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GEO GROUP
A New Mindset for Prison Operator
GEO Group's move into mental health has some lessons for future privatization efforts.
Promising potential
Frick says the company is targeting about two to three new contracts a year in the mental health services area. To expand any faster would be “dangerous,” he says.
But the arithmetic of mental health services means mental health will likely remain a focus for GEO. “The typical correctional bed generates only $20,000 to $25,000 per year as compared to the GEO Care bed, which generates in excess of $100,000 per year per bed,” GEO Group Chairman and CEO George Zoley recently told investors.
Because mental health facilities are more expensive to run, Frick says the margins for correctional services and mental health services are about the same. When asked whether the company had turned a profit at the south Florida hospital from the outset, Frick demurred, saying only that “none of the projects have ever been a loss leader.”
Meanwhile, GEO Care revenue has risen from $33 million in 2005 to $127 million in 2007 and is expected to hit $180 million next year. “It’s just a different market. It’s not that it’s more lucrative,” says Frick. “It’s just that it’s new, it’s available and it’s large.”
GEO's Evolution
1954 — Former FBI agent George R. Wackenhut starts a private investigation firm called Wackenhnut Corp. 1958 — Wackenhut expands into providing security guard services 1967 — Wackenhut goes public 1984 — Wackenhut Corrections Corp. (WCC) is formed as a division of Wackenhut Corp. to expand into corrections sector 1986 — WCC receives a contract — its first — from the U.S. Immigration and Naturalization Service to design and operate a 150-bed detention facility 1997 — WCC buys a psychiatric hospital and forms Atlantic Shores Healthcare division as a vehicle to compete for privatized state mental health service contracts 2002 — Group 4 Falck, a Danish security company, acquires Wackenhut Corp. for $570 million and divests WCC 2003 — WCC moves its headquarters from Palm Beach Gardens to Boca Raton and changes name to GEO Group 2005 — Atlantic Shores Healthcare changes name to GEO Care |
