Since its formation in 2013, the Defense Health Agency (DHA) has implemented the consolidation of medical services. The Department of Defense (DOD) formed the DHA based on the recommendation of a task force that identified inefficiencies in the previous system in which each DOD branch had separate medical services. Moving each branch under the DHA authority was a highly complex process implemented in phases. While the COVID-19 pandemic impacted the timeline, the transition is complete. As of October 2022, the DHA is fully responsible for the DOD health care delivery at all military treatment facilities and its 140,000 workforces of active duty, GS, and civilian contractors serving 9.6 million beneficiaries worldwide.
Consolidation of Services
The DHA consolidation of services is a game changer in medical services delivery and business operations. The scope ranges from workforce management, medical services delivery, enterprise optimization, modernization, and costs to procurement and acquisition. The benefits are far-reaching, from improved access to care to unformed infrastructure to optimizing the yearly $11B medical supply chain. For military healthcare contractors, the transition will always present speed bumps. However, the outcome will be improved ease of doing business with the DHA. There will be many positive impacts, from new opportunities to standardization of processes.
Military Healthcare Contractors
Another factor impacting military healthcare contractors is the medical billet reduction. The 2020 budget cut Uniformed Medical Personnel, comprising a 22% decrease in the active-duty medical force. The 2022 and 2023 National Defense Authorization Acts (NDAA) temporarily paused the reduction in medical billets, but planned reductions remain on the horizon. Soon, there will be a need for more military health contractors to deliver personnel.
More than Just Staffing, Performance-based Management
The increased use of performance-based contracts in healthcare benefits all stakeholders. Delegating operational management to contractors reduces government resources while maintaining oversight, allowing the government to tap into private-sector innovations to help the military health system. In performance contracts, government healthcare contractors are responsible for the delivery of services, including staffing, and are accountable for delivering. The acquisition process clearly defines deliverables and holds contractors accountable. Performance-based contracts in healthcare maintain government stakeholders’ oversight through Quality Assurance and the Service Level Agreement KPIs. Contractors are vested in continuous process improvement, ensuring they meet KPIs to remain contract-compliant.
Consolidation of services, medical billets reductions, and performance contracts are just three areas impacting military healthcare contractors today and in the future. Finding government healthcare contractors with expertise is critical to improving health outcomes.
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