Correctional Facilities

Industry Report
by Chad Stanger
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The correctional facilities industry will see minimal growth due to its heavy restrictions. The
following document will provide the firm with a deeper understanding of this regulated market.
The sectors future development is dependent upon the nation and its incarceration and crime
rates. Below, I will summarize the correctional facilities industry regarding its four main
dynamics: the marketplace, global trends, challenges/threats, and opportunities.

Industry Overview

The correctional facilities industry yields $5.3 billion in revenue annually, maintaining $591.7
million in profits. The well-established field provides high barriers to entry for prospective
businesses. While firms experienced a 1.5% growth in the past five years, the industry is
projecting a 0.9% shrinkage by 2021 (OHollaren, 2016, p. 4). As correctional facilities approach
a mature life cycle, companies will find difficulty reaching untapped markets. Recognized
corporations, such as The GEO Group, Inc. and Corrections Corporation of America, are losing
valuable business due to lack of capacity. The decline is largely impacted by the U.S.
incarceration rate, which increased 500% in the last forty years. (The Sentencing Project, 2017,
p. 2). American prisons and jails face overcrowding issues due to their 2.2 million inmates. As a
result, correctional institutions are releasing petty criminals more freely through probation and
bail.

The Marketplace

Segments
The correctional facilities industry is separated into four main segments: federal, state, county,
and city. Over 5,000 U.S. locations fall under jurisdiction of these government levels. Although
there is an abundance of prison capacity, America still faces issues with overcrowding. 100
facilities operate under the federal government, housing nearly 200,000 inmates (Correctional
institutions, 2016, para. 2). State entities mandate their own correctional legislature to
accommodate facilities to citizens needs. Jails, which are different institutions than prisons, are
coordinated through local governments. Cities and counties utilize jails to house individuals
awaiting trial and petty criminals. Each government level determines how its distinctive facilities
will operate.

Services Provided
The government offers correctional facilities that vary in security level ranging from minimum to
maximum. Institutions assess prisoners crimes and severity to determine what level of security
is needed. Maximum security prisons house the most brutal criminals who live alone under 24-
hour surveillance. Below, Figure 1 illustrates that the largest service provided is medium
security institutions. Nearly 64% of prisons require medium security for inmates that
demonstrate a considerable threat to society. These facilities are constructed to keep prisoners
inside with large concrete walls, impassable fences, and automated recognition. Businesses also
fund halfway homes, which prepare offenders for communal reentry. These community
correctional institutions serve as a deterrence against recidivism. Minimum security prisons are
lenient with their inmates. According to OHollaren, the lack of vulnerability creates a
relatively low staff-to-inmate ratio and limited or no perimeter fencing (2016, p. 14). Prisoners
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can work an off-site job, volunteer, or access rehabilitation programs with their freedom. With
varying levels of security, prisons provide different services depending upon housed inmates.

Figure 1: Products and services segmentation (2016)

Target Markets
State and local governments dominate the market, while the industry also targets other federal
clients. As the inmate population increases, all government levels are transitioning to private
prisons. The transfer from public to private institutions substantially conserves the limited
federal budget. By 2014, government officials employed by 30 states housed a portion of their
prisoners in private correctional facilities (OHollaren, 2016, p. 17). The industry has
historically generated contracts with three federal entities: Federal Bureau of Prisons, U.S.
Marshals Service and Bureau of Immigration and Customs Enforcement.

The Federal Bureau of Prisons privately manages over 170,000 prisoners across America. An
absence of prison capacity forced the FBP to privatize their prisons to obtain more physical
capital. The USMS transfers its prisoners to federally-owned institutions because the division has
no proprietorship over correctional facilities. Instead, the entity handles all activities prior to a
criminals sentencing. The ICE protects U.S. borders from harmful outsiders, and regulates the
nations entry laws. Illegal immigration has increased recently, leaving many criminals under
ICEs supervision.

