DEFENSE HEALTH 

CARE

Additional Analysis of 

Costs and Benefits of 

Potential Governance 

Structures Is Needed

Report to Congressional Committees

September 2012

GAO-12-911

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-911, a report to 

congressional committees

September 2012

DEFENSE HEALTH CARE

Additional Analysis of Costs and Benefits of 

Potential Governance Structures Is Needed

Why GAO Did This Study

Over the past decade, the cost of the 

MHS has grown substantially and is 

projected to reach nearly $95 billion by 

2030 according to the Congressional 

Budget Office. As health care costs 

consume an increasingly large portion 

of the defense budget, current DOD 

leadership and Congress have 

recognized the need to better control 

these costs. Section 716 of the 

National Defense Authorization Act for 

Fiscal Year 2012 required DOD to 

submit a report analyzing potential 

MHS governance options under 

consideration, and also required GAO 

to submit an analysis of these options. 

In response to this mandate, GAO 

determined the extent to which DOD’s 

assessment provides complete 

information on cost implications and 

the strengths and weaknesses of 

potential MHS governance options. To 

conduct this review, GAO analyzed 

DOD’s governance report along with 

supporting documents, and interviewed

Task Force members.

What GAO Recommends

GAO recommends that DOD develop 

(1) a comprehensive cost analysis for 

its potential MHS governance options, 

(2) a business case analysis and 

strategy for implementing its shared 

services concept, and (3) more 

complete analyses of the options’

strengths and weaknesses. DOD 

concurred with developing a business 

case analysis for its shared services 

concept. DOD did not concur with the 

other 2 recommendations, stating that 

further analysis would not alter its 

conclusions. GAO disagrees and 

believes that more comprehensive 

analysis will help to distinguish the 

differences among the costs and 

benefits of the options.

What GAO Found

The Department of Defense’s (DOD) assessment of potential governance 

options for its Military Health System (MHS) did not provide complete information 

on the options’ total cost impact and their strengths and weaknesses. As part of 

DOD’s assessment, it identified 13 potential governance options for the MHS and 

included a limited analysis of the options’ estimated costs savings and their 

strengths and weaknesses. All of the options would create a shared services 

concept to consolidate common services, such as medical logistics, acquisition, 

and facility planning, under the control of a single entity. DOD selected an option

that would create a defense health agency to, among other things, assume the 

responsibility for creating and managing shared services, and leave the longstanding military chain of command intact with the services in control of the 

military hospitals. The National Defense Authorization Act (Act) for Fiscal Year 

2012 required DOD to submit a report to congressional committees that would, 

among other things, estimate the cost savings and analyze the strengths and 

weaknesses of each option. Using key principles derived from federal guidance, 

including cost estimating and economic analysis documents, GAO determined 

that DOD could have provided more information on cost implications and 

strengths and weaknesses in its report to Congress. Specifically, DOD did not (1) 

estimate implementation costs and comprehensive cost savings; (2) include a 

business case to support consolidating common services; or (3) include 

supporting quantitative data in its analysis of the options’ strengths and

weaknesses. 

• DOD’s cost analysis for its potential MHS governance options was limited In 

that it did not include implementation costs and only estimated personnel 

costs savings based on some potentially flawed assumptions, such as not 

using representative salaries to estimate personnel savings. 

• DOD did not develop a business case analysis and an implementation 

strategy for its proposed shared services concept. A business case analysis 

would, among other things, define the services to be consolidated, cost to 

implement and efficiencies to be achieved and could support DOD’s 

assertion that implementing shared services could achieve efficiencies. DOD 

approved a shared services concept two other times since 2006, but it has 

yet to develop a business case analysis that would provide a data-driven 

rationale for implementing the concept. 

• DOD used a qualitative process with input from internal experts to assess the 

strengths and weaknesses of the potential governance structures. However, 

it did not balance this support with quantitative data as its criteria for 

assessing the strengths and weaknesses specified. 

DOD officials stated that they did not provide comprehensive cost estimates or 

quantitative analysis of the options because an internal 90-day deadline to report 

back to the Deputy Secretary of Defense did not allow enough time. However, 

the act requiring DOD to report to Congress was enacted subsequent to DOD’s 

own internal assessment and did not establish a specific deadline. As a result, 

DOD could have taken time to conduct a more comprehensive analysis before 

submitting its report. 

View GAO-12-911. For more information, 

contact Brenda S. Farrell at (202) 512-3604 or 

farrellb@gao.gov.
Page i GAO-12-911 Defense Health Care

Letter 1 

Background 4

DOD’s Preferred Option Generally Retains Command Structures 

and Includes a Shared Service Concept 13

DOD’s Cost Analysis of Its Potential MHS Governance Options Was

Limited 22

DOD Limited Its Assessment of the Options’ Strengths and 

Weaknesses to a Qualitative Process 28

Conclusions 34

Recommendations for Executive Action 34

Agency Comments and Our Evaluation 35

Appendix I Scope and Methodology 41

Appendix II Detailed Description of the Potential Governance Structures and DOD’s 

Assessment of Their Strengths and Weaknesses 44

Defense Health Agency Governance Structures 44

Unified Medical Command Governance Structures 46

Single Service Governance Structures 49

Hybrid Governance Structures 50

Appendix III Comments from the Department of Defense 53

Appendix IV GAO Contact and Staff Acknowledgments 58 

Related Products 59

Table

Table 1: Possible Implementation Cost and Cost Savings Categories 

for DOD’s Preferred Defense Health Agency Governance 

Structure 27

Contents
Page ii GAO-12-911 Defense Health Care

Figures

Figure 1: Distribution of Beneficiaries as of May 2012 6

Figure 2: Governance Structure of the MHS as of August 2012 7

Figure 3: Timeline of Military Health System Governance Studies 9

Figure 4: Summary of Differences in Governance Elements for the 

Potential Defense Health Agency, Unified Medical 

Command, and the Single Service Governance Structures 15

Figure 5: Summary of Differences in Governance Elements for the 

Potential Hybrid Governance Structures 16

Figure 6: Criteria Used to Assess MHS Governance Options 29

Figure 7: Frequency that the Criteria Were Listed as a Strength or 

Weakness for Potential Governance Structures 33

Abbreviations

BRAC Base Realignment and Closure

DOD Department of Defense

MHS Military Health System

JTF CapMed Joint Task Force National Capital Region Medical 

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Page 1 GAO-12-911 Defense Health Care

United States Government Accountability Office

Washington, DC 20548

September 26, 2012

Congressional Committees

Over the past decade, the cost of the Department of Defense’s (DOD) 

Military Health System (MHS) has grown substantially. DOD’s fiscal year 

2013 budget request for health care is almost $50 billion,1 and is 

projected to reach about $95 billion by 2030.2 Historical growth rates in 

the MHS have been significantly higher than the corresponding rates in 

the national economy. For example, from 2006 to 2011, DOD 

experienced annual growth rates of 6.2 percent for purchased care and 

contracts and 5.2 percent for direct care and administration, compared 

with a national rate of 3.3 percent.3

Congressional leaders also have raised questions regarding rising military 

health costs and the MHS governance structure. For example, the House 

Armed Services Committee’s Print accompanying the Ike Skelton 

National Defense Authorization Act for Fiscal Year 2011

As health care consumes an 

increasingly larger portion of the defense budget, DOD leadership 

recognizes the need to reduce duplication, overhead, and operate the 

most efficient health system possible. Under the current structure, the 

responsibilities and authorities for the management of the MHS and the 

medical services it provides to over 9.7 million beneficiaries are 

distributed among several organizations. Several past DOD studies have 

suggested that realigning the MHS governance structure could help 

control the increase in health care costs.

4

 

1 DOD’s fiscal year 2013 budget request of $48.7 billion for its Unified Medical Budget 

includes $32.5 billion for the Defense Health Program, $8.5 billion for military medical 

personnel, $1.0 billion for military construction, and $6.7 billion set aside for the MedicareEligible Retiree Health Care Fund. The total excludes overseas contingency operations 

funds and certain transfers. 

noted that DOD 

2 Congressional Budget Office, Long-term Implications of the 2013 Future Years Defense 

Program, Pub. No. 4458, July 2012.

3 The national rate refers to the comparable composite category of hospital care and 

physician and clinical services.

4 The Ike Skelton National Defense Authorization Act for Fiscal Year 2011 Pub. L. No. 

111-383 (2010) was not accompanied by a conference report. In lieu of a formal 

conference report and joint explanatory statement, House Committee on Armed Services 

Print No. 5 (December 2010) was reported to show congressional intent and maintain 

legislative history. 

 
 

Page 2 GAO-12-911 Defense Health Care

had not yet developed a comprehensive plan to enhance quality, 

efficiencies, and savings in the MHS, and it encouraged the Secretary of 

Defense to evaluate the potential operational, organizational, and 

financial benefits of a unified medical command. For the past 6 decades, 

DOD and Congress have undertaken many studies to attempt to 

determine the governance structure of the MHS, with many of these 

studies recommending major organizational realignments. However, for 

several years, GAO has highlighted a range of long-standing issues 

surrounding the MHS and its efforts to reorganize its governance 

structure. In 2005, we identified DOD’s health care system as an example 

of a key challenge facing the U.S. government in the 21st century and an 

area in which DOD could improve delivery of services by combining, 

realigning, or otherwise changing selected support functions to achieve 

economies of scale.5 Additionally, in our March 2011 report on 

opportunities to reduce potential duplication in government programs, we 

noted that realigning DOD’s military medical command structures and 

consolidating common functions could increase efficiencies and 

significantly reduce costs.6

In June 2011, the Deputy Secretary of Defense established a Task Force 

to review various options for changes to the overall governance structure 

of the MHS and of its multi-service medical markets and to provide a 

report back within 90 days.7

 

5 GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, 

The Task Force submitted a report to the 

Deputy Secretary of Defense in September of 2011. Further, the National 

Defense Authorization Act for Fiscal Year 2012 required DOD to submit a 

report to the congressional defense committees to include a description of 

the alternative MHS governance structures developed and considered by 

the Task Force; the goals to be achieved by restructuring or 

reorganization and the principles upon which the goals are based; a 

description of how each option would affect readiness, quality of care, 

and beneficiary satisfaction; an explanation of the costs of each potential 

option considered; an analysis of the strengths and weaknesses of each 

GAO-05-325SP (Washington, D.C.: Feb. 2005).

