A medical logistic division has been established within DOD’s new Defense Health Agency (DHA) to develop an efficient global supply chain. Since October 1, 2013, DHA has been managing many of the administrative and shared services functions for the Army, Navy, and Air Force medical departments that includes health IT, pharmacy operations, and medical logistics.
The new logistics division will work with the Army, Air Force, and Navy to standardize and monitor the purchasing and provision of medical supplies and equipment, with an eye on efficiency and reducing costs.
The new logistics division is expected to reduce spending on medical supplies, equipment, and services by $189 million over five years starting in FY 2015. However, the result will be that military treatment centers will have less autonomy in ordering medical supplies and equipment.
The DHA cost saving goals also complement the Defense Logistics Agency’s (DLA) goal to save billions of dollars on all military supplies. DLA is the combat logistics support agency for the entire Defense Department providing nearly 100 percent of the goods that military forces need to operate.
The DLA plan calls for renegotiating vendor contracts to get better pricing for materials and plans to reduce overhead costs by consolidating distribution facilities and warehouses. DLA Director Navy Vice Admiral Mark Harnitcheck has set a goal of saving $13 million in six years. Currently, the Defense Department spends $4.5 billion annually on medical materiel through DLA.