Future Military Health Care
THE MILITARY IS LOOKING FOR WAYS TO STREAMLINE AND IMPROVE HEALTH CARE ACROSS THE CONTINUUM. COOPERATIVE EFFORTS ARE PAVING THE WAY.
Fourteen members of the Task Force on the Future of Military Health Care are presently examining a variety of issues relevant to the future of health care in the military. Established by the Secretary of Defense, in accordance with the John Warner National Defense Authorization Act for 2007, the task force is currently gathering information and will issue a final report this December, complete with its assessment and recommendations.
Among other issues, the task force is evaluating the current process of acquisition and procurement. The task force welcomed representatives of the Army, Navy and Air Force, as well as TRICARE, to give presentations at an open session on July 25, 2007, in Arlington, Va. Military Medical Technology has interviewed representatives from the services to better understand the issues they face in contracting, and how they are rising to the challenge. We should note that representatives from TRICARE were unable to participate.
ARMY
Colonel Earle Smith, commander of the Army’s Health Care Acquisition Activity, heads up a streamlined system that deals with medical contracting, including medical services (health care providers and ancillary services), medical equipment and supplies. Contract spending has increased from $800 million in FY04, to $1.1 billion in FY06. In FY06, they executed 7,607 contracts, with 18 percent of those being service contracts.
Smith’s briefing to the task force was divided into two parts. First, he outlined the organizational structure, including staffing and the amount of contracts executed. Second, he explained some of the biggest challenges facing his organization.
On his list of obstacles is the current statutory limit on compensation for personal services. DoDI 6025.5 (paragraph 4.7) limits total annual compensation to $400,000 to an individual under a personal service compensation (PSC) arrangement. That presents a problem, according to Smith, because the cost for providers is ever-increasing. With the market dictating the compensation for medical professionals, contractors are just trying to keep up. According the American Medical Group Association’s compensation data, a neurosurgeon commands a $476,000 salary, and a cardiothoracic surgeon is paid on average $470,000. It is especially challenging when the Army is competing with the private sector for qualified providers.
“Some of the specialized positions are now starting to exceed that [400,000] cap, and that puts us in a predicament,” said Smith.
Additionally, blanket purchase agreements (BPA) are also subject to a statutory cap on calls, which are not to exceed the simplified acquisition threshold of $100,000. Smith said it would be hard to find a physician who they would want to contract out for, for the period of one year, who would be less than that amount. Even particular specialties in nursing are more expensive than the BPA cap allows.
Smith also spoke about the difficulty of performance-based contracting. He said it is tough to establish what could be considered “performance-based standards” for health care providers. Current regulations stipulate that performance-based contracting is the preferred method. However, with personal services contracts, that can be difficult to do.
“It is very hard to develop prospective measures of performance,” said Albert Jacob, chief of staff. “You do not know what the person will be doing every day. It is hard to come up with objectified measures. Not to oversimplify, but with a grass cutting contract you would specify that the grass needs to be a certain height, and it either is or it isn’t. But with a health care provider, it is much more difficult to gauge if they are a quality health care provider.”
Another challenge Smith mentioned is that DoD prohibits the use of VA federal supply schedule (FSS) contracts for personal services. That limits the surge capability to care for wounded soldiers. It also limits the contractor base and increases the time required to procure medical service for troop deployments.
While Smith believed his team did a good job at conveying the issues, he said he is not sure if the task force truly understands the nature of the Army’s acquisition and procurement challenges. He is hoping they recommend statutory changes to make the job easier for his team and keep the quality of military health care high.
AIR FORCE
Lieutenant Colonel Joe Mirrow represented the Air Force Medical Service Commodity Council on the task force. Mirrow serves as director of AFMSCC. The commodity council operates under what Mirrow described as “centralized strategy, with decentralized execution.” He pointed out that Army and Navy have many more people— hundreds more—working on medical acquisition and procurement, while the Air Force has only 10 staff members.
Though he shares some of the same concerns as his counterparts in the other services, Mirrow also presented a few different issues to the task force. The Department of Defense typically asks staff to show up at hospitals within 30 days from the time a contract is awarded. However, the credentialing process takes 60 to 90 days. That causes medical treatment facilities to turn to temporary staffing to fill the gap, which becomes an expensive prospect. Mirrow believes a temporary medical staffing program would reduce time and improve credentialing.