6 GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax 

Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: Mar. 1, 2011).

7 Deputy Secretary of Defense Memorandum, Review of Governance Model Options for 

the Military Health System (Jun. 14, 2011). Multi-service medical markets are areas in 

which more than one DOD component provides military health care services.
 

Page 3 GAO-12-911 Defense Health Care

option; and an estimate of the cost savings, if any, to be achieved by 

each option compared to the MHS in place on December 31, 2011. No 

deadline for DOD’s report was included in the statutory language. 

Additionally, we were required to submit a subsequent report to the 

congressional defense committees within 180 days from the date DOD 

issued its report (March 2, 2012) reviewing, among other things, the cost 

implications and strengths and weaknesses of DOD’s potential 

governance structures.8

To determine how DOD’s preferred governance option and the other 

options presented in its report would change the current structure of the 

MHS, we obtained and reviewed the current MHS governance structure 

including identifying key changes that have occurred since 1991 by 

reviewing relevant legislative materials and DOD directives, as well as 

interviewing knowledgeable DOD officials. We then compared the current 

governance structure with each of the potential options by using the terms 

of reference from the Task Force report. To determine the extent to which 

DOD has developed a cost analysis of its potential MHS governance 

options, we reviewed DOD’s analysis using key principles we derived 

from cost estimating and budgeting guidance.

In response to this mandate, we determined the 

extent to which (1) DOD’s preferred governance option, and the other 

options presented in its report, change the current structure of the MHS; 

(2) DOD developed a cost analysis of its potential MHS governance 

options; and (3) DOD’s assessment of the strengths and weaknesses of 

its potential governance options is well supported and data-driven.

9

 

8 National Defense Authorization Act for Fiscal Year 2012, Pub. L. No. 112-81, § 716 

(2011). The act also prohibits the Secretary of Defense from restructuring or reorganizing 

the MHS until 120 days after we submit our report. 

To apply those principles, 

we reviewed DOD’s report, interviewed Task Force members concerning 

9 We reviewed numerous federal guidance documents related to cost estimating, 

accounting standards, economic analysis, and budgeting and identified key principles that 

we believe can be applied to the evaluation of cost savings estimates. The guidance 

documents we reviewed include: GAO Cost Estimating and Assessment Guide, 

GAO-09-3SP (Washington, D.C.: Mar. 2, 2009); Office of Management and Budget 

Circular No. A-11, Preparation, Submission and Execution of the Budget (Aug. 2011, 

superseded by an August 2012 issuance); Federal Accounting Standards Advisory Board, 

Statement of Federal Financial Accounting Standards 4 (June 2011); Department of 

Defense Instruction 7041.3, Economic Analysis for Decisionmaking (Nov. 7, 1995); and 

Department of Defense Financial Management Regulation 7000.14-R, Volume 4, Chapter 

22, Cost Finding (May 2010). Although each of these documents may not apply to these 

circumstances as a legal matter, we believe that they collectively contain broad themes 

that can be applied to evaluating cost analyses.
 

Page 4 GAO-12-911 Defense Health Care

their analysis, and identified broad cost categories that should be 

considered in the course of implementing DOD’s governance 

transformation. We were unable to rely on DOD’s cost savings estimates 

because the estimates and their supporting data were insufficient in the 

key data elements needed to completely and accurately develop them as 

discussed in the findings section of this report. Finally, to determine the 

extent to which DOD’s assessment of the strengths and weaknesses of 

its potential governance options is well-supported and data driven, we 

obtained and reviewed the Task Force’s supporting documents including 

meeting minutes, briefing slides, and the voting template for the criteria 

and process used to formulate the strengths and weaknesses of the 

options. We also interviewed Task Force officials regarding their 

involvement in the process and how they formulated their assessments. 

For each of our objectives, we limited our review to the potential overall 

governance structures that the Task Force presented in its report. We did 

not specifically review the proposed changes to DOD’s multi-service 

medical markets or to the governance structure in place within the 

National Capital Region as presented in the Task Force report because 

we determined these proposed changes were outside the scope of our 

mandate. We conducted this performance audit from March 2012 through 

September 2012 in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives. For details on our 

scope and methodology, see appendix I.

The MHS is a complex organization that provides health services to its 

beneficiaries across a range of care venues, from the battlefield to 

traditional hospitals and clinics at stationary locations. The current 

management of this large health system is spread over several 

organizations in order to meet its two-fold mission of ensuring 

servicemember readiness and delivering beneficiary care. Over the years 

many studies have been conducted to assess potential changes to the 

governance structure of the MHS.

Background 
 

Page 5 GAO-12-911 Defense Health Care

DOD operates its own large, complex health system that employs almost 

140,000 military, civilian, and contract personnel who work in medical 

facilities throughout the world to provide health care to approximately 9.7 

million beneficiaries.10

 

10 In addition to approximately 9.7 million beneficiaries, DOD also provides care and, in 

some cases, rehabilitation for veterans as part of its coordination with the Department of 

Veterans Affairs on health care services. 

Operationally, the MHS has two missions: 

supporting wartime and other deployments, known as the readiness 

mission, and providing peacetime care, known as the benefits mission. 

The readiness mission provides medical services and support to the 

armed forces during military operations, including deploying medical 

personnel and equipment throughout the world, and ensures the medical 

readiness of troops prior to deployment. The benefits mission provides 

medical services and support to members of the armed forces, retirees, 

and their dependents. Beneficiaries fall into several different categories: 

(1) active duty servicemembers and their dependents, (2) eligible National 

Guard and Reserve servicemembers and their dependents, and (3) 

retirees and their dependents or survivors. As of May 2012, active duty 

servicemembers and their dependents represented 36.7 percent of the 

beneficiary population, eligible National Guard and Reserve 

servicemembers and their dependents represented 9.5 percent, and 

retirees and their dependents or survivors made up the remaining 53.8 

percent. See figure 1.

Current Governance 

Structure of DOD’s Military 

Health System
 

Page 6 GAO-12-911 Defense Health Care

Figure 1: Distribution of Beneficiaries as of May 2012

Reporting to the Under Secretary of Defense (Personnel and Readiness), 

the Assistant Secretary of Defense (Health Affairs) is the principal advisor 

for all DOD health policies, programs, and force health protection 

activities. The Assistant Secretary of Defense (Health Affairs) issues 

policies, procedures, and standards that govern management of DOD 

medical programs and has the authority to issue DOD instructions, 

publications, and directive-type memorandums that implement policy 

approved by the Secretary of Defense or the Under Secretary of Defense 

(Personnel and Readiness). As the Director of the TRICARE 

Management Activity, the Assistant Secretary of Defense (Health Affairs) 

is also responsible for awarding, administering, and overseeing 

approximately $24.4 billion in fiscal year 2012 funding for DOD’s 

purchased care network of private sector civilian primary and specialty 

care providers. Additionally, the Assistant Secretary of Defense (Health 

Affairs) integrates the military departments’ budget submissions into a 

unified medical budget that provides resources for MHS operations; 

however, the military services have direct command and control of the 

military hospitals and their medical personnel. See figure 2 for the current 

organizational structure of the MHS.
 

Page 7 GAO-12-911 Defense Health Care

Figure 2: Governance Structure of the MHS as of August 2012

The care of the eligible beneficiary population is also spread across the 

Army, the Navy, and the Air Force, which deliver care at 56 inpatient 

facilities and hundreds of clinics. Both the Army and the Navy have 

medical commands headed by surgeons general. The Army’s portion of 

the fiscal year 2012 Unified Medical Budget’s funding is approximately 

$11.8 billion, and it manages 24 of the 56 inpatient facilities. Additionally, 

the Navy’s portion of the fiscal year 2012 Unified Medical Budget funding 

was approximately $6.4 billion. It manages 19 of the 56 inpatient facilities 

and provides medical support to the Marine Corps. Additionally, the Air 

Force’s portion of the fiscal year 2012 Unified Medical Budget’s funding is 

approximately $6.6 billion, and it manages 13 of the 56 inpatient clinics. 

The Air Force Surgeon General serves as medical advisor to the Air 

Force Chief of Staff and as functional manager of the Air Force Medical 

Service. Air Force hospitals and their personnel do not report to the Air 

Force Surgeon General, but directly to local line commanders. Each 

military department also recruits, trains, and funds its own medical 
 

Page 8 GAO-12-911 Defense Health Care

personnel to administer the medical programs and provide medical 

services to beneficiaries.

Specifically for the management of Military Treatment Facilities within the 

National Capital Region and the execution of related Base Realignment 

and Closure (BRAC) actions in that area, an additional medical 

organizational structure and reporting chain was established in 2007.11

This structure is known as the Joint Task Force National Capital Region 

Medical, and its Commander reports to the Secretary of Defense through 

the Deputy Secretary of Defense. The two inpatient medical facilities in 

the area, Walter Reed National Military Medical Center and Fort Belvoir 

Community Hospital, were directed by the Deputy Secretary of Defense in 

January 2009 to become joint commands.12

As early as March 1949, the following recommendation was presented to 

the Secretary of Defense:

“The Joint Chiefs of Staff recommend unanimously that the Secretary of Defense 

immediately institute studies and measures intended to produce, for the support of the 

three fighting services, a completely unified and amalgamated (single) Medical Service.”

13

As noted in DOD’s 2011 Task Force report, a long series of studies have 

addressed the issue of DOD’s health care organization. Performed by 

both internal and external boards, commissions, task forces, and other 

entities, a number of these studies have recommended dramatic changes 

in the organizational structure of military medicine. See figure 3 for a 

timeline of MHS governance studies.

 

11 The 2005 BRAC Commission recommended that certain patient care activities at Walter 

Reed Army Medical Center in Washington, D.C., be relocated to the National Naval 

Medical Center in Bethesda, Maryland, and to a new community hospital at Fort Belvoir, 

Virginia.

12 According to DOD, as of August 2012, these hospitals were operating on an interim 

manning document. 

