Improved Guidance Could Result in More Cost-Effective Sizing of Military Medical Facilities

HRD-85-32: Published: Dec 31, 1984. Publicly Released: Dec 31, 1984.

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GAO assessed the adequacy of the military services' economic analyses used in estimating the proper inpatient capacities for four proposed military medical facilities after taking into account the available medical care alternatives and projected inpatient workloads.

GAO found that the services contracted with outside firms to conduct the economic analyses for the design plans, which are the basis for hospital construction review and approval. Although federal regulations provide that the Department of Defense (DOD) should consider all reasonable and available medical care treatment alternatives in these analyses, GAO found that, of the four analyses reviewed, only one analysis considered available beds at a nearby DOD facility, and that analysis did not take into account the facility's declining inpatient workload. GAO found that DOD guidance is needed on the development of workload projections. The four economic analyses assumed that the medical facilities' inpatient workloads would increase because the local beneficiary population was increasing. However, workloads at the four facilities have declined because more care is being provided on an outpatient basis, and the lengths of hospital stays have been declining. The lack of realistic inpatient projections was a key factor in the disapproval of one hospital construction plan. Finally, GAO found that, although economic analyses are often prepared several years before facility design and funding, DOD does not require economic analyses to be updated to reflect the most current data.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: A manual has been published by OASD-HA prescribing a uniform methodology to be used in making economic analyses of military treatment facilities. The manual incorporates this recommendation.

    Recommendation: Before approving proposals for construction or alteration of DOD medical facilities, the Assistant Secretary of Defense, Health Affairs, should ensure that the services have complied with the provisions of P.L. 97-337 and DOD Directive 6015.5 regarding consideration of underused capacity at nearby military medical facilities. The Assistant Secretary of Defense, Health Affairs, should also issue guidance to the military services on the methods to be used for developing workload projections based on historical trends adjusted for factors, such as potential workload changes expected as a result of anticipated changes in the facilities' missions, that demonstrate the trends are not good predictors of future workload.

    Agency Affected: Department of Defense: Office of the Assistant Secretary of Defense (Health Affairs)


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