Defense Health Care Reform: DOD Needs Further Analysis of the Size, Readiness, and Efficiency of the Medical Force
Highlights
What GAO Found
The Department of Defense's (DOD) approach in its Report on Military Health System Modernization (the Study) did not consistently follow relevant generally accepted research standards for research design and execution. While the Study's recommendations position DOD, over time, to take actions to improve the effectiveness and efficiency of the Military Health System, GAO found a number of shortcomings, including the following:
The Study did not fully mitigate limitations identified in its analysis of the required number of active-duty and civilian medical personnel. For example, the Study did not explain how known issues with the military services' workforce models affected the results of its requirements analysis. Without addressing such limitations, DOD will not have a full assessment of its medical workforce needs.
The Study did not sufficiently identify or mitigate limitations concerning its assessment of the requirements necessary to maintain the skills of active-duty medical providers. For example, although there were limitations concerning the accuracy of information on medical providers' workload, the Study did not identify or mitigate these limitations. Having accurate workload information is important to establishing a sound standard for maintaining the clinical skills of medical providers.
The Study established goals for transferring health care from DOD's purchased care network into its own network of hospitals and clinics and for increasing the productivity of active-duty medical providers, but did not develop a strategy explaining how these goals would be achieved. Without such a strategy it remains unclear whether DOD can achieve its goals to transfer health care from the purchased care network into its own network.
DOD's estimated cost savings did not fully utilize key practices for developing such estimates. DOD estimated net annual savings of $366 million from changes to 10 small hospitals and achievement of its goals for recapturing health care and increasing the productivity of active-duty health care providers. However, DOD did not include in its estimate an appropriate level of detail concerning the calculation of estimated savings, all potentially significant costs, or a description of the steps taken by the Study team to assess the reliability of cost data used to develop the estimate. For example, the Study recommended that a number of inpatient facilities be closed, but GAO's analysis found that the Study did not identify estimated costs associated with these changes. As a result, DOD's cost savings estimate did not present a full and accurate picture of possible costs and savings.
Why GAO Did This Study
DOD initiated the Study to address perceived weaknesses within the Military Health System and to leverage advances in civilian business practices. The National Defense Authorization Act for Fiscal Year 2015 included a provision for DOD to submit the Study to the congressional defense committees and for GAO to review the Study. DOD submitted its study in February 2016. This report assesses, among other things, the extent to which the Study followed an approach that is consistent with relevant generally accepted research standards and utilized key practices for estimating cost savings. GAO compared the Study with generally accepted research standards that were developed by reviewing research literature and DOD guidance and with key practices derived from cost-estimating guidance.
Recommendations
GAO is making six recommendations, including that DOD conduct a new analysis of the required number of active-duty and civilian medical personnel that mitigates known limitations; identify and mitigate limitations regarding the standard for maintaining providers' clinical skills; develop a strategy for achieving its goals for transferring health care to DOD facilities and increasing the productivity of active-duty providers; and, when considering proposed changes to facilities, include in any accompanying cost estimates an appropriate level of detail. DOD concurred with each of GAO's recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To fully assess the size and composition of the medical force, the Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to conduct a new analysis of the required number of active-duty and civilian medical personnel that mitigates known limitations. |
DOD concurred with this recommendation. As of March 2026, DOD provided an update on the status of this recommendation, but further information is needed to assess its efforts. As discussed in the report, the Study based its findings on estimates of the required number of active-duty personnel based on service-specific approaches with known limitations and did not include an assessment of civilian personnel requirements. To close this recommendation, DOD will need to conduct a new analysis of its requirements that addresses these challenges. We continue to engage with DOD on this matter.
|
| Department of Defense | To strengthen ongoing efforts to analyze the costs of medical force readiness and establish clinical currency standards, the Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to take steps to identify and mitigate limitations regarding the standard for maintaining providers' clinical skills, including improving the accuracy of information concerning providers' workload and conducting an analytically rigorous calculation of active-duty providers' time devoted to military-specific responsibilities. |
DOD concurred with this recommendation. The "standard" referred to in the recommendation consisted of a goal for active-duty specialist providers to achieve 40 percent of the median clinical productivity of private-sector specialist providers as defined by a major medical survey. Since that time, DOD has pursued an alternate strategy by developing a metric known as Joint Knowledge, Skills, and Abilities. This consists of measuring practice of specialist-specific skills derived from each specialty's "expeditionary" or wartime scope of clinical practice. As such, it represents a fundamentally different approach to assessing readiness, and we are closing the recommendation as no longer valid.
