from the longer-term perspective," Campbell said.