Market Drivers
The primary market drivers concerning the industry are the incarceration and crime rates. Both
indicators determine the correctional facilities success. The incarceration percentage has a direct
correlation with the crime rate. According to King, violent crime has declined by 33% and
property crime has decreased 23%, while incarceration rates rose by 24% over the last two
decades (2005, p. 3). When criminals are removed from the streets, there are less individuals that
are likely to commit crimes. American crime rates are constantly dropping, yet there are more
prisoners than ever before. The incarceration rate is ascending because drug offenders are being
arrested more frequently (King, 2005, p. 5). There are many drug criminals in federal prisons
that state officials are dropping trivial drug charges to avoid overcrowding. Correctional facilities
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must monitor the incarceration and crime rates to determine population size. In doing so, staff
can effectively allocate the necessary resources to serve prisoners.

Major Players
There are several major players within the correctional facilities industry, including The GEO
Group, Inc. and Corrections Corporation of America. These two companies contribute 62% of
the industrys total market share (OHollaren, 2016, p. 24). The GEO Group, Inc. manages 17
million square feet of correctional facilities with over 85,000 beds. On the other hand, the CCA
is the largest privatized company to manage institutions. The corporation possesses nationwide
properties that house approximately 70,000 inmates.

These businesses are not limited to bedding arrangements for inmates; the industry leaders also
provide services to benefit the criminals they serve. Companies are pursu[ing] additional
opportunities in the delivery of evidence-based rehabilitation and reentry services to smooth
transitions upon prisoner discharge (The GEO Group, Inc., 2016, p. 19). Drug reliance can
trouble criminals even after they are reintroduced to their communities. To prevent recidivism,
leading companies are developing programs to ease the homecoming process.

Global Trends

International Markets
While the industry adjusts to growth in U.S. prison population, international correctional
facilities face the same issue. Since 2004, the overall inmate population increased 10% globally.
Governments do not have the financial capacity to house the worlds 10 million prisoners. There
is a predisposition that all individuals held in prison are criminals. However, many people
awaiting trial are kept in a correctional facility. About one-third of all prisoners were placed in
custody without any definitive verdict (Allen, 2015, p. 8).

This tendency contributes to the universal overcrowding in prisons and jails. The industry is
exploring new options for housing individuals in custody, instead of overfilling facilities. While
sentencing differs between countries, there is an international trend regarding the extent and
length. Most nations agree that a sentence must be of a length and type which fits the crime, and
the circumstances of the offender (Allen, 2015, p. 10). Correctional facilities are establishing a
less subjective method for determining imprisonment details.

Challenges & Threats

Suicide
The correctional facilities industry faces the challenge of suicide prevention. Table 1 illustrates
that suicide accounted for the second-most prisoner deaths following illness (Noonan, 2015, p.
7). Suicide is a growing cause of mortality, affecting 46 out of every 100,000 prisoners.
Correctional facilities must prevent the issue prematurely before inmates form a familiarity with
suicidal occurrences. According to Noonan, the trend will continue as suicide has been the
leading cause of death in jails every year since 2000 (2015, p. 1). As rates continue to surge,
prisons and jails are developing better methods of detecting early warning signs.
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Correctional healthcare professionals face the same level of scrutiny as their typical colleagues.
Furthermore, these specialists are harshly criticized since inmate suicide rates continue to climb.
Prisoners are consistently assessed regarding their suicide risk via examinations and interviews.
Still, healthcare professionals need to improve their unsatisfactory practices because 38% of
suicide victims had been determined not in need of mental health treatment by staff (Knoll,
2010, p. 190). A large percentage of inmates were wrongly evaluated, leading to their
preventable deaths. To overcome this adversity, correctional healthcare and suicide prevention
methods must substantially progress.