|
| Department of Defense | To help achieve DOD's goals for transferring health care into its own facilities and increasing the productivity of active-duty medical providers, the Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to develop a strategy for achieving these goals that reflects the leading practices of effective federal strategic planning. |
DOD concurred with this recommendation. As of March 2026, DOD provided an update on the status of its efforts to implement this recommendation, but we do not believe that the information provided constitutes a strategy to achieve the goals of transferring health care into its own facilities and increasing the productivity of active-duty medical providers. To close this recommendation, DOD will need to develop such a strategy. We will continue to follow-up with DOD on its efforts.
|
| Department of Defense | To strengthen ongoing efforts within DOD to address the Study's recommendations to use the provider model outputs to inform execution of health care delivery and to refine the model for future use, the Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to modify DOD's model to reflect the military service of the physicians and military treatment facilities included in the model. |
DOD concurred with this recommendation. While the Study's model is no longer in use, changes in how the military health system (MHS) operates and assigns physicians to military medical treatment facilities (MTFs) meet the intent of our recommendation of a more realistic estimation of need for and allocation of personnel. Specifically, in November 2022, DOD completed its multiyear transition of MTFs from the military departments to the Defense Health Agency (DHA). MTFs therefore no longer have a strict service orientation. Further, DOD shifted from use of the productivity metric in its Study to clinical currency metrics. In a June 2024 Directive-Type Memorandum, DOD stated that DHA and the services would work together to identify the capacity of MTFs to support the clinical currency of physicians, and that the DHA would submit the resulting personnel requirements requests to the military services for staffing. As a result, DOD is better placed to estimate its need for and allocate physicians across the MHS on a more efficient basis.
|
| Department of Defense | To strengthen any future assessments of additional changes to DOD's network of military treatment facilities, the Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to describe steps taken to assess the reliability of data supporting the assessment, including, at a minimum, the sources of data, data limitations, and efforts to test data reliability. |
DOD concurred with this recommendation. As of March 2026, DOD provided an update on the status of this recommendation, but further information is needed to assess its efforts. To close this recommendation, DOD will need to demonstrate that it has documented its assessment of the data supporting a review of its network of facilities. We will continue to engage with DOD on this matter.
|
| Department of Defense | To strengthen any future assessments of additional changes to DOD's network of military treatment facilities, the Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to include in any accompanying cost estimates an appropriate level of detail, all significant costs, and an assessment of the reliability of the data supporting the cost estimate. |
DOD concurred with this recommendation. In 2020, we recommended that DOD conduct a sensitivity analysis of the relative cost-effectiveness of MTF-provided care compared to civilian-provided care under varying assumptions, and document that information for decision makers to inform recommendations on future MTF restructuring decisions. In 2022, DOD developed a Transition Impact Analysis tool, which, according to a DOD memorandum and other documentation we reviewed, uses a standard set of evaluation criteria and key metrics to identify and prioritize MTFs for future restructuring efforts. The model can also estimate the change in costs based on the restructuring scenario, factor in one-time transition costs, and estimate the increase in private-sector care costs. According to DOD, the model is dynamic and allows the user to make adjustments to key assumptions to provide additional sensitivity analysis. Adjustments include the potential increase in private sector care reimbursement rates, potential under reporting in direct care workload, and the ability to exclude military pay. In 2023, a team of DOD analysts applied the tool in studying potential future strategies for the military health system at the request of senior department leaders. Specifically, the DOD analysts used the tool to perform sensitivity analyses of the costs associated with potential strategies, such as restructuring MTFs. According to DOD officials, the results of the analyses helped inform the Deputy Secretary of Defense's strategy selection as documented in a December 6, 2023 memorandum entitled "Stabilizing and Improving the Military Health System." This meets the intent of our recommendation.
|