Defense Health Care:

Potential for Savings by Treating CHAMPUS Patients in Military Hospitals

HRD-90-131: Published: Sep 7, 1990. Publicly Released: Sep 7, 1990.

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Pursuant to a congressional request, GAO assessed the potential for savings by adding staff and other resources at military hospitals to treat more patients, instead of paying for their care under the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).

GAO found that: (1) the Department of Defense (DOD) could potentially save between $18 million and $21 million if it increased resources at the reviewed hospitals to care for CHAMPUS patients; (2) military hospital care for CHAMPUS patients would cost from 43 to 52 percent less than CHAMPUS-funded care, although savings estimates varied due to differing costs of adding military, civilian, or contractor staff, and by hospital, type of care, and other factors; (3) DOD paid $37 million for CHAMPUS care in certain specialties during fiscal year (FY) 1988, amounting to nearly 20 percent of its total health care expenditures; (4) military facilities had unused capacity due to staff shortages, with a FY 1988 overall occupancy rate of 45 percent; (5) about 70 percent of CHAMPUS costs were incurred within areas experiencing low occupancy rates; (6) acquiring additional civilian government personnel presented the greatest savings potential, since such costs were less than those for acquiring military or contract staff; (7) treating more dependents of active-duty personnel in military hospitals could result in significant savings; (8) treating more CHAMPUS beneficiaries in military hospitals could produce increased medical proficiency and improved medical education programs; and (9) if hospitals augmented their resources, they could attract more CHAMPUS patients, but their costs would increase.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The DOD Coordinated Care Program is designed to integrate the direct care system and CHAMPUS, and this program is expected to be implemented within the continental United States. DOD has designated a number of hospitals to serve as cornerstones for its Coordinated Care Program. These hospitals will be the principal sources of specialty care for beneficiaries.

    Recommendation: As DOD proceeds with efforts to identify additional locations in which to implement its cost-containment initiatives, the Secretary of Defense should direct secretaries of the military departments to identify, using either the GAO-developed methodology or a similar one, the hospitals and medical specialties for which expanding capability to care for patients whose care is now funded under CHAMPUS would be most cost-effective.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: The DOD Coordinated Care Program is designed to integrate the direct care system and CHAMPUS, and this program is expected to be implemented within the continental United States. DOD has designated a number of hospitals to serve as cornerstones for its Coordinated Care Program. These hospitals will be the principal sources of specialty care for beneficiaries.

    Recommendation: Where warranted, the military services should proceed to increase hospitals' capabilities, after the services determine the appropriate hospitals and medical specialties.

    Agency Affected: Department of Defense: Department of the Air Force

  3. Status: Closed - Not Implemented

    Comments: The DOD Coordinated Care Program is designed to integrate the direct care system and CHAMPUS, and this program is expected to be implemented within the continental United States. DOD has designated a number of hospitals to serve as cornerstones for its Coordinated Care Program. These hospitals will be the principal sources of specialty care for beneficiaries.

    Recommendation: Where warranted, the military services should proceed to increase hospitals' capabilities, after the services determine the appropriate hospitals and medical specialties.

    Agency Affected: Department of Defense: Department of the Navy

  4. Status: Closed - Not Implemented

    Comments: The DOD Coordinated Care Program is designed to integrate the direct care system and CHAMPUS, and this program is expected to be implemented within the continental United States. DOD has designated a number of hospitals to serve as cornerstones for its Coordinated Care Program. These hospitals will be the principal sources of specialty care for beneficiaries.

    Recommendation: Where warranted, the military services should proceed to increase hospitals' capabilities, after the services determine the appropriate hospitals and medical specialties.

    Agency Affected: Department of Defense: Department of the Army

 

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