13 Department of Defense, Review of the Department of Defense Organization for Health 

Care, March 1991.

Studies of Governance 

Structures for DOD’s 

Military Health System
 

Page 9 GAO-12-911 Defense Health Care

Figure 3: Timeline of Military Health System Governance Studies

Although many of these studies favored a unified system or a stronger 

central authority to improve coordination among the services, major 

organizational change has historically been resisted by the military 

services in favor of the retention of their respective independent health 

care systems. In 1995, we reported that interservice rivalries and 

conflicting responsibilities, hindered improvement efforts,14 and noted that 

the services’ resistance to changing the way military medicine is 

organized is based primarily on the grounds that each service has unique 

medical activities and requirements.

 

14 GAO, Defense Health Care: Issues and Challenges Confronting Military Medicine, 

GAO/HEHS-95-104 (Washington, D.C.: Mar. 22, 1995). 
 

Page 10 GAO-12-911 Defense Health Care

In June 2011, with the pending completion of the consolidation of medical 

facilities and functions in the National Capital Region undertaken by DOD 

in response to 2005 BRAC Commission recommendations, the Deputy 

Secretary of Defense recognized that a final decision concerning the 

governance of military health care in the capital region needed to be 

made. This need for a decision provided an opportunity to address the 

desired end-state governance structure of the entire MHS. Furthermore, 

in light of the considerable, long-term fiscal challenges the nation faces, 

and the 2010 comprehensive review established by the then-Secretary of 

Defense to inform future decisions about spending on national security, 

the Deputy Secretary of Defense wrote that it was important to ensure 

that MHS was organized in a way that curtails expenses and achieves 

savings to the greatest extent possible in meeting its mission.

As a result, in June of 2011, the Deputy Secretary of Defense established 

an internal task force to conduct a review of the current governance 

structure of the MHS. The Task Force was directed to evaluate options 

for the long-term governance of the MHS as a whole and for the 

governance of multi-service medical markets, to include the National 

Capital Region and to provide a report within 90 days detailing the relative 

strengths and weaknesses of each option evaluated as well as 

recommendations. The Deputy Secretary of Defense designated the cochairs of the Task Force as the Deputy Assistant Secretary of Defense 

(Force Health Protection and Readiness) and the Joint Staff Surgeon. 

The Task Force also contained representatives from the military 

services,15

Potential Governance Structures—DOD’s report, submitted to the Deputy 

Secretary of Defense in September of 2011 and later to Congress in 

response to section 716 of the National Defense Authorization Act for 

Fiscal Year 2012, presented 13 potential governance structures for the 

the Joint Chiefs of Staff, the DOD Comptroller, the Cost 

Assessment and Program Evaluation Office, and the Under Secretary of 

Defense (Personnel and Readiness). In addition to this membership, the 

co-chairs included representatives from the Office of the Deputy 

Secretary of Defense, the DOD Office of General Counsel, Legislative 

Affairs, and Administration and Management as advisors to the Task 

Force.

 

15 The Task Force subsequently added a representative from the Marine Corps to the 

Department of the Navy delegation.

Overview of DOD’s 2011 

Task Force and Its 

Potential Governance 

Options 
 

Page 11 GAO-12-911 Defense Health Care

overall MHS, with other options for governance of multi-service medical 

markets and the National Capital Region. The potential options were 

variations of the following three governance structures:16

• The defense health agency governance structures would create a 

combat support agency led by a 3-star flag officer (Lieutenant General 

or Vice Admiral) who would report to the Assistant Secretary of 

Defense (Health Affairs). This agency would be focused on 

consolidating and delivering a set of shared health care support 

services. DOD presented variations of a defense health agency which 

would (1) leave management of the Military Treatment Facilities with 

the military services, (2) place the management of the Military 

Treatment Facilities under the control of the defense health agency, or 

(3) create hybrid structures by pairing the agency with other options 

such as a unified medical command.

• The unified medical command governance structures would create 

a unified functional combatant command led by a 4-star flag officer 

(General or Admiral) who would report to the Secretary of Defense. 

The command would exercise direction and control over the entire 

MHS but would do so either through (1) service components, (2) 

geographic regions, (3) a subordinate health care command, or (4) 

various hybrid governance structures pairing the unified medical 

command with other options such as a designated single service 

structure.

• Finally, the single service governance structures would place overall 

control of the MHS under one designated military department 

Secretary, who would report to the Secretary of Defense. However, 

each of the services would continue to organize, train, and equip their 

respective forces. The Military Treatment Facilities report to the 

designated military department Secretary through a variety of local 

and regional commands combinations.

See appendix II for a more detailed description of DOD’s potential 

governance options.

Task Force Voting Process—Through the course of 20 formal meetings, 

the Task Force members evaluated 13 potential overall governance 

 

16 These three structures are in addition to the current MHS structure, which the Task 

Force included in the 13 options presented in the report.
 

Page 12 GAO-12-911 Defense Health Care

structures by first establishing criteria for evaluation and developing a 

system to weight the criteria to reflect their relative importance. After 

formulating criteria, the Task Force discussed each potential governance 

structure in detail. Following discussion, the individual Task Force 

members voted on the governance structures by scoring them according 

to the criteria. The member score was then adjusted by the weights 

established by the Task Force, and the governance structures were 

ranked according to the final, weighted score. The Task Force held five 

voting rounds on the governance options throughout the 90 days allotted 

to the review process (rather than holding a single vote at the end of the 

review). Using this method, the Task Force evaluated the potential 

structures in “head-to-head” voting rounds, until the governance option 

that the Task Force believed was the highest ranking was determined.

Task Force Results—The Task Force provided the Deputy Secretary of 

Defense with a report and a recommendation as to which course of action 

to follow for changing the governance structure of the overall MHS, the 

multi-service medical markets, and specifically, the National Capital 

Region. For the overall MHS, the Task Force’s recommendation was to 

pursue the formation of a defense health agency which would consolidate 

common shared services17 in support of the three military departments 

and to leave the medical components of the military departments as they 

are currently. The rationale for this action, according to the Task Force 

report, would allow DOD to create shared services, common business 

and clinical practices under one leader without large-scale changes to the 

MHS at this time. According to the Task Force report, pursuing this 

preferred option would not preclude subsequent decisions by the 

Department to implement more sweeping changes in the future and was 

considered an appropriate incremental next step to improving MHS 

governance and providing a structure to rein in healthcare costs. 

 

17 According to DOD a shared services concept is a combination of common services 

performed across the medical community, such as medical logistics, facility planning, 

medical education and training, health information technology, and medical research and 

development. 
 

Page 13 GAO-12-911 Defense Health Care

DOD’s preferred option would create a defense health agency that would 

assume the responsibility for shared services in the MHS with military 

hospitals remaining under the control of the services while other potential 

options represent larger scale changes. In addition, DOD’s preferred 

option would include implementing a shared services concept, which was 

common to all of its governance options; however, DOD did not develop a 

business case analysis that would provide a data-driven rationale for 

implementing the concept.

DOD’s preferred option creates a defense health agency that would 

report to the Assistant Secretary of Defense (Health Affairs) and would 

consolidate and deliver shared services in the MHS while services would 

maintain control of their military hospitals. DOD presented a wide range of 

governance structures in its report, such as creating another unified 

functional combatant command or establishing a single service in charge 

of all medical operations. However, DOD’s preferred option does not 

require complex changes in long-established military chains of command 

like some other structures would. As discussed earlier, currently the 

Army, the Navy, and the Air Force manage their own personnel, 

hospitals, and medical operations. The Assistant Secretary of Defense 

(Health Affairs) exercises authority, direction, and control over the policies

and resources of the MHS, but does not have command and control over 

the military hospitals or over the respective military departments’ medical 

personnel. Over the years, DOD has shifted certain responsibilities and 

authorities among various MHS officials, as seen in the establishment of 

the Assistant Secretary of Defense (Health Affairs) authority over the 

Defense Health Program in 1991 and the TRICARE Management Activity 

in 1998, both of which remain part of the current MHS. In 1991, the 

Defense Health Program was established as the result of a study of 

governance options for the MHS to address concerns about recurring 

funding crises and concerns over the inconsistent distribution of health 

care services and benefits among the different military departments. In 

1992, Department of Defense Directive 5136.1 assigned responsibility for 

the program to the Assistant Secretary of Defense (Health Affairs). Later, 

the TRICARE Management Activity was created to reduce duplication 

within management of the MHS and transfer the direct management of 

several functions away from the Assistant Secretary of Defense (Health 

Affairs) to allow that position to concentrate on major policy and Defense 

Health Program related issues and initiatives. Together, all of these 

entities and their responsibilities have evolved into the current MHS 

governance structure.

DOD’s Preferred 

Option Generally 

Retains Command 

Structures and 

Includes a Shared 

Service Concept

DOD’s Preferred Option 

Creates a New Agency but 

Maintains Established 

Military Chains of 

Command
 

Page 14 GAO-12-911 Defense Health Care

The Task Force reviewed multiple versions of three basic governance 

structures—defense health agency, unified medical command, and single 

service. The options’ primary differences from the current structure of the 

MHS occur mainly in three particular areas of roles and responsibilities—

overall control, budgetary authority, and control of personnel. DOD’s 

preferred governance option is a defense health agency with military 

hospitals remaining under the control of the military services. The unified 

medical command options would assign the services’ medical assets to a 

functional combatant command. Lastly, the single service options would 

assign these assets to a single military service. Figure 4 summarizes 

variations of these three structures and the current structure as it has 

evolved over the years, while figure 5 presents a number of hybrid 

models also considered by the Task Force, such as an option which 

includes a unified medical command sharing responsibilities with a 

defense health agency.
 

