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GAO Expresses Concern about Defense Health Agency Implementation

Published: September 16, 2015

DEFENSEHealth CareHealth IT

The Defense Health Agency (DHA) achieved $236 million in cost savings in its first year of operation. However, as DHA approaches its full operational capability deadline and the end of its second year, GAO is concerned about DHA maintaining implementation momentum.

In October 2013, DOD created the DHA to consolidate military health care support services.  Prior to that time each military service administered its own health care and support.  DHA was stood up to combine medical programs and common “shared” services to achieve cost savings.

In FY 2014, DHA’s first year of operation, it achieved the following:  

  • Established the DHA as a combat support agency in support of medical readiness and appointed the first DHA Director.  
  • Stood up ten integrated shared services to improve Military Health System (MHS)-wide standardization, efficiency, and jointness. 
  • Integrated more than 1,700 employees from the Army, Navy, Air Force, and the former TRICARE Management Activity (TMA) into the agency at more than 40 sites around the globe.  
  • Launched a robust analytics cell to provide dynamic decision support and standardized performance monitoring across the MHS.   
  • Realigned the NCR Medical Directorate, including Walter Reed National Military Medical Center and Fort Belvoir Community Hospital, to the DHA. 
  • Achieved net savings of approximately $236 million.

GAO is tasked with reviewing DOD’s progress in implementing DHA in the areas of personnel requirements, cost savings through shared services, and performance measures for shared services.  Although GAO acknowledged DHA progress toward reaching full implementation in a recent report, it found deficiencies in the three areas cited. 

According to GAO, DHA has begun the process of assessing personnel requirements, but it does not have a detailed timeline for completion, the process has been delayed, and the plan is not comprehensive. 

In the area of shared services cost savings, DHA is using a business case analysis approach to achieve cost savings for eight of its ten DHA shared services.  However, the shared services areas of Public Health and Medical Education and Training do not yet have comprehensive business case analyses. 

GAO also found deficiencies in DHA’s performance measures for shared service implementation and ongoing operations.  Although DHA has developed measures to assess the progress of its ten shared services, according to GAO, there are key elements lacking, such as baseline data and measurable targets.

To remedy the identified shortcomings, GAO recommends DHA take the following actions:

  • Develop a timeline for completion of the personnel requirements assessment that includes milestones and interim steps
  •  Develop a comprehensive personnel requirements assessment process to include future skill set needs, potential organizational changes, and end-state DHA military workforce composition. 
  •  Develop a plan for reassessing and revalidating personnel requirements as the missions and needs of the DHA evolve over time.
  •  Provide the number and cost of DHA administrative and headquarters personnel as an annual exhibit in the president’s budget.
  • Determine the future of the Public Health and Medical Education and Training shared services by either identifying common functions to consolidate to achieve cost savings, or by developing a justification for the transfer of these functions from the military services to the DHA that is not based on cost savings.

DHA concurred with most of GAO’s findings and recommendations.