In New York City, the Department of Health is responsible for providing health services to eight correctional facilities which receive 60,000 admissions annually. A large component of this prison health system is a contract with Montefiore Hospital, a voluntary institution, to provide medical services to the population on Rikers Island, a prison complex. This contractual agreement is unique in that an operating entity, Montefiore Hospital, has agreed to provide a 'package' of health services to a defined prisoner population. For the 3-year term of the contract, the City agreed to reimburse to the hospital a total amount not to exceed $11.7 million. Because of delays in renovation of the prison facilities, only two of the five prisons in the penal complex will be served for the majority of the period of the 3-year contract. Since 1973, the program has provided services ranging from new prisoner screening to primary, emergency, infirmary and limited specialty care. Major improvements in laboratory and radiology services were implemented. Although abuses typical of some affiliation contracts between volunteer institutions and municipal hospitals have been absent, other deficiencies hamper services provisions: 1) the correctional setting, 2) limited financial resources, 3) staff recruitment difficulties, 4) absence of standards, 5) isolation from community health care, and 6) lack of constituency for prison health services. The early experience with this program indicates that the contractual model possesses distinct advantages over the direct delivery of prison health services. Disadvantages include a significantly higher cost on a contract basis as compared to the direct component of the Prison Health Services of New York City. A series of recommendations are made for successful implementation of the contractual model, including provision for clearly defined standards of care and a series of cost control devices. Three references are provided.