Page 15 GAO-12-911 Defense Health Care

Figure 4: Summary of Differences in Governance Elements for the Potential Defense Health Agency, Unified Medical 

Command, and the Single Service Governance Structures
 

Page 16 GAO-12-911 Defense Health Care

Figure 5: Summary of Differences in Governance Elements for the Potential Hybrid Governance Structures
 

Page 17 GAO-12-911 Defense Health Care

• Overall control – determines policy making authority, dispute 

resolution, and lines of accountability. Under the current MHS 

structure, the Assistant Secretary of Defense (Health Affairs) 

exercises authority, direction, and control of policy and resources, but 

DOD noted that in practice, this structure fails to take advantage of 

consensus opportunities to more rapidly implement common business 

processes. DOD’s preferred option of a defense health agency with 

military hospitals remaining under the control of the services would 

establish a military-led combat support agency organized under the 

Assistant Secretary of Defense (Health Affairs) that would have 

authority, direction, and control of shared services, health plan 

management, other strategic areas, while another version of this 

option would assign the proposed defense health agency control of 

military hospitals. The unified medical command options would place 

authority, direction, and control of the MHS with a functional 

combatant commander, along with direct responsibility for execution 

of health care services. This option would mark a departure from the 

current separation of these responsibilities among the three military 

services. The single-service options would assign responsibility for the 

MHS as a whole to a designated military service Secretary who would 

also command all military hospitals— a departure from the current 

arrangement of split responsibility between the Assistant Secretary of 

Defense (Health Affairs) and the military departments. Under all 

options, the Assistant Secretary of Defense (Health Affairs) would 

retain a policy-making role. 

• Budgetary authority – determines the organizational entity or entities 

with responsibility over the Defense Health Program appropriation. In 

2007, the Defense Health Board stated in its report, Task Force on 

the Future of Military Health Care,

18

 

18 Defense Health Board, Task Force on the Future of Military Health Care (December 

2007). 

that the MHS does not function 

as a fully integrated health care system and this lack of integration 

diffuses accountability for fiscal management and results in 

misalignment of incentives. The current governance structure vests 

overall budgetary authority with the Assistant Secretary of Defense 

(Health Affairs), who allocates funds to the services to execute their 

respective budgets. The Assistant Secretary of Defense (Health 

Affairs) does not have command and control over the military 

hospitals or over the respective military departments’ medical 
 

Page 18 GAO-12-911 Defense Health Care

personnel. DOD’s preferred option of a defense health agency with 

military hospitals remaining under the control of the services would 

not alter this aspect of the current governance structure. An 

alternative potential option of a defense health agency with the 

military hospitals under the agency’s control would assume direct 

control of the Defense Health Program appropriation. Like the latter 

option, the unified medical command options would consolidate 

budgetary authority with a single official, a functional combatant 

commander, along with direct responsibility for the execution of health 

care, and would mark a departure from the current separation of these 

responsibilities. Similarly, the single-service options would streamline 

budgetary authority by vesting all such authority with a designated 

military service Secretary. 

• Personnel control – determines which entity has management and 

supervisory responsibility over the personnel working within the MHS. 

Historically, military services have exercised command and control 

over their own medical personnel, and Task Force members told us 

that control over the medical personnel was a sensitive issue in their 

discussions. DOD’s preferred option of a defense health agency with 

military hospitals remaining under the control of the services would 

allow the services to maintain control over their own personnel. An 

alternative potential option of a defense health agency with the 

military hospitals under the agency’s control would allow the agency 

to take control of personnel not assigned to deployable units. The 

unified medical command options vary on the level of authorities 

retained over personnel, as some options assign control of all forces 

to the unified medical command, and others assign control of only 

some personnel to the unified medical command. The single service 

options provide some level of control of all personnel to the 

designated single military service in charge of the MHS, with 

variations of this option related to the assignment of the deployable 

medical personnel assigned to their respective military services.

DOD’s potential governance options would have different effects on multiservice medical market governance, which is the management of medical 

care in a geographic area where more than one service operates Military 

Treatment Facilities through a common business plan and coordination of 

resources. For example, a single service option would make such 

coordination unnecessary, while it still might be required under a unified 

medical command. In its report, DOD cites the main weakness of the 

current governance of multi-service markets as the failure to fully 

leverage the medical capabilities across service boundaries in a given 

market to achieve efficiencies. According to DOD officials, DOD’s 
 

Page 19 GAO-12-911 Defense Health Care

preferred option of a defense health agency would allow the department 

to implement an enhanced management structure for the multi-service 

medical markets that would drive such efficiencies while avoiding 

complex changes to long-established military chains of command. 

According to DOD’s report, the authorities of the multi-service market 

managers would be expanded to include responsibility for developing a 5-

year business plan, budgetary authority for the entire medical market, and 

the authority to direct personnel to work in other locations within the 

market on a short-term basis, among other authorities. However, DOD’s 

current effort is not its first attempt at improving multi-service medical 

market governance. As its report notes, DOD has experimented with 

different approaches to multi-service medical markets over the past 25 

years, including the 2003 establishment of Senior Market Managers 

responsible for coordinating the development of a single business plan for 

all Military Treatment Facilities in each such market. In 2006, the Deputy 

Secretary of Defense approved the implementation of an alternative to 

wholesale changes in the structure of the MHS, which included seven 

targeted governance initiatives. Among other things, the initiatives 

included the establishment of governance structures for two multi-service 

medical markets, San Antonio and the National Capital Region, as well as 

the creation of governance structures that consolidate command and 

control of military treatment facilities in other multi-service medical 

markets.19 As we reported in 2012, DOD established these structures in 

San Antonio and the National Capital Region, but had made no changes 

to the governance structures of other multi-service markets.20 Several 

senior DOD officials noted that while they recognize there are efficiencies 

to be gained in multi-service markets, they expressed reservations 

concerning the details of DOD’s plans for reforming such markets. One 

senior DOD official highlighted challenges that may arise in their 

operation, such as the control of medical personnel to support 

deployments and other missions and coordination of market business 

plans with the services’ priorities.

 

19 Action Memorandum for the Deputy Secretary of Defense, Joint/Unified Medical 

Command (J/UMC) Way Ahead (Nov. 27, 2006).

20 GAO, GAO-12-224, Applying Key Management Practices Should Help Achieve 

Efficiencies within the Military Health System, GAO-12-542 (Washington, D.C.: Apr 12, 

2012). 
 

Page 20 GAO-12-911 Defense Health Care

DOD did not present a business case analysis for proceeding with its 

shared services concept21 common to all of the proposed governance 

structures, including an estimate of costs to merge shared services 

functions, operational savings to be accrued, or the likely timeframe in 

which this service consolidation would achieve savings. As we have 

previously reported, a business-case analysis can provide a data-driven 

rationale for why an agency is undertaking a consolidation initiative, such 

as a shared services concept since consolidation is beneficial in some 

situations and not in others, and so a case-by-case analysis is 

necessary.22 DOD has twice proposed this shared services concept in the 

past, which would consolidate areas such as information technology, 

contracting, and public health under one entity. DOD first proposed 

implementation of a shared services concept in 2006 as part of a series of 

seven different incremental governance initiatives adopted as an 

alternative to wholesale changes in the structure of the MHS. Specifically, 

implementation of the initiative would have created a Joint Military Health 

Service Directorate under a joint senior flag officer reporting to the 

Assistant Secretary of Defense (Health Affairs), a structure not unlike 

DOD’s preferred option of a Defense Health Agency for its current review 

of MHS governance. At the time, we recommended that DOD needed to 

demonstrate a sound business case, including an analysis of benefits, 

costs, and risks, for proceeding with its seven initiatives, and DOD 

concurred with our recommendation.23 Further, we later reported that 

DOD had not developed such estimates, and the Assistant Secretary of 

Defense (Health Affairs) had not provided guidance on how and when to 

complete these initiatives.24

 

21 According to DOD a shared services concept is a combination of like common services 

across the medical community, such as medical logistics, facility planning and 

construction, health information technology, and medical research and development.

In 2012, we also reported that in the prior 

calendar year, DOD approved a plan to reorganize the TRICARE 

Management Activity and establish a shared services division with a new 

Military Health System Support Activity as part of the former Secretary of 

22 GAO, Streamlining Government: Questions to Consider When Evaluating Proposals to 

Consolidate Physical Infrastructure and Management, GAO-12-542 (Washington, D.C.: 

May 23, 2012).

23 GAO, Defense Health Care: DOD Needs to Address the Expected Benefits, Costs, and 

Risks for Its Newly Approved Medical Command Structure, GAO-08-122 (Washington,

D.C.: Oct. 12, 2007).

24 GAO-11-318SP. GAO-12-224. 

DOD Did Not Present a 

Business Case Analysis for 

Its Shared Services 

Concept 
 

Page 21 GAO-12-911 Defense Health Care

Defense’s effort to increase efficiencies and reduce costs with the 

department.25

In addition to a data-driven analysis, our body of work on organizational 

mergers, acquisitions, and other transformations has shown that agencies 

should apply essential change management practices such as active, 

engaged leadership of top leaders and a dedicated implementation team 

to ensure the continued attention needed for a transformation to be 

sustained and successful, among others.

As a result of this effort, DOD reduced the fiscal year 2012 

Defense Health Program budget request anticipating the establishment of 

the Military Health System Support Activity, but the initiative was put on 

hold pending the results of the Task Force report.

26 We reported in 2012 that in 

the implementation of its 2006 governance initiatives, including efforts to 

establish a shared services directorate, DOD did not establish an 

effective and ongoing communication strategy, did not establish a 

dedicated implementation team, and top leadership did not provide the 

sustained direction needed to maintain progress.27 Moreover, we also 

have previously reported on the challenges that other federal agencies 

have faced in attempting to specifically implement shared services. For 

example, in December 2005, the Department of Homeland Security 

(DHS) halted its eMerge2 program, which was expected to integrate 

financial management systems across the entire department and address 

financial management weaknesses, after DHS had spent about $52 

million, according to officials.28

DOD’s report does not estimate the costs to implement a shared services 

concept or an implementation timeline. Also, while DOD estimated a 

projected savings of 330 full-time personnel equivalents for implementing 

We noted our concern that moving 

forward, DHS did not have a fully developed financial management 

strategy and plan for the integration of its financial management systems 

and shared services, such as information technology hosting, business 

process services, and application management services.

 

25 GAO-12-224. 

26 GAO, Highlights of a GAO Forum: Mergers and Transformation: Lessons Learned for a 

Department of Homeland Security and Other Federal Agencies, GAO-03-293SP 

(Washington, D.C.: Nov. 14, 2002).

