Assessing the Performance of Military Treatment Facilities

The U.S. Department of Defense (DoD) has increasingly confronted financial, managerial, and operational challenges in sustaining the TRICARE health benefit, which it provided to 9.2 million beneficiaries in fiscal year (FY) 2006. Medical costs, for example, are projected to increase to 12 percent of DoD s total budget as of FY 2015, from a level of 8 percent in FY 2007. In response to such challenges, the 2006 Quadrennial Defense Review motivated a transformation in business practices within the Military Health System (MHS). Performance-based planning and financing would allocate resources based on the value of activities to DoD s mission, while aligning accountability and authority within the system. DoD has considered setting targets for health care utilization in its military treatment facilities (MTFs) and rewarding or penalizing MTFs according to their performance. Such an initiative supposes that MTF leaders are able to cost-effectively manage care, much as generalist physicians or managed-care plans are frequently expected to do in the private sector. For example, in areas in which TRICARE costs are high at private hospitals, MTF leaders may be able to encourage beneficiaries to be treated at military hospitals with spare capacity.