News & Events

Proposed Changes to the Military Health System

A Recently proposed plan to combine the administrative and management functions of the military health system under a new Defense Health Agency (“DHA”), currently administered separately by the Army, Navy, and Air Force, may have broader implications than the estimated $50-100 million in cost savings.  The plan submitted to Congress on March 2nd outlines three key initiatives:

  • Creating the DHA to be led by a three-star officer with oversight of Tricare, health care support, IT, logistics, and acquisitions, amongst other responsibilities;
  • Appointing managers in areas of multiple military treatment facilities; and
  • Transferring the joint command responsible for treatment facilities in the Washington D.C. area to the DHA.

Beyond its specific focus on efficiencies, cost savings, and encouraging beneficiaries to utilize less costly military treatment facilities as opposed to private providers; the plan will likely impact government contractors’ ability and opportunity to support military health initiatives / programs.  Consolidated acquisition of services and common business / clinical practices may afford contractors a more streamlined access point through which to sell their medical solutions as well as cross-selling opportunities into multiple military branches. 

On the contrary, the Federal government’s continued focus on budget control, cost saving, and utilization of contract vehicles (or similar procurement mediums) may squeeze out smaller vendors and niche providers without the breadth to meet diverse agency(ies) needs.

Military branches have begun putting together planning teams in expectation of the Government Accountability Office and Congress approving the plan during their 300 day review deadline and instituted changes taking place in early 2013.

Contributors: Marc Marlin and Robert Dowling