“We think if we could come up with some way to look at that process from a DoD standpoint, we might be able to solve some of the credentialing issues. Instead of having one way of business we’ll have two. And the hospitals will be able to determine if this is a short-term need, like maternity leave [or a long-term need],” he said.
One thing Mirrow thinks the Air Force does better than the other services is surveillance of its contractors. The council uses a contract tracking and reporting system, which allows it to push contractors to fill positions at Air Force hospitals, with the threat of holding past performance over their heads if that does not occur. Mirrow said it ensures they get their staffing and that the staff is of high quality.
While the Air Force shares the Army’s concern over personal services caps, Mirrow does not have a problem with performancebased contracting. That is because the Air Force makes a distinction between the contractor and the individual provider. Rather than focus on the performance of specific health care workers, which can be difficult to objectify, the contractor is in the hot seat.
“[We measure] the quality of the health care workers they get for us, how responsive they are if there is a problem with a health care worker, and whether they take care of those problems promptly and refill positions in a timely manner,” Mirrow said.
The partnership the Air Force has with the Department of Veterans Affairs is another source of concern. In order to do anything outside of the Department of Defense, there must be a justification made every time the Air Force wants to work with the VA. However, the VA Sharing Statute says the services are supposed to share resources and supplies with the VA. Unfortunately, this is not clearly defined in the statute.
“Congress needs to decide how they want DoD to work with the VA, and they can fix that in the VA Sharing Statute by saying DoD and VA have full authority to share all services and information systems.” Mirrow said. “I think that will open up a whole new world… and provide a complete spectrum of care for beneficiaries of both systems. I hope [the Task Force] realizes that we are trying to put our requirements together, but there are limitations that prevent us from doing that,” he said.
Overall, Mirrow hoped the task force would keep in mind that acquisition provides an essential duty. Contracting is the last line of defense, after measures to recruit health care workers or hire civilians fail. For example, Mirrow said the Air Force was short 115 pharmacists this year, and he maintained that his staff will fill every position with highly qualified candidates. “I think acquisition is really doing a good job at providing the benefit, and any changes anyone wants to make need to really be looked at. We hear a lot of critics, but we are kind of it. If we can’t do it, then [there is a problem]. We would appreciate if they take into account what we say very seriously, because we are it.”
NAVY
The biggest problem the Navy faces is the scarcity of medical resources. That’s according to Terry Horst, director of acquisition management for the Naval Medical Logistics Command. Finding qualified medical staff and keeping prices down is tough in such a competitive market, which is experiencing a shortage of health care workers. The military is forced to compete with the private sector for a limited supply, and the private sector can often offer more money.
Horst also addressed the problem of timing when it comes to funding. “Funding drives everything,” she said. “When funding comes late in the year, it limits options that a contracting officer can choose. Usually the best contracting decisions are not being made, because money is being released late. The budget should not drive the acquisition plan. The acquisition plan should drive the budget.”
Horst is also pushing for the establishment of a medical portal that would be used by all of the services. Currently the Navy is developing a medical acquisition portal that will be in use by December of this year. The plan is to post many of their multiple award task order contracts/single award task order contracts, and indefinite delivery/indefinite quantity contracts on the portal to orders to be placed against them. If all DoD services were collaborating together to utilize the portal, Horst said it would open many doors in the face of late funding.
“Just think… if everybody had a vehicle to place orders from, and we were using each others’, the possibilities would be wide open as to what we could do,” Horst said.
Rather than concern herself with appealing to Congress for statutory changes, which she said could take years, Horst prefers to work within the parameters she is given to come up with reasonable solutions. She thinks it is especially important for the services to combine resources and work together now, given how many soldiers are coming come from active duty that need help immediately.
Of course, the nationwide shortage of contractor specialists does not help the situation. Horst said the Navy is facing this challenge with an intern program that concentrates on recruitment from colleges and in-house on-the-job training. Within the last three years, the Naval Medical Logistics Command has gone from 17 contract specialists to 48. Horst said the task force was very interested in this plan to improve staffing levels.
Bottom line, Horst and her colleagues in the other DoD services say they are performing a satisfying and important job, despite the many challenges of contracting.
“If I don’t come through, people’s lives are going to be affected. There are parents whose kids are not going to get health care if we do not make this work. Or there is a soldier who is coming back who needs a prosthetic, but there will not be anyone to do it,” Horst said. “I just remind my people of that all the time.” ♦