27 GAO-12-224. 

28 GAO, Homeland Security: Departmentwide Integrated Financial Management Systems 

Remain a Challenge, GAO-07-536 (Washington, D.C.: June 21, 2007).
 

Page 22 GAO-12-911 Defense Health Care

this concept, it did not estimate potential savings from consolidating 

common services. According to DOD officials, DOD’s preferred option of 

a defense health agency is a significant change for the MHS because it 

would allow the department to implement shared services in order to drive 

the adoption of common business and clinical practices and achieve 

efficiencies while not requiring complex changes to long-established 

military chains of command. However, under the current governance 

structure, the Assistant Secretary of Defense (Health Affairs) has the 

broad authority that could allow for the implementation of shared support 

services across the MHS. As noted above, DOD has developed 

proposals to exercise such authority in the past, but such proposals have 

never been implemented. Further, DOD has not developed a business 

case analysis for its shared services concept since it was first proposed in 

2006. Until DOD develops a more detailed business case analysis, it 

lacks a data-driven rationale and a strategy for proceeding with the 

implementation of this concept.

DOD took certain steps to develop a cost analysis for its potential MHS 

governance options, but we found it to be limited because it (1) did not 

include an estimate of implementation costs, (2) reflected only personnel 

cost savings, and (3) was based on some potentially flawed assumptions. 

DOD initiated a review of potential governance structures to assess 

possible changes that it anticipated could result in improved effectiveness 

and cost savings within the MHS. To aid its assessment, DOD included 

many internal stakeholders from across the department in the Task Force 

to solicit varying opinions and perspectives in the deliberations. As part of 

this process, the Task Force used a number of methods to develop 

estimates of the required number of full-time equivalent positions for the 

headquarters of each potential governance structure. To develop its cost 

savings estimates, the Task Force then translated these estimates of the 

number of required personnel into costs by multiplying the number of fulltime equivalent positions by an average salary for civilian employees. The 

Task Force did not attempt to estimate savings other than in the area of 

headquarters personnel. Based on key principles we derived from cost 

DOD’s Cost Analysis 

of Its Potential MHS 

Governance Options 

Was Limited
 

Page 23 GAO-12-911 Defense Health Care

estimating and budgeting guidance,29

• DOD did not estimate implementation costs. The Task Force’s report 

does not include an estimate of implementation costs for any of its 13 

governance options. We have previously reported that, in some 

instances, up-front investments are needed to yield longer-term 

savings.

we identified two elements needed 

to ensure a reasonable basis for cost savings estimates: (1) inclusion of 

all significant costs and key assumptions and (2) use of reliable data. 

However, several aspects of DOD’s cost analysis fell short of these 

principles for the following reasons.

30 The results of the implementation of the 2005 BRAC 

recommendations provide useful insight concerning the effect of 

implementation costs on the net impact of major transformations. For 

example, the estimate of the 20-year net present value31 for the 

relocation of medical command headquarters changed from a 

projected net savings of $316.3 million to a net cost of $105.9 million. 

According to officials, projected increases are the result of the 

decision to lease a building, as opposed to the original plan to 

renovate an existing building or build a new facility.32

 

29 We reviewed numerous federal guidance documents related to cost estimating, 

accounting standards, economic analysis, and budgeting and identified key principles that 

we believe can be applied to the evaluation of cost savings estimates. The guidance 

documents we reviewed include: GAO Cost Estimating and Assessment Guide, 

Over the course 

of BRAC implementation, DOD’s one-time implementation costs 

GAO-09-3SP; Office of Management and Budget Circular No. A-11, Preparation, 

Submission and Execution of the Budget (Aug. 2011, superseded by an August 2012

issuance); Federal Accounting Standards Advisory Board, Statement of Federal Financial 

Accounting Standards 4 (June 2011); Department of Defense Instruction 7041.3, 

Economic Analysis for Decisionmaking (Nov. 7, 1995); and Department of Defense 

Financial Management Regulation 7000.14-R, Volume 4, Chapter 22, Cost Finding (May 

2010). Although each of these documents may not apply to these circumstances as a 

legal matter, we believe that they collectively contain broad themes that can be applied to 

evaluating cost analyses.

30 GAO-12-542. 

31 Net present value is a financial calculation that accounts for the time value of money by 

determining the present value of future savings minus up-front investment costs over a 

specific period of time. Determining net present value is important because it illustrates 

both the up-front investment costs and long-term savings in a single amount. In the 

context of BRAC implementation, net present value is calculated for a 20-year period from 

2006 through 2025.

32 GAO, Military Base Realignments and Closures: Updated Costs and Savings Estimates 

from BRAC 2005, GAO-12-709R (Washington, D.C.: Jun. 29, 2012).
 

Page 24 GAO-12-911 Defense Health Care

increased 53 percent, from the $21 billion originally estimated by the 

BRAC Commission to about $32.2 billion,33 while the 20-year net 

present value of savings decreased 72 percent, from $35.6 billion 

originally estimated by the BRAC Commission to $9.9 billion.34 The 

Cost of Base Realignment and Closure Model provides a number of 

implementation cost categories that may be relevant to health care 

reorganization, including personnel severance, moving costs, and 

military construction. Military construction costs are particularly 

important, as our analysis of the implementation of the 2005 BRAC 

recommendations found that such expenses were largely responsible 

for the overall increase in implementation costs. Task Force officials 

told us that they did not attempt to develop implementation cost 

estimates for the various options, and that they intend to develop an 

implementation cost estimate only for DOD’s preferred option as part 

of the implementation process. Similarly, in the course of the 2006 

review of possible changes to MHS governance, DOD approved 

seven initiatives to improve medical governance without conducting a 

comprehensive cost-benefit analysis. GAO recommended that DOD 

needed to demonstrate a sound business case, including an analysis 

of benefits, costs, and risks, for proceeding with its preferred medical 

governance concept, and DOD concurred. However, in 2011, we 

reported that DOD had not developed such estimates.35

• DOD restricted its estimates to personnel savings. DOD’s cost 

analysis of potential savings for its governance options was limited to 

changes in headquarters personnel levels and excluded other 

possible areas of savings. By limiting its analysis of savings for all of 

the governance options to changes in headquarters personnel levels, 

DOD’s savings estimates do not consider the impact of headquarters 

reorganization on the larger health system. In its 2006 report on MHS 

governance,36

 

33 Calculation and amounts in 2005 constant dollars.

CNA’s Center for Naval Analyses presented additional 

areas of potential savings which the 2011 Task Force report did not 

explore. Although CNA’s estimates are 6 years old and do not reflect 

such changes in the MHS as the consolidation of health care in the 

34 GAO-12-709R. 

35 GAO-11-318SP. 

36 CNA Center for Naval Analyses, Cost Implications of a Unified Medical Command, 

2006.
 

Page 25 GAO-12-911 Defense Health Care

National Capital Region, the study provides several categories for 

potential savings beyond headquarters personnel. For example, 

health care operations savings could be accrued through 

administrative consolidation between large medical facilities which 

perform responsibilities on behalf of smaller clinics in the same 

geographic area. CNA reported that by bridging current service 

administrative boundaries which require the smaller clinics to report to 

larger facilities of the same service, potential savings could be 

accrued by designating a single facility in a geographic area to 

perform technical, legal, and administrative functions on behalf of all 

nearby clinics, regardless of service affiliation. In addition, governance 

reorganization may provide an opportunity to reduce infrastructure 

costs, and as the CNA report notes, the timeline for realizing cost 

savings could influence the amount of possible short- and long-term 

savings. The difference in the areas of cost savings considered and 

methodological approaches could explain the varying results of CNA 

and DOD’s analyses. For example, DOD estimated a net cost 

increase for a unified medical command option, while CNA estimated 

a net cost savings for the same option in its 2006 study. As noted 

earlier, although DOD’s preferred option assumes that DOD would 

achieve some personnel efficiencies due to greater use of shared 

services, DOD did not estimate the operational savings it expects, 

such as savings from consolidated contracts.

• DOD used several potentially flawed assumptions in estimating 

headquarters personnel savings. DOD used several potentially flawed 

assumptions in estimating its headquarters personnel savings, and 

therefore it cannot be assured that DOD’s methods to estimate such 

savings produced reliable results. First, DOD estimated the size of a 

unified medical command by using Joint Task Force National Capital 

Region Medical (JTF CapMed) headquarters as an example of a 

unified medical command on a small scale. DOD estimated that given 

this command performs 10 percent of MHS operations with 150 

personnel, a unified medical command would require a minimum of 

1,500 personnel. However, DOD did not present evidence that 150 

personnel is the most efficient number of staff for JTF CapMed, and 

the assumption concerning the relationship between the number of 

staff at JTF CapMed and a unified medical command is questionable 

because economies of scale could create efficiencies, therefore 

requiring fewer personnel. Moreover, the report assumes such 

economies of scale in its estimate of personnel savings from shared 

services functions. Second, DOD used the services’ execution of the 

Defense Health Program’s Operations and Maintenance budget to 

determine the most efficient staffing requirements for service support 
 

Page 26 GAO-12-911 Defense Health Care

and regional commands. While these commands currently execute 

only their respective services’ portion of the budget, DOD estimated 

the number of full-time equivalents each of these commands would 

require if charged with executing the entire budget. However, in its 

report, DOD undermines the credibility of this method by citing 

numerous weaknesses, and characterized this approach as “not a 

credible predictor of staffing requirements.” Third, DOD determined 

the cost of the potential options’ personnel requirements by 

multiplying an average of TRICARE Management Activity civilian 

compensation by the number of staffing requirements. However, this 

figure excluded military personnel, whose compensation is markedly 

different from that of civilian personnel.

Task Force officials stated that the internal 90-day deadline required by 

the Deputy Secretary of Defense for the Task Force to complete its report 

did not allow for a detailed analysis of implementation costs or a more 

thorough review of possible cost savings, and that this time period also 

limited the practicality of more detailed analysis. However, the National 

Defense Authorization Act for Fiscal Year 2012, which required a report 

on MHS governance options to be submitted to the congressional 

defense committees, was passed approximately 3 months after the Task 

Force completed its review and contained no specific deadline for DOD to 

submit its report. DOD chose to submit the report developed by the Task 

Force in response to the Deputy Secretary of Defense’s direction, along 

with an additional cost analysis in response to the statutory requirement. 

