Implementing Outpatient Surgery Programs in Military Hospitals Can Reduce DOD's Health Care Costs

HRD-85-23: Published: May 24, 1985. Publicly Released: May 24, 1985.

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GAO reviewed the extent to which outpatient surgery is being practiced in Department of Defense (DOD) hospitals.

GAO found that: (1) military hospitals have not generally adopted outpatient surgery programs as a means of reducing health care costs; (2) about 65 percent of the cases it reviewed could have been treated on an outpatient basis; (3) expenditures by the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) could have been reduced by up to $3.6 million annually if outpatient surgery programs were implemented at the hospitals reviewed; and (4) its estimate of the number of patients and procedures suitable for outpatient surgery may be conservative because it did not include certain procedures performed on an outpatient basis by nonfederal health care providers. GAO also found that military hospital commanders have not encouraged the implementation of outpatient surgery programs because they believe that: (1) patient population characteristics limit the potential for outpatient surgery; (2) operating room and other facilities at some hospitals could limit full development of outpatient surgery; and (3) outpatient surgery programs could adversely affect hospital staffing by reducing the number of inpatients. In addition, GAO and hospital commanders believe that outpatient surgery programs may not result in savings to the DOD direct-care system because: (1) while CHAMPUS is centrally funded and administered, the direct-care system is funded and administered by the military services; and (2) patients who would have been treated under CHAMPUS could instead be treated under the direct-care system, resulting in increased costs.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: Based on information supplied by the services, 12 hospitals were identified as having potential for a cost-effective ambulatory surgery capability. The hospitals are in the process of developing this capability.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to develop a DOD-wide policy on outpatient surgery programs in military hospitals. This policy should require: (1) the development of a list of surgical procedures, similar to the lists developed by Medicare and CHAMPUS, suitable for performance on an outpatient basis in military hospitals; (2) that analyses be made on a hospital-by-hospital basis to determine whether implementing outpatient surgery programs would be cost-beneficial, taking into account the potential for reducing CHAMPUS costs; and (3) the military services to implement formal outpatient surgery programs in all military hospitals where analyses show that this would reduce total DOD health care costs.

    Agency Affected: Department of Defense


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