Defense Health Reform: Steps Taken to Plan the Transfer of the Administration of the Military Treatment Facilities to the Defense Health Agency, but Work Remains to Finalize the Plan

What GAO Found

The Department of Defense’s (DOD) March 2017 and June 2017 interim reports summarize at a high level how the Defense Health Agency (DHA) will take administrative responsibility of the Military Treatment Facilities (MTFs). For example, GAO’s review of the June 2017 interim report found that DOD identified the major functions required to operate the MTFs. In addition, a DHA official and the chair of the work group established to lead planning efforts stated that appointments for two key DHA senior the administrative positions—the Assistant Director for Health Care Administration and the Deputy Assistant Director for Financial Operations—are underway. However, a significant amount of work remains to complete the implementation plan by March 1, 2018—the due date of the department’s final report on its planned implementation. For example, GAO’s review of a draft planning document found that the work group still needed to define readiness functions, the organizational structure, and the governance structure, among other things. Further, members of the work group stated that it has yet to define in sufficient detail the administrative model the department will use for the DHA.

GAO also found that the interim reports included information about eliminating duplicative activities, maximizing efficiencies of the activities carried out by the DHA, and reducing headquarters staff, but details related to these elements are under development. Specifically, the March 2017 and June 2017 interim reports stated that details will not be available until the department issues its final report on the implementation plan by March 1, 2018. According to a draft planning document, the work group has begun efforts to reengineer six major functional areas, among other things. However, a member of the work group stated that much of the work related to eliminating duplicative activities carried out by the DHA and MTFs and related to maximizing efficiencies in the activities carried out by the DHA was not complete. The department is also conducting a review of the programmed management headquarters activities to develop a comprehensive plan to reduce these activities by 25 percent. Because much of the department’s work remains to be completed, it is too soon to fully assess how DOD’s efforts will eliminate duplicative activities, maximize efficiencies, or reduce headquarters staffing.

Why GAO Did This Study

In September 2013, DOD established the DHA to assume management responsibility for numerous functions of the Military Health System. Currently, DHA exercises authority, direction, and control over three MTFs and all other MTFs, approximately 680, are under the direction and control of the services. The National Defense Authorization Act (NDAA) for Fiscal Year 2017 directed the DHA to take responsibility for the administration of all of the MTFs by October 1, 2018, and develop an implementation plan for how the Secretary will carry out the transfer of the administration of the MTFs. The act requires that DOD’s implementation plan include, among other requirements, efforts to eliminate duplicative activities carried out by the DHA and military departments, and efforts to maximize efficiencies in the activities carried out by the DHA.

Section 702 of the NDAA for Fiscal Year 2017 also includes a provision for GAO to review the department’s preliminary draft of the implementation plan, as well as to review the final version of the implementation plan, which is due by March 1, 2018. This report describes DOD’s efforts in developing the preliminary draft of the implementation plan to address the requirements of identifying how the DHA will (1) take administrative responsibility of the MTFs and (2) eliminate duplicative activities, maximize efficiencies in the activities it carries out and reduce headquarters staff.