However, DOD could have conducted additional analysis before 

submitting its report to the congressional defense committees.

Given the concerns outlined above, DOD has not comprehensively 

assessed the net costs of the various governance options. As we 

reported in 2007, such information is critical to making data-informed 

decisions about the structure of the MHS, especially in light of the nation’s 

current fiscal challenges.37

 

37

Past transformation experiences, such as the 

BRAC process, and prior reports on MHS governance, such as the 2006 

CNA study, could provide a starting point for DOD in the consideration of 

possible implementation costs, cost savings areas, and methods of 

estimating such cost data. DOD has selected its preferred structure, a 

Defense Health Agency with the Military Treatment Facilities remaining 

under the services, without the benefit of an inclusive cost analysis which 

GAO-08-122. 
 

Page 27 GAO-12-911 Defense Health Care

explores these areas. Table 1 provides possible implementation cost and 

cost savings categories from BRAC and the 2006 CNA study and 

available estimates for DOD’s preferred defense health agency 

governance option as provided in their report.

Table 1: Possible Implementation Cost and Cost Savings Categories for DOD’s 

Preferred Defense Health Agency Governance Structure

Category Cost/Savings (dollars, millions per year)

Implementation Costs 

Personnel severance Not estimated

Moving Not estimated

Military construction Not estimated

Information technology Not estimated

Total Implementation Costs Not estimated 

Cost Savings 

Shared Services Not estimateda

Health care operations Not estimated

Reduced Infrastructure Not estimated

Personnel $46.5b 

Total Cost Savings Not estimated 

Net Cost/Savings Not estimated 

Source: GAO analysis and DOD MHS governance cost estimates.

a These savings should include the net of any implementation costs and anticipated savings 

associated with the creation of the shared services part of the Defense Health Agency.

b We determined that this cost savings estimate is not reliable because DOD did not use estimating 

methods which produced reliable results.

Prior attempts to proceed with MHS reorganization without the benefit of 

reliable estimates of implementation costs and cost savings demonstrate 

the effects of such an approach. In 2007, DOD did not conduct a 

comprehensive cost-benefit analysis, including an analysis of benefits, 

costs, and risks, for proceeding with its preferred medical governance 

concept at that time, which consisted of seven different incremental 

governance initiatives.38

 

38

At the time, DOD concurred with our 

recommendation that they develop such an analysis, but we reported in 

GAO-08-122. 
 

Page 28 GAO-12-911 Defense Health Care

2011 that it had not done so.39 Additionally, in 2012, we reported that 

DOD had documented estimated financial savings for only one of those 

seven governance initiatives while at least one other one had an 

estimated cost increase.40 In the absence of an inclusive and reliable cost 

analysis, DOD’s current effort may produce similar results.

DOD used a qualitative process to support its assessment of the 

strengths and weaknesses of the 13 potential governance options 

presented in its report, but did not balance this support with quantitative 

data. We recognize the use of quantitative data is a key component of 

study quality, and DOD’s criteria calls for assessing the options based on 

quantitative data. Also, DOD did not mention in its report some of the 

criteria it identified as most important for assessing the governance 

options because they asserted that no option that adversely affected 

these two criteria would be recommended.

DOD used a deliberative and qualitative approach to assess the strengths 

and weaknesses of the 13 potential governance structures presented in 

its report that included developing and applying criteria to each of the 13 

governance options it developed.41

• Provision of high-quality, integrated medical care for servicemembers 

and eligible beneficiaries;

In establishing the MHS review, the 

Deputy Secretary of Defense prescribed that the review should assess 

potential governance options based on their fulfillment of the following 

criteria:

• Maintenance of a trained and ready deployable medical force to 

support combatant commanders;

 

39 GAO-11-318SP. 

40 GAO-12-224. 

41 Qualitative methods include collecting data through interviews, focus groups, document 

or literature reviews, and observation, and analyzing data by discerning, examining, 

comparing, and contrasting meaningful patterns or themes in qualitative data. Quantitative 

methods typically involve collecting quantifiable data or other information, and may include 

the use of probability sampling using various forms of statistical analysis to generalize 

results. Evaluations using mixed methods employ a combination of qualitative and 

quantitative data collection and analysis techniques. 

DOD Limited Its 

Assessment of the 

Options’ Strengths 

and Weaknesses to a 

Qualitative Process

DOD’s Assessment 

Gathered Significant 

Qualitative Information 

from Internal 

Stakeholders, but Did Not 

Provide Support for the 

Quantitative Elements 

Included in Its Criteria
 

Page 29 GAO-12-911 Defense Health Care

• Achievement of significant cost-savings through, for example, 

elimination of redundancies, increased interoperability, and other 

means of promoting cost-efficient delivery of care.

The Deputy Secretary of Defense noted that the Task Force members 

could consider additional criteria in their review. As such, the Task 

Force members collectively decided to split the criteria provided by 

the Deputy Secretary of Defense into separate criteria and add two 

new criteria, for a total of seven criteria used to assess the MHS 

governance options (see Figure 6). The Task Force members also 

collectively defined each of the criteria and added a weight to each 

based on their expert opinion of the relative importance of the criteria. 

Figure 6: Criteria Used to Assess MHS Governance Options

The definitions of the seven criteria used by DOD—while mostly 

qualitative—included elements for certain criteria that called for 

quantitative data. For example,

• DOD defined the Ease of Implementation criterion as “The alternative 

should be implementable taking into account Title 10 equities,42

 

42 DOD’s Task Force report did not define Title 10 equities. Title 10 of the United States 

Code contains the organic law governing the Armed Forces of the United States and 

providing for the organization of the Department of Defense, including the military 

departments and the Reserve Components.

shortterm costs and long-term savings, and decisions required inside and 
 

Page 30 GAO-12-911 Defense Health Care

outside of the DOD.” 

• DOD defined the Achieve Significant Cost Savings through Reduction 

in Duplication and Variation criterion as “The alternative should result 

in a reduction of the system operating costs.” 

As we have previously reported, the quality of assessments can be 

strengthened by using a mixed approach that includes both qualitative 

and quantitative information to remove concerns about bias in one data 

source.43

• DOD did not attempt to estimate the range of either short- or longterm costs or savings data associated with the governance structures 

in the 14 instances where Ease of Implementation was listed either as 

a strength or a weakness. Instead, the DOD report cited qualitative 

information such as “this action would represent a significant 

departure in governance for all existing organizations” or “this will 

entail a large scale reorganization to include re-mapping of service 

medical personnel to operational platforms and there is no known 

precedent or example where this approach has been tested in other 

military medical organizations worldwide” as support for the 

assessment of this criterion. As one leading industry official told us, 

statements about how hard it would be to change and that the change 

would be too disruptive to actually implement is not sufficient evidence 

for avoiding necessary change.

DOD’s review obtained a great deal of qualitative information 

from stakeholders and internal experts and used this information to 

support its assessment of the strengths and weaknesses of the 

governance options, but it did not balance this assessment with 

quantitative data. Specifically DOD’s assessments of the strengths and 

weaknesses did not provide data to support the quantitative elements 

specified in its own criteria as indicated in the following two examples.

• DOD did not provide cost data as support for the 11 instances where 

Achieve Significant Cost Savings through Reduction in Duplication 

and Variation was listed as a strength or a weakness. During the Task 

Force meetings, members expressed concern that no business case 

was presented for the governance options, and that the support 

presented for the assessment of strengths and weaknesses were 

 

43 GAO, Designing Evaluations: 2012 Revision, GAO-12-208G (Washington, D.C.: Jan. 

12, 2012).
 

Page 31 GAO-12-911 Defense Health Care

“descriptive statements.” According to the meeting minutes, it was

understood by the Task Force that “deeper analytical work will be 

required following the submission of the report.” 

Furthermore, DOD’s report listed the Medical Readiness criterion as a 

weakness for five options but did not provide supporting examples or 

quantitative data for this assessment. DOD defined Medical Readiness as 

“The alternative should maintain or enhance the ability to provide 

medically ready warfighters.” As support for the assessments where this 

criterion was listed as a weakness, DOD stated that coordination between 

Service Chiefs and Military Department Secretaries would be required 

under governance options where medical personnel were still “owned” by 

their service components. For governance options that included a split 

between unified medical command and military-led defense health 

agency, DOD stated that these structures would effectively split the 

readiness sustainment between the higher command and the services, 

thereby making the development and sustainment of the medical 

readiness forces more complex. However, DOD did not specifically 

identify the types of complexities or provide supporting examples in which 

such organizational issues have resulted in a negative impact on medical 

readiness. In July 2010, we reported that the services’ collaborative 

planning efforts regarding requirements determination for medical 

personnel working in fixed military treatment facilities have been limited, 

and recommended that DOD develop and implement cross-service 

medical manpower standards for common medical capabilities.44 DOD did 

not address how the potential governance structures they presented 

would affect such issues. Similarly, DOD did not discuss or provide 

support for how the governance structures would impact the other MHS 

priorities—population health, experience of care, and per capita cost—

even though quantitative data that measure the performance of these 

priorities for the current governance structure are available.45

In addition, DOD’s assessment of the strengths and weaknesses was 

often unclear. Specifically, 10 of the 13 assessments of governance 

options listed at least one criterion as support for both a strength and a 

 

44 GAO, Military Personnel: Enhanced Collaboration and Process Improvements Needed 

for Determining Military Treatment Facility Medical Personnel Requirements, GAO-10-696 

(Washington, D.C.: July 29, 2010).