Table 1: Number of local jail inmate deaths, by cause of death, 2000 2013

Healthcare
A significant threat to prisoner well-being and safety is the lack of healthcare and treatment.
Prisoners suffer from a variety of health problems, such as mental health disorders, drug
dependence, infectious disease, and chronic conditions. According to Macmadu, mental health
disorders severely affect 10 to 25% of criminals in correctional facilities (2015, p. 65). Over half
of the prison population experiences drug addiction, which is often paired with mental illness.
Transferrable diseases such as HIV, STIs, and hepatitis C are spread from one prisoner to
another.

Inmate screenings indicate that these infections affect incarcerated people to a higher degree than
the general population. The industry is responsible for delivering proper healthcare to the 40%
of all inmates [who] have at least one chronic health condition (Macmadu, 2015, p. 66). As the
nation struggles with obesity, diseases like diabetes will not disappear anytime soon.
Correctional healthcare must compensate for the horrid environments that prisoners live in.
Inmates must receive appropriate medical attention that will diminish the effects of their
diseases.

Opportunities

Education
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Many correctional facilities are expanding prisoners opportunities to receive an education

during imprisonment. Institutions are initiating educational advancements since there are
tangible benefits: more efficient communal re-entry and less recidivism (O'Neill, 2007, p. 311).
Schooling provides inmates with self-confidence as they achieve goals in an academic setting.
Convicts obtain valuable knowledge and transferrable skills that can positively influence the
communities they return to. Some programs earn prisoners their General Education Diploma,
which they can leverage towards a career.

In terms of recidivism, education provides one of the most successful ways to prevent
reoffending. Prisoner education also presents possible roadblocks because environments [are]
not conducive to concentrating, [the] eclectic student population [has] varying educational needs
and motivation levels and limited resources for teachers and supplies (O'Neill, 2007, p. 312).
While these threats could prevent inmate education, correctional facilities are working
proactively to solve these issues.

As mentioned above, the correctional institution industry is categorized into four main elements:
the marketplace, global trends, challenges/threats, and opportunities. The report provided a
deeper comprehension of the industrys marketplace. Major players are developing notable
programs that assist criminals upon release; provided services are altering to accommodate for
international trends. Education, as well as suicide prevention and healthcare, must be emphasized
for continual industry growth.
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References

Allen, R. (2015, January 27). Global prison trends 2015. Penal Reform International. Retrieved
April 24, 2017 from: https://www.penalreform.org/wp-content/uploads/2015/04/PRI-
Prisons-global-trends-report-LR.pdf

Correctional institutions. (2016). Encyclopedia of American Industries. Farmington Hills, MI:

Gale. Retrieved from Business Insights: Essentials database.

King, R. et al. (2005). Incarceration and crime: A complex relationship. The Sentencing Project.
Retrieved April 24, 2017 from: http://www.sentencingproject.org/wp-
content/uploads/2016/01/Incarceration-and-Crime-A-Complex-Relationship.pdf

Knoll, J. (2010, May 12). Suicide in correctional settings: Assessment, prevention, and
professional liability. Journal of Correctional Health Care, 16(3), 188-204. Retrieved
from UA Library database.

Macmadu, A., & Rich, J. (2015). Correctional health is community health. Issues in Science &
Technology. 32(1), 64-70. Retrieved from Business Source Complete database.

Noonan, M. et al. (2015, August 4). Mortality in local jails and state prisons, 20002013:
Statistical tables. Bureau of Justice Statistics, 1-40. Retrieved from UA Library database.

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

the US. Retrieved from IBISWorld database.

O'Neill, L. et al. (2007, September). Educational opportunities within correctional institutions.

The Prison Journal, 87(3), 311. Retrieved from UA Library database.

The GEO Group, Inc. (2016). MarketLine, 1-20. Retrieved from Business Source Complete
database.

Trends in U.S. corrections. (2017, March 7). The Sentencing Project. Retrieved April 23, 2017
from: http://sentencingproject.org/wp-content/uploads/2016/01/Trends-in-US-
Corrections.pdf