Defense Health Agency: Next step to curb medical costs
March 8, 2012
by Tom Philpott
Defense officials have asked Congress
to approve a new governance structure for the military health care
system that, like higher TRICARE fees, would help to curb what, for a
decade, have been runaway medical costs.
The centerpiece of the plan is to
elevate of the TRICARE Management Activity to a more powerful Defense
Health Agency (DHA), with new authorities to use more effectively the
military’s direct care system and to manage more
carefully purchased care through TRICARE support contractors.
The DHA also would impose new business
processes and appoint market managers in areas with multi-service
medical facilities so operations are streamlined. The agency also would
reduce redundancies across the separate medical commands of the Army,
Navy and Air Force by combining where possible functions for purchasing,
logistics and information technology.
Service medical commands would continue
to be run separately, a concession to those who see they providing
unique strengths and expertise. But to critics, including some
lawmakers, who still want a joint medical command running military
healthcare, as numerous studies have endorsed, the DHA should be seen as
a reasonable interim step, said Dr. Jonathan Woodson, assistant
secretary of defense for health affairs.
"The Defense Health Agency will be an important pillar of
any unified health command if that, indeed, were considered down the
line,"Woodson explained to several journalists during a
briefing on the proposed structure.
The strongest reason to keep Army, Navy
and Air Force medical commands, led by separate surgeons general, is
operational medicine, Woodson said. The Navy is trained to deliver care
to units afloat and to deployed Marines, the Air Force has expertise in
aerial platforms and Army docs are trained to deliver medical ground
support in combat theaters.
"The whole idea is not to throw the baby out with the
bathwater. To design a system that creates…the best
quality in health care [and] access, but preserves the unique features
that individual service cultures bring to the fight,"Woodson
A DHA, he added, will "allow us
to get maximum effort and efficiency of shared services, and really
creates the 70-percent solution, without having to tear the services
apart in reorganizing…a cumbersome
and probably more expensive"command, and doing
so in wartime.
A Pentagon task force established last
June drafted the new governance plan. But Congress temporarily blocked
it, demanding a report from the department that describes every option
studied, the potential impact on readiness of each, and their projected
The DHA eyed would be led by a
three-star officer and would report to Woodson, the
department’s most senior health official. The surgeons
general would focus more heavily on operational medicine and less on the
garrison care and insurance benefit for troops, retirees and their
The Washington D.C. area, which has
seen heavy realignment of medical facilities with a new hospital at Fort
Belvoir, Va., and the Walter Reed National Military Medical Center
consolidated at Bethesda, Md., would see another governance change.
These new hospitals now fall under Joint Task Force National Capitol Reg
ion Medical, which is led by a three-star admiral who reports to the
deputy defense secretary. The JTF CAPMED would be replaced by a two-star
run directorate , which would report to DHA.
With the plan delivered, the Government
Accountability Office, auditing arm of Congress, now has 180 days to
review recommendations, comment on strengths and weaknesses, and report
its own estimate of cost savings to House and Senate defense committees.
Lawmakers gave themselves an additional 120 days to study
GAO’s findings and the task force report, and then to accept,
reject or modify what the department wants to do.
After the full 300-day review period,
Woodson said, "we are hopeful we will get the okay"to
restructure. The savings from creating the DHA would be modest, about
$50 million a year through reduced staffing, shaved off of a healthcare
budget that will top $53 billion this year.
But more substantial savings
–in the billions of dollars annually –are expected
once the DHA is operating to eliminate waste and can impose new business
processes on military hospitals and clinics, and on purchased care
contracts that govern TRICARE civilian networks.
Woodson said he prefers not to release
the department’s overall savings estimate for the governance
"If I give you a dollar amount, then we’re
kind of struck with that. I would much rather give you the conservative
estimate on what the restructuring of headquarters will provide. Then we
will drive that change and we will reap the benefits"on the
whole system, he said.
Woodson did say that about 25 percent
of on-base hospitals and clinics are underutilized. So a key goal of the
DHA will be to use fully brick-and-mortar resources and reverse the
exodus in recent years of patients to the more costly civilian TRICARE
It might appear the surgeons general
are losing some authority, particularly in areas with multi-service
medical facilities. But Woodson said operational medicine would gain
from new governance as dollars are spent more wisely. For example, if a
base hospital sees it orthopedic specialist deployed for war, a DHA-run
system will have more replacement options than to send patients to a
civilian specialist until the doctor returns.
A decade of war show that "unless you
have a coordinated strategy that reaches across the services, we get a
local solution,"which usually means patients go off base for
care and they are hard to get back.
The DHA would be able to back fill for
deployed staff by tapping an other service branch, reserve components or
locally contracted physicians. With business plans in place,
"there are all sorts of possibilities for solutions to
maintaining our commitment to the beneficiary for on base
The DHA would develop the requirements
and have the surgeons general fill them. "Unless you have
this collaborative administration structure,"Woodson said, the
services would continue to operate "in their own little
silos"and, as current cost growth shows, "that just
To comment, email firstname.lastname@example.org,
write to Military Update, P.O. Box 231111, Centreville, VA, 20120-1111
or visit: www.militaryupdate.com