45 Department of Defense, 2012 MHS Stakeholder’s Report. 
 

Page 32 GAO-12-911 Defense Health Care

weakness, without coming to a conclusion as to whether the criterion was 

a strength or a weakness on balance. For example, in its assessment of 

its preferred governance option (Defense Health Agency with Service 

Medical Treatment Facilities), DOD listed the Enhance Interoperability 

criterion as both a strength and a weakness for the option without coming 

to a final conclusion as to the net effect of this assessment. Task Force 

members we met with told us that for options where the same criterion 

was listed as both a strength and a weakness, each Task Force member 

would make their own judgment as to which was a more important 

characteristic and vote accordingly – taking into account the perspective 

of their organization or service and the weighting of the criteria. This 

approach to assessing the strengths and weaknesses of the options 

illustrates the subjective nature of DOD’s analysis, and highlights an area 

where additional support, specifically quantitative data, would have 

improved the clarity and robustness of DOD’s conclusions about the 

strengths and weaknesses of the governance options.

DOD weighted its criteria according to relative importance but DOD’s 

assessment of strengths and weaknesses did not mention two of the 

three criteria weighted as most important. As noted earlier, DOD assigned 

various weights to the seven criteria used to assess the governance 

options as shown in figure 6. The DOD report stated that the weighting 

system was developed to reflect the relative importance of the criteria. 

However, two of the top three criteria with the greatest assigned weight—

Trained and Ready Medical Force and Quality Beneficiary Care—were 

not mentioned in DOD’s assessment of the strengths and weaknesses. 

See figure 7. 

DOD’s Assessment Did Not 

Provide Supporting 

Information for Two of the 

Criteria It Identified as 

Most Important
 

Page 33 GAO-12-911 Defense Health Care

Figure 7: Frequency that the Criteria Were Listed as a Strength or Weakness for Potential Governance Structures

DOD officials told us that these two criteria were not discussed in the 

report because the Task Force members agreed that each governance 

option presented in the report would meet both of these criteria. However, 

DOD did not provide an explanation or justification as to how each 

governance option would satisfy the two criteria in question. The officials 

added that there was a general understanding among the Task Force 

members that no option that adversely affected these two criteria would 

be recommended. However, five of DOD’s options presented medical 

readiness of the active duty force, a related and similarly important 

concept, as a weakness. Because DOD’s report does not discuss the 

criteria they identified as the most important for their assessment of the 

strengths and weaknesses—including providing support for why each 
 

Page 34 GAO-12-911 Defense Health Care

option equally satisfied the Trained and Ready Medical Force and Quality 

Beneficiary Care criteria—DOD and Congress lack assurance that these 

criteria were sufficiently considered in DOD’s assessment. As a result, 

decision makers may not have well-supported, data-driven information 

about the strengths and weaknesses of the potential MHS governance 

options.

Transforming the governance structure of the MHS represents a potential 

opportunity to implement more efficient ways of doing business while 

maintaining a ready and trained medical force as well as continuing to 

meet the needs of military personnel, retirees, and their dependents. 

Reliable and comprehensive information, including implementation and 

other associated costs, is needed to provide a data-driven rationale for 

why DOD may be undertaking consolidation initiatives, and a clearly 

presented business-case or cost-benefit analysis can justify the benefits 

of such action. DOD has repeatedly studied options to transform its 

governance structure, but has relied on implementing “interim steps” or 

incremental changes toward an unknown final governance structure, 

often without the benefit of a clear understanding of the costs and 

benefits of its actions. DOD risks repeating this pattern without full 

knowledge of the costs, strengths, and weaknesses of each of the 

options. As DOD moves forward with its plans to transform its governance 

structure, it is imperative that officials benefit from full and complete 

information to be assured that they choose the best alternative and that 

their efforts yield necessary improvements and achieve maximum 

efficiencies.

To provide decision makers with more complete information on the total 

cost impact of the various governance structures to help determine the 

best way forward, we recommend that the Secretary of Defense direct the 

Assistant Secretary of Defense (Health Affairs) to:

• Develop a comprehensive cost analysis for the MHS governance 

structures including estimates of implementation costs and cost 

savings in additional areas such as health care operations and 

infrastructure changes as well as an improved estimate of personnel 

savings,

• Develop a business case analysis and strategy for the implementation 

of its shared services concept,

Conclusions 

Recommendations for 

Executive Action
 

Page 35 GAO-12-911 Defense Health Care

• Improve its evaluation of the potential governance structures’ 

strengths and weaknesses by including quantitative data when 

available, and a specific assessment of the degree to which the 

options meet the criteria Trained and Ready Medical Force and 

Quality Beneficiary Care.

In written comments provided in response to our draft report, DOD 

concurred with one of our recommendations and did not concur with the 

remaining two recommendations. DOD’s written comments are reprinted 

in appendix III of this report.

In concurring with our recommendation that DOD develop a business 

case analysis and a strategy for the implementation of its shared services 

concept, DOD agreed, but on the premise that it can and should occur in 

the context of its ongoing implementation planning effort for the creation 

of a defense health agency. DOD reiterated that all of the potential 

governance options under consideration include a shared services 

concept and noted that as part of its implementation planning, it will 

ascertain which shared services, functions, and activities will be 

consolidated. Additionally, DOD stated it will produce a detailed 

implementation timeline for the transfer of each such service to the 

defense health agency. We agree this effort to identify which services will 

be consolidated and to develop a timeline for the migration of these 

services is important. DOD states that shared services and common 

business practices will realize savings, but we are concerned that DOD is 

moving forward in implementing its shared services concept without 

knowledge of implementation costs or an estimated return on its 

investment. Further, with respect to DOD’s governance decisions on the 

multi-service markets and the National Capital Region, DOD states that 

our recommendations for additional analysis did not apply to these 

reforms. We did not include these specific areas in our recommendation 

because the potential governance options for the multi-service markets 

and the National Capital Region were outside the scope of our mandated 

review. As a result, we did not address the extent to which DOD’s reform 

plans for the multi-service markets and the National Capital Region may 

or may not require additional analysis. However, several senior DOD 

officials noted during the course of our review that while they recognize 

efficiencies could be gained in multi-service markets, they expressed 

reservations concerning the details of DOD’s plans for reforming such 

markets.

Agency Comments 

and Our Evaluation
 

Page 36 GAO-12-911 Defense Health Care

In its non-concurrence with our recommendation that DOD develop a 

comprehensive cost analysis for the MHS governance structures, 

including (1) estimates of implementation costs, (2) cost savings in 

additional areas such as health care operations and infrastructure 

changes, and (3) and an improved estimate of personnel savings, DOD 

noted that it recognizes that a more detailed and comprehensive cost 

analysis of governance options could be undertaken. However, DOD 

states that further cost analysis will not help to materially distinguish 

among the options. We disagree with DOD and believe that more 

comprehensive cost analysis will help to distinguish the differences 

among the costs and benefits of the options. First, DOD did not estimate 

implementation costs for any of its 13 governance options. As we 

reported, significant implementation costs are a key element of a 

comprehensive cost analysis, as illustrated in the case of the Base 

Realignment and Closure (BRAC) process, in which DOD’s one-time 

implementation costs increased 53 percent over the BRAC Commission’s 

original estimate. Second, we continue to believe that further analysis of 

cost savings areas beyond personnel cost savings, such as health care 

operations or reduced infrastructure, could help DOD to materially 

distinguish among the governance options. Third, DOD’s estimate of 

personnel cost savings used several potentially flawed assumptions, and 

as a result, we determined DOD’s estimate to be unreliable. In its 

decision to move forward with implementation of the defense health 

agency, DOD not only lacks any estimate of implementation costs and 

cost savings in areas such as healthcare operations and reduced 

infrastructure, but also reliable estimates of personnel cost savings. DOD 

also stated in its non-concurrence that its decision to affect incremental 

change through the implementation of a defense health agency enjoys 

the consensus of the most senior military leaders. However, the decision 

for this option is based on incomplete and potentially flawed data. Absent 

such information, we continue to believe that DOD lacks a sound basis 

upon which to make its decision about the future of MHS governance.

In its non-concurrence with our recommendation that DOD include 

quantitative data as available in its assessment of the strengths and 

weaknesses of the potential overall governance structures and conduct a 

specific assessment of the degree to which the options meet the criteria

for Trained and Ready Medical Force and Quality Beneficiary Care, DOD 

stated that the work of the MHS governance task force provided DOD 

senior leaders with sufficient information to make decisions among nearterm medical governance reform options based on a variety of criteria, 

many of which are inherently qualitative in nature and would not 

significantly benefit from the sort of quantitative data we recommended 
 

Page 37 GAO-12-911 Defense Health Care

that DOD include. However, DOD’s own criteria for the assessment of the 

potential governance structures called for the inclusion of quantitative 

information, as we reported. Further, DOD’s response to our draft report 

did not specifically address the portion of our recommendation that a 

specific assessment of the degree to which the potential governance 

options meet the criteria Trained and Ready Medical Force and Quality 

Beneficiary Care—two of the three most important criteria according to 

DOD task force members. Without inclusion of these criteria coupled with 

the lack of quantitative data, it remains unclear how DOD senior leaders 

have sufficient information to make decisions regarding near-and longterm medical governance reform options. Therefore, we believe our 

recommendation that DOD improve its evaluation of the potential 

governance structures’ strengths and weaknesses by including 

quantitative data in its assessment and to determine the impact on a 

trained and ready medical force and the quality of beneficiary care 

remains valid.

In its comments, DOD noted that it is committed to the MHS governance 

changes agreed to by the Department leadership in 2012 that are 

presented in its report in response to Section 716 of the National Defense 

Authorization Act for Fiscal Year 2012. As we noted, Section 716 required 

DOD to submit a report to the congressional defense committees to 

include, among other things, a description of the alternative MHS 

governance options developed and considered by the Task Force; an 

analysis of the strengths and weaknesses of each option; and an 

estimate of the cost savings, if any, to be achieved by each option. DOD 

stated that to undertake the additional evaluation we recommended would 

not only be time-consuming but also inherently speculative and imprecise, 

and that additional analysis would not alter its conclusion about which 

governance reforms to pursue in the near term. We are not suggesting 

that DOD not reap the benefits of certain desirable, near-term reforms, 

such as the development of a business-case analysis for its shared 

services followed by its implementation, and we recognize that 

implementing these near-term reforms can provide some insight into the 

potential benefits of further transformation efforts. As we noted in our 

report, under the current governance structure, the Assistant Secretary of 

Defense (Health Affairs) has the broad authority that could allow for the 

implementation of shared support services across MHS, and DOD has 

had an opportunity to develop a supporting business case analysis since 

this concept was first proposed in 2006. However, given the complex and 

costly nature of MHS, we continue to believe that changes to its overall 

governance should be well thought out and analyzed to ensure that there 

are significant, measurable benefits before being implemented. In 
 

Page 38 GAO-12-911 Defense Health Care

addition, the need to improve the evaluation of potential governance 

options by considering critical information such as the cost of DOD’s 

reforms, their possible cost savings, and a thorough discussion of the 

options’ strengths and weaknesses would benefit DOD’s decision-making 

process. DOD has repeatedly studied options to transform its governance 

structure, but has relied on implementing “interim steps” or incremental 

changes toward an unknown final governance structure, often without the 

benefit of a clear understanding of the costs and benefits of its actions. 

