The Government Accountability Office has chided the Department of Defense for adopting a restructuring plan for the military health system without conducting a comprehensive analysis of the costs, benefits and risks.

The GAO report released in October also suggests that Deputy Defense Secretary Gordon England opted for the path of least resistance last November when he rejected three options for consolidating Army, Navy and Air Force medical bureaucracies in favor of a plan that merely would combine some key support functions such as finance, logistics and medical research.

Phased implementation of this option is under way, but it won’t be too far along by January 2009 when a new administration assumes control.

Influencing England, officials said last December, were Air Force arguments that cultural differences between the services make a unified medical command impractical and could harm medical readiness.

The Navy, Army and joint staff had endorsed a unified command. They were backed by an advisory board of business executives and by a Pentagon working group established specifically to weigh alternatives for restructuring the health care system. The Center for Naval Analyses projected annual savings of hundreds of millions of dollars.

England rejected three options presented to him for a joint or unified command. Instead, he embraced a fourth developed by his senior advisers. This plan calls for keeping the three service medical departments but combining some support functions. This “incremental” approach, officials argue, would also result in cost efficiencies while preserving the service-unique cultures of the three medical components.

Ironically, it also might involve establishing a new layer of bureaucracy to oversee consolidated functions.

The GAO suggested that claims of cultural differences can block many transformational changes for the military if defense leaders allow them to do so.

“The department’s view that there is a strong cultural challenge to successful implementation [of a unified medical command] should underscore the need for department leadership to address the challenge,” GAO said, “rather than be used to justify a decision by the department to avoid necessary change.”

The report cites a RAND Corporation finding that at least 13 studies have been conducted over five decades to restructure military health care. All but three favored moving to a unified system or at least toward stronger central control over service departments.

But what most bothered the GAO about England’s “fourth option” was a lack of “comprehensive analysis” to support the decision. The business case presented “does not demonstrate how DOD determined the fourth option to be better than the other three in terms of its potential impact on medical readiness, quality of care, beneficiaries’ access to care, costs, implementation time and risks,” the report says.

Without analysis to justify the choice, GAO said, neither the secretary of defense nor Congress can be assured that DOD “made an informed decision” to consolidate key support functions and to reject the other options.

In a written response to GAO, Dr. S. Ward Casscells, assistant secretary of defense for health affairs, said his department overall concurs with its findings. He gave assurances that the team tasked to implement the restructuring plan would be preparing a more comprehensive business case with findings on risks and benefits.

In a phone interview, Army Col. Thom Kurmel, Casscells’ chief of staff, said that while the department “doesn’t disagree” with GAO, the auditors “failed to realize” that senior leaders like the deputy defense secretary are authorized to make these kinds of “governance decisions.”

“Perhaps if we had known there was a rule book to play by we might have used it,” Kurmel said. “But in the end, the deputy is the final decision maker on these kinds of issues and he made a decision last year.”

Kurmel said the “hybrid” option chosen had been analyzed by the Pentagon working group. One factor in choosing the plan, he said, was concern that “we don’t break anything” critical to troops in wartime. Another factor, he said, “was preserving service equities.”

England’s memo of last November also contained important decisions for implementing the 2005 Base Realignment and Closure round as it impacts the medical system. One of these will have a profound effect on military direct care for 500,000 patients in and around Washington, D.C., Kurmel said.

England authorized a Joint Task Force National Capital Region Medical Command to oversee all medical centers, hospitals and clinics in the D.C. area. That includes Walter Reed Army Medical Center, the National Naval Medical Center in Bethesda, and 29 smaller hospitals and clinics from Quantico, Va., up to Sugar Grove, W.Va. and across to Lakehurst, N.J.

On Oct. 1, Rear Adm. John M. Mateczun, Navy’s deputy surgeon general, took charge of the task force. He faces two big challenges tied to the BRAC deadline of 2011. He will oversee the merger of Walter Reed and Bethesda into the Walter Reed National Military Medical Center at Bethesda. He also will execute a major shift in regional health care from Walter Reed and Bethesda down to Fort Belvoir, Va.

DeWitt hospital at Belvoir will gain primary care capabilities as well as most specialty care for the D.C. area, thus improving access for the large beneficiary population living in Northern Virginia. Walter Reed will retain primary care capability as well as major teaching programs, amputee care, traumatic brain injury care and psychological health.

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