A new Defense Health Agency, or DHA, came to life Oct. 1, armed with new authorities to control health costs by cutting waste and duplication across the separate medical departments of Army, Navy and Air Force.
The DHA is tasked to streamline delivery of care, recapture thousands of patients for the direct care system from purchased-care contractors, combine common support functions and standardize health care business practices.
Its power and effectiveness will evolve over time, said Dr. Jonathan Woodson, assistant secretary of defense for health affairs, in a phone interview to explain how this major restructuring will affect its 9.7 million beneficiaries.
One impact will be greater access to military facilities, particularly in areas where beneficiaries are most concentrated. Usage of base hospitals has dropped to about 33 percent of capacity, a trend aggravated by years of war when medical staffs are routinely deployed to care for wounded in war zones.
Meanwhile, many more beneficiaries came to rely on Tricare networks of civilian providers or on private-sector doctors who would accept patients using Tricare Standard, the fee-for-service option.
The DHA’s goal is to increase base hospital usage to at least 70 percent of capacity, Woodson said, because care in the military system costs about a third less than Tricare purchased care.
Woodson stressed that the goal is to “optimize dollars invested into the direct care system.” It is not to deny beneficiaries access to care “when they need it from the purchased-care market.”
Perhaps the greater potential for cost savings under the DHA will be its control of 10 “shared services.” It will start with five. Tricare support contracts and pharmacy operations already centrally managed. The DHA will assume those responsibilities. It also will control medical facilities planning, medical logistics and health information technology.
Sometime in 2014 or early 2015, it will assume responsibility from the services for medical education and training; research and development; acquisition and contracting; budgeting and resourcing; AND public health. Plans are to reach full operational capability of all shared services by the fall of 2015.
“In the future, we will build our hospitals and clinics using the same analytics,” said the DHA’s first director, Air Force Lt. Gen. (Dr.) Douglas J. Robb. “We’ll buy supplies, equipment and services from common contracts. We’ll train in even more common ways. Army, Navy and Air Force personnel will be able to work in any medical facility in the world without needing to learn a whole new way of doing business.”
Robb was chief medical adviser to the Joint Chiefs before taking charge of Tricare Management Activity on July 1, where he has supervised transition to the DHA. TMA will cease to exist Oct. 1.
Woodson said a “conservative” estimate of cost savings from DHA control of shared services is $3.4 billion over the agency’s first five years.
Seventeen studies of the military health care system, dating back to the Truman era, urged greater integration of services, Woodson said. Two years ago, the deputy secretary of defense ordered a task force of department civilian and military leaders, both line officers and medical officials, to create a framework for reform. After four months of intense study and debate, it agreed on the DHA model.
Participants rejected alternatives, including creation of a Unified Medical Command to replace the three service medical departments, as many outside studies had recommended.
“That would have been a much more complex undertaking than many people recognize, and it was projected to be more expensive than the status quo,” Woodson said.
In settling on the DHA concept, the task force also identified those shared services with the best opportunities to realize significant cost savings.
“Then, as we tried to begin to eat this elephant,” Woodson said, “it was clear we had to have a schedule to bring them on board … We can’t just flip the switch on all these shared services at the same time without running the chance of breaking something.”
Another critical part of restructuring a more efficient health system is jointly managing staffs and resources in areas where two or more services operate major medical facilities and serve large beneficiary populations. So with the launch of the DHA, six “enhanced multiservice markets” are being created.
One of the enhanced markets will be in the Puget Sound area.
Controlling costs in these locales is critical. They provide more than half of all inpatient care delivered through military hospitals, and manage 40 percent of all Tricare Prime beneficiaries enrolled at base facilities.
Beneficiaries at smaller base hospitals may be referred more often to civilian providers for their specialty care.
Both Woodson and Robb said the services understand and support the DHA, enhanced markets and the goal of controlling health costs.
“Internal team members, from surgeons general down, are pursuing the same objectives. Turf fights are from another era,” Woodson said.
To comment, write Military Update, P.O. Box 231111, Centreville, VA, or email milupdate Tom Philpott @Military_Update
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