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Published by Patricia Dillon

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Published by: Patricia Dillon on Nov 12, 2010
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The Military Health System
How Might It Be Reorganized?
Since the end of World War II, the issue of whether tocreate a unified military health system has arisen repeat-edly. Some observers have suggested that a joint organiza-tion could potentially lead to reduced costs, better inte-grated health care delivery, a more efficient administrativeprocess, and improved readiness.A recent RAND study done for the Under Secretary ofDefense (Personnel and Readiness) developed organiza-tional alternatives for the military health system and out-lined trade-offs inherent in choosing among them. Thisanalysis—as reported in
Reorganizing the Military HealthSystem: Should There Be a Joint Command?
 by Susan D.Hosek and Gary Cecchine—concluded that careful consid-eration should be given to reorganizing TRICARE, themilitary’s health care program for active and retired mili-tary members and their families, but that the additional benefits of a joint command are more difficult to assess.
The Department of Defense (DoD) operates one of thelargest and most complex health care organizations in thenation. Including their overseas facilities, the Army, Navy,and Air Force operated about 450 military treatment facili-ties (MTFs) in 1999, including 91 hospitals and 374 clinics.The MTFs serve just over 8 million active-duty personnel,retirees, and dependents. This care is provided throughTRICARE, which offers both managed-care and fee-for-service options. TRICARE managed-care providersinclude the MTFs and a network of civilian providersadministered through regional contracts with civilianmanaged-care organizations. The fee-for-service optionalso covers care provided by civilian providers that havenot joined the network.On the surface, the military health system resembles afairly typical U.S. managed-care organization. However,as a
health system, it has unique responsibilitiesarising from dual missions:
: To provide, and to maintain readiness toprovide, medical services and support to the armedforces during military operations.
: To provide medical services and support tomembers of the armed forces, their dependents, andothers entitled to DoD medical care.The readiness mission involves deploying medicalpersonnel and equipment as needed to support militaryforces throughout the world in wartime, in peacekeepingand humanitarian operations, and in military training.Activities that ensure the readiness of medical and othermilitary personnel to deploy also contribute to the medicalreadiness mission. The benefits mission is designed to pro-vide a health benefit to military personnel and their familymembers, during active service and after retirement.Historically, MTFs have supplied about two-thirds of thehealth care used by TRICARE beneficiaries overall (asmeasured by the number of visits) and almost all of thehealth care used by active-duty personnel. Civilianproviders have supplied the rest of the care.The two missions are linked in two ways. First, thehealth care provided under TRICARE also contributes toreadiness; it keeps active-duty personnel at the peakhealth needed for military effectiveness and ensures thattheir families are taken care of while they are away fromhome. Second, the same medical personnel are used for both missions.
The organizational structure that implementsTRICARE today is shown in Figure 1. It involves four hier-archies: the Office of the Secretary of Defense (OSD) andthe three military services with medical departments. Eachoversees a set of providers that deliver health care toTRICARE beneficiaries (the darker-shaded boxes in thefigure). Responsibility for the TRICARE contracts resides
National Defense Research Institute
Research Brief 
in OSD’s Health Affairs office (the lighter-shaded boxes).Health-care resources and management authority arefragmented because they flow through all branches of thesystem.The RAND study team compared the structure illus-trated in Figure 1 with organizational approachesdescribed in the health management literature and used by four large private-sector managed-care companies:Kaiser Permanente, UnitedHealthcare, Sutter HealthSystem, and Tenet Healthcare. The study team alsoreviewed prior military-health studies and conductedinterviews with key government personnel to betterunderstand the particular needs that derive from the mili-tary system’s readiness mission.
The analysis pointed to the critical need for reorgani-zation of TRICARE management. To address this need,the
Reorganizing the Military Health System
report presentsfour alternative organizational structures, outlined in thetable, for the DoD to consider. One alternative would be amodification of the current structure. Three others wouldrely on a joint command, which, as defined by Title 10, is aunified combatant command having broad, continuingmissions and involving forces from two or more militarydepartments. All four management structures consolidateauthority over TRICARE resources and establish clearaccountability for outcomes.Alternative 1 would retain much of the current organi-zational structure but would call for several changesdesigned to clarify management responsibilities forTRICARE and facilitate resource management and inte-gration of health services. TRICARE would administer thehealth plan, supported by local market managers.The three joint medical command alternatives illus-trate important organizational differences. Alternative 2would organize all medical activities in service component
TRICARE ContractorsDirectorTRICARE SupportOfficeLead AgentsTRICARERegionsDirectorTRICARE Management ActivityAssistant Secretary of Defense(Health Affairs)Under Secretary of Defense(Personnel & Readiness)Secretaryof the ArmyArmy SurgeonGeneralCommander,Army MedicalCommandNavy SurgeonGeneralDirector, Bureauof Medicine &SurgerySecretaryof the NavyAir ForceSurgeonGeneralMTFCommandersMTFCommandersMTFCommandersAir ForceMajor CommandsArmy Chiefof StaffChief of NavalOperationsCommandantMarine CorpsAir ForceChief of StaffSecretaryof the Air ForceSecretary of Defense
 Figure 1—Current TRICARE Organization Four Alternative Military Health System OrganizationalStructures
Alternative Structure ComponentsNumber
1Modification of currentSame as todayorganizationTRICARE would administer the healthplan, supported by local marketmanagers in each region2Joint Medical CommandArmy Component CommandNavy Component CommandAir Force Component Command3Joint Medical CommandArmy Component CommandNavy Component CommandAir Force Component CommandTRICARE Component Command4Joint Medical CommandMedical Readiness ComponentCommandTRICARE Component Command
commands. MTF commanders would also serve as localTRICARE managers, a dual operational structure that hasnot worked well in the private sector. Alternative 3, whilesimilar to Alternative 2, would follow the more commonprivate-sector practice of separating responsibility forhealth-plan management from provider management byadding a TRICARE component. Alternative 4, depicted inFigure 2, involves more-radical change: It would structuremedical activities functionally under a readiness compo-nent (organized by service) and a TRICARE component(organized geographically).A joint command is unlikely to succeed without morefundamental reorganization of the system. TRICARE isnow testing in its Pacific Northwest facilities whetherstrengthening TRICARE regional management, a versionof Alternative 1, would improve authority and account-ability for TRICARE. If the test succeeds, the DoD shouldconsider implementing the more comprehensive changesenvisioned in Alternative 1. If the test does not substan-tially improve authority and accountability, the study sug-gests that the DoD should consider a joint command andreorganization along the lines of Alternatives 3 or 4.
Joint Medical CommandMedical ReadinessComponent CommandDeployableUnitsHealthPlanContractorsMTFsDeployableUnitsDeployableUnitsArmyComponentTRICARERegionsAir ForceComponentNavyComponentTRICARE ComponentCommand
 Figure 2—Joint Command with Readiness and TRICARE Components

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