States and localities nationwide are turning to private companies to treat their prison populations -- saving taxpayers millions of dollars in the process.

• After New Jersey's prison medical expenses rose 500 percent in the last decade, Gov. Christine Todd Whitman dismissed the prisons' nurses and doctors and hired a private company to deliver managed care to the state's 26,000 inmates -- at a savings of at least $14 million in the first year.

• New York City officials are negotiating with medical companies to create what would be the largest managed-care contract in the country-- providing services to 128,000 inmates.

• Analysts estimate that the number of inmates cared for by such companies is growing by about 20 percent a year.

• The largest company, Correctional Medical Services, has contracts with jails and prisons in 28 states and cares for 162,000 inmates -- twice those it cared for in 1992.

Experts estimate that private companies now care for about 370,000 inmates -- up from 261,000 as recently as 1994. Governments spend more than $3 billion a year on inmate care.

Source: Melody Peterson, "Managed Health Care in Prisons Gains Favor, Despite Complaints," New York Times, December 26, 1996.