DOD Has Identified Initiatives Aimed at Slowing Medical Cost Growth but Has Not Fully Applied Results- Oriented Management Practices

DOD has identified 11 initiatives aimed at slowing medical cost growth,  but it has not fully applied results-oriented management practices to its  efforts. Cost savings estimates are  critical to successful management of the initiatives so that DOD can  achieve its goal of reducing growth in medical costs as stated in the 2010  Quadrennial Defense Review. As DOD completes its dashboards, implementation  plans, and cost savings estimates, it could benefit from the application of  the six characteristics of a comprehensive, results-oriented management  framework, on which GAO has previously reported, including a thorough  description of the initiatives’ mission statement; problem definition, scope,  and methodology; goals, objectives, activities, milestones, and  performance measures; resources and investments; organizational roles,  responsibilities, and coordination; and key external factors that could  affect the achievement of goals. DOD Is in the Initial Stages of Developing a Monitoring Process for Measuring the Progress of Its Health Care Initiatives

DOD also has not completed the implementation of an overall process for  monitoring progress across its portfolio of health care initiatives and has  not completed the process of identifying accountable officials and their  roles and responsibilities for all of its reform efforts. Without  sustained top civilian and military leadership which is consistently  involved throughout the implementation of its various initiatives and until  DOD fully implements for all of its initiatives a mechanism to monitor  performance and identify accountable officials, including their roles and  responsibilities, DOD may be hindered in its ability to achieve a more  cost-efficient MHS and at the same time address its medical readiness  goals, improve its overall population health, and improve its patients’  experience of care. However, DOD officials have not fully  employed several key management practices to help ensure that these  medical governance initiatives will achieve their stated goals. DOD Has Taken Steps to Implement Its Seven Governance Initiatives

DOD has to varying degrees taken steps to implement some of the seven  governance initiatives approved by the Deputy Secretary of Defense in  2006 with the goal of achieving economies of scale, operational  efficiencies, and financial savings as well as consolidating common  support functions and eliminating administrative redundancies. Initially, DOD expected that the  seven initiatives would save at least $200 million annually once  implemented. During the course of our work examining DOD’s health  care initiatives, we determined that six of the key practices identified at  our 2002 forum were especially important to ensure that DOD has the  framework needed to implement its governance initiatives: (1) a focus on  a key set of principles and priorities that are embedded in the  organization to reinforce the new changes, (2) coherent mission and  integrated strategic goals to guide the transformation, (3) implementation  goals and a timeline to build momentum and show progress from day  one, (4) a communication strategy to create shared expectations and  report related progress, (5) a dedicated implementation team with the  responsibility and authority to drive the department’s governance  initiatives, and (6) committed and sustained leadership. Recommendations for Executive Action

In order to enhance DOD’s efforts to manage rising health care costs and  demonstrate sustained leadership commitment for achieving the  performance goals of the MHS’s strategic initiatives, we recommend that  the Under Secretary of Defense for Personnel and Readiness direct the  Assistant Secretary of Defense for Health Affairs, in conjunction with the  service surgeons general, to take the following three actions:
Complete and fully implement, within an established time frame, the  dashboards and detailed implementation plans for each of the  approved health care initiatives in a manner that incorporates the  desired characteristics of results-oriented management practices,  such as the inclusion of performance metrics, investment costs, and  cost savings estimates. Complete the implementation of an overall monitoring process across  DOD’s portfolio of initiatives for overseeing the initiatives’ progress  and identifying accountable officials and their roles and  responsibilities for all of its initiatives. Complete the implementation of the governance initiatives that are  already under way by employing key management practices in order  to show financial and nonfinancial outcomes and to evaluate both  interim and long-term progress of the initiatives. Agency Comments

In written comments provided in response to a draft of this report, DOD  concurred with our findings and recommendations. To determine the extent to which the Department of Defense (DOD) has  identified initiatives to reduce health care costs and applied results- oriented management practices in developing plans to implement and  monitor them, we interviewed DOD officials concerning their approach to  this challenge and examined documentation of related plans and policies. 2.
Why GAO Did This Study

DODs health care costs have risen significantly, from $19 billion in fiscal year 2001 to $48.7 billion in its fiscal year 2013 budget request, and are projected to increase to $92 billion by 2030.
GAO reviewed DODs efforts to slow its rising health care costs by changing selected clinical, business, and management practices. Specifically, GAO determined the extent to which DOD has (1) identified initiatives to reduce health care costs and applied results-oriented management practices in developing plans for implementing and monitoring them and (2) implemented its seven medical governance initiatives approved in 2006 and employed key management practices. For this review, GAO analyzed policies, memorandums, directives, and cost documentation, and interviewed officials from the Office of the Secretary of Defense, from the three services, and at each of the sites where the governance initiatives were under way.

What GAO Found

The Department of Defense (DOD) has identified 11 initiatives aimed at slowing its rising health care costs, but has not fully applied results-oriented management practices in developing plans to implement and monitor its initiatives. Results-oriented management practices include developing plans that identify goals, activities, and performance measures; resources and investments; organization roles, responsibilities, and coordination; and key external factors that could affect goals, such as a decrease of funding to a program. At the conclusion of GAOs review, DOD had completed and approved a detailed implementation plan, including a cost savings estimate, for just 1 of its 11 initiatives. Developing cost savings estimates is critical to successful management of the initiatives for achieving the 2010 Quadrennial Defense Reviews call for reduced growth in medical costs. DOD also has not completed the implementation of an overall process for monitoring progress across its portfolio of health care initiatives and has not completed the process of identifying accountable officials and their roles and responsibilities for all of its initiatives. Without comprehensive, results-oriented plans, a monitoring process, and clear leadership accountability, DOD may be hindered in its ability to achieve a more cost-efficient Military Health System, address its medical readiness goals, improve its overall population health, and improve its patients experience of care.
Additionally, DOD has another set of initiatives, which were approved in 2006 to change aspects of its medical governance structure. GAO found that DOD had implemented some of the initiatives but had not consistently employed several key management practices that would have helped it achieve its stated goals and sustain its efforts. DOD approved the implementation of the seven governance initiatives with the goal of achieving economies of scale and operational efficiencies, sharing common support functions, and eliminating administrative redundancies. Specifically, DOD expected the initiatives to save at least $200 million annually once implemented; however, to date, only one initiative has projected any estimated financial savings. DOD officials stated that the other governance initiatives have resulted in efficiencies and have significant potential for cost savings. Further, the governance initiatives that are further developed were driven primarily by requirements of Base Realignment and Closure Commission recommendations and their associated statutory deadlines for completion. Additionally, GAO found that DOD had not consistently employed several key management practices, which likely hindered the full implementation of the initiatives. For example, the initiatives initial timeline was high-level and generally not adhered to, a communication strategy was not prepared, an overall implementation team was never established, and performance measures to monitor the implementation process and achievement of the goals were not established. With more emphasis on the key practices of a successful transformation, DOD will be better positioned in the future to realize efficiencies and achieve its goals as it continues to implement the initiatives.

What GAO Recommends

GAO recommends that DOD (1) complete and fully implement comprehensive results-oriented plans for each of its medical initiatives; (2) fully implement an overall monitoring process across the portfolio of initiatives and identify accountable officials and their roles and responsibilities; and (3) complete its governance initiatives and employ key management practices to show financial and nonfinancial outcomes and evaluate interim and long-term progress. In written comments on a draft of this report, DOD concurred with each of these three recommendations.