Streamlining Military Health

The government partial shutdown did not stop the official October 1 opening of the new Defense Health Agency (DHA). The plan is for DHA to perform a major streamlining of military medicine that has been in the works for decades.

The military health system is one of the largest healthcare systems in the world with 56 hospitals, hundreds of clinics, and 160,000 employees. Over 2,500 babies are born each week into the system which has an annual budget exceeding $50 billion.

Just as in the civilian sector, military healthcare costs have increased faster than inflation with military health costs more than doubling in the past decade by increasing from $19 billion in FY 2001 to $51 billion in FY 2013.

Air Force Lt. Gen Douglas Robb heads the new agency that is charged with creating common business and clinical practices for the services and the responsibility to integrate functions that each agency previously has done separately, such as purchasing medical supplies and equipment.

To start off, DHA is establishing a shared services model for managing and overseeing the operational work for health information technology, medical logistics, pharmacy operations, and facilities planning for the services. Defense health officials estimate the savings from shared services will total at least $3.4 billion in the agency’s first five years.

By October 2015, the agency expects to be fully operational and will incorporate management and oversight of additional shared services to include contracting, medical education and training, public health, resource management, and medical research and development.

In addition, DHA will manage the TRICARE health plan for the military’s 9.6 million beneficiaries. TRICARE Management Activity’s 800 workers are now part of DHA and 500 Army, Navy, and Air Force staff mostly IT professionals have moved to the new agency.