Prior attempts to proceed with MHS reorganization without the benefit of 

such information demonstrate the effects of such an approach. In 2007, 

DOD did not conduct a comprehensive cost-benefit analysis, including an 

analysis of benefits, costs, and risks, for proceeding with its preferred 

medical governance concept at that time, which consisted of seven 

different incremental governance initiatives. At the time, DOD concurred 

with our recommendation that they develop such an analysis, but we

reported in 2011 that it had not done so. We reiterate that DOD risks 

repeating this pattern if it does not develop full knowledge of the costs, 

strengths, and weaknesses of each of the options under consideration.

DOD noted that it is currently planning for the implementation of its 

governance reforms, and that it expects the defense health agency to 

reach an initial operating capability by 2013, with full operating capability 

within 2 years. We will continue to monitor DOD’s efforts to reform MHS 

governance.

We are sending copies of this report to interested congressional 

committees, the Secretary of Defense, the Deputy Secretary of Defense, 

the Under Secretary of Defense for Personnel and Readiness, the 

Assistant Secretary of Defense (Health Affairs), the Surgeon General of 

the Air Force, the Surgeon General of the Army, and the Surgeon 

General of the Navy. In addition, the report is available at no charge on 

the GAO website at http://www.gao.gov. 
 

Page 39 GAO-12-911 Defense Health Care

If you or your staff have any questions regarding this report, please 

contact me at (202) 512-3604 or farrellb@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix IV.

Brenda S. Farrell

Director

Defense Capabilities and Management
 

Page 40 GAO-12-911 Defense Health Care

List of Committees

The Honorable Carl Levin

Chairman

The Honorable John McCain

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Daniel K. Inouye

Chairman

The Honorable Thad Cochran

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Howard P. “Buck” McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable C.W. Bill Young

Chairman

The Honorable Norman D. Dicks

Ranking Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives
Appendix I: Scope and Methodology

Page 41 GAO-12-911 Defense Health Care

To determine how the Department of Defense’s (DOD) preferred 

governance option, and the other options presented in its report, changes 

the current structure of the MHS, we first obtained documentation 

describing key changes in the Military Health System (MHS) governance 

structure since 1991 by reviewing relevant DOD directives, legislation, 

and interviewing knowledgeable DOD officials. Using this as the basis for 

what constitutes the current MHS governance system, we then reviewed 

DOD’s description of each of the proposed changes to the current 

governance options in the Task Force report. Upon review of all of the 

historical as well as proposed changes to the MHS governance structure, 

we identified three common governance elements among them all: the 

overall control of policy-making authority, budgetary authority, and control 

of medical personnel. As a guide for developing our comparison of the 

changes, we used these elements to describe the differences among the 

various governance options and key changes that have shaped the 

current structure. We defined these three governance elements to 

encompass the following activities:

• Overall Control of Policy-Making Authority: Who controls the overall 

MHS? Who heads its various entities? Who reports to the Secretary of 

Defense? What is the command and control structure? Who 

establishes MHS policy for the Office of the Secretary of Defense, the 

Services, and joint entities? What are the roles of senior leaders?

• Budgetary Authority: Who controls the Defense Health Program 

appropriation?

• Control of Personnel: Who manages and supervises the Military 

Treatment Facilities and multi-service medical markets? Who controls 

the MHS mission and administrative support personnel among the 

Office of the Secretary of Defense, the Military Departments, and/or 

joint entities?

To review DOD’s shared services concept, we reviewed the information 

presented in DOD’s report and interviewed DOD officials concerning their 

analysis of this concept. We compared this information to our prior work 

on business case analyses in the context of management consolidations,1

 

1

and leveraged our prior work on efforts by DOD and other federal 

GAO-12-542. 

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 42 GAO-12-911 Defense Health Care

agencies to establish shared services to provide context for DOD’s 

current efforts.2

To determine the extent to which DOD has developed a cost analysis of 

its potential MHS governance options, we reviewed DOD’s cost 

assessments for its governance options using key principles we derived 

from cost estimating and budgeting guidance. Specifically, we reviewed 

numerous federal guidance documents related to cost estimating, 

accounting standards, economic analysis, and budgeting and identified 

key principles that we believe can be applied to the evaluation of cost 

savings estimates. The guidance documents we reviewed include GAO 

Cost Estimating and Assessment Guide, GAO-09-3SP; Office of 

Management and Budget Circular No. A-11, Preparation, Submission and 

Execution of the Budget (Aug. 2011, superseded by an August 2012 

issuance); Federal Accounting Standards Advisory Board, Statement of 

Federal Financial Accounting Standards 4 (June 2011); Department of 

Defense Instruction 7041.3, Economic Analysis for Decisionmaking (Nov. 

7, 1995); and Department of Defense Financial Management Regulation 

7000.14-R, Volume 4, Chapter 22, Cost Finding (May 2010). Although 

each of these documents may not apply to these circumstances as a 

legal matter, we believe that they collectively contain broad themes that 

can be applied to evaluating cost analyses. To apply these key principles, 

we interviewed Task Force members concerning the extent to which they 

attempted to estimate implementation costs and reviewed the cost 

savings presented in DOD’s report. We identified broad cost categories 

that should be considered in the course of implementing DOD’s 

governance transformation by leveraging prior GAO work on the 

implementation costs of major transformations and consolidations, such 

as the Base Realignment and Closure (BRAC) process, and CNA’s 

report, Cost Implications of a Unified Medical Command.3

 

2

In reviewing 

DOD’s cost savings estimate, we interviewed officials concerning their 

estimating methods and reviewed supporting documentation, noting 

where we identified shortcomings in the Task Force’s approach. We were 

unable to rely on DOD’s cost savings estimates because the estimates 

and their supporting data were insufficient in the key data elements 

needed to completely and accurately develop them as discussed in the 

findings section of this report.

GAO-07-536 and GAO-12-224. 

3 GAO-12-542. 
Appendix I: Scope and Methodology

Page 43 GAO-12-911 Defense Health Care

To determine the extent to which DOD’s assessment of the strengths and 

weaknesses of its potential governance options is well-supported and 

data-driven, we obtained and analyzed Task Force documents including 

meeting minutes, briefing slides, and voting templates. We then used this

analysis to determine the criteria and process used to formulate the 

strengths and weaknesses of the options. We then assembled a list of the 

78 strengths and weaknesses cited in the task force report and used a 

semi-structured interview process to collect information from Task Force 

officials regarding the process and inputs used to formulate each 

assessment. We then conducted a content analysis of the information 

provided by the officials to identify and categorize the inputs that the 

officials cited as contributing to the assessments of strengths and 

weaknesses. The categorization of the information was conducted by one 

analyst and confirmed by a second analyst to ensure the analysis was 

adequately supported by the evidence. In addition, we interviewed 

officials from one multi-service market and a health administration expert 

to obtain their opinions on the process used by DOD to formulate the 

strengths and weaknesses.

For each of our objectives, we limited our review to the potential overall 

governance structures that the Task Force presented in its report. We did 

not specifically review the proposed changes to DOD’s multi-service 

medical markets or to the governance structure in place within the 

National Capital Region as presented in the Task Force report because 

we determined that these proposed changes were outside the scope of 

our mandate. We conducted this performance audit from March 2012 

through September 2012 in accordance with generally accepted 

government auditing standards. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide 

a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our audit objectives.
Appendix II: Detailed Description of the 

Potential Governance Structures and DOD’s 

Assessment of Their Strengths and 

Weaknesses

Page 44 GAO-12-911 Defense Health Care

DOD’s task force report provided the following detailed description, cost 

savings estimates,1 and strengths and weaknesses of the governance 

structures2 it identified as potential options for its Military Health System 

(MHS). As we noted earlier in our report, we found DOD’s cost savings 

estimates to be unreliable because the estimates and their supporting 

data were insufficient in the key data elements needed to completely and 

accurately develop them. As a result, using DOD’s data as presented 

below may lead to an incorrect or unintentional result.

DOD’s preferred option would create a new defense health agency that 

would assume the responsibilities of the TRICARE Management Activity 

and additional possible areas of savings known as shared services. The 

new agency would be a combat support agency headed by a 3-star 

general or flag officer who would report to the Assistant Secretary of 

Defense (Health Affairs), but with oversight from the Chairman of the 

Joint Chiefs of Staff. The services would maintain their surgeons general, 

service support commands, and intermediate headquarters.

 

1 We determined DOD’s cost savings estimates to be unreliable. 

2 These structures are in addition to the current MHS structure, which the Task Force 

included in the 13 options presented in the report.

Appendix II: Detailed Description of the 

Potential Governance Structures and DOD’s 

Assessment of Their Strengths and Weaknesses

Defense Health 

Agency Governance 

Structures 

Defense Health Agency 

with Military Treatment 

Facilities under the 

Services
Appendix II: Detailed Description of the 

Potential Governance Structures and DOD’s 

Assessment of Their Strengths and 

Weaknesses

Page 45 GAO-12-911 Defense Health Care

DOD’s Estimate of Projected Net Savings: $46.5 million per year.

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• Lines of Authority: The services control the hospital and 

deployed health care; eliminates the Assistant Secretary of 

Defense role as the Director of the TRICARE Management 

Activity.

• Enhance Interoperability: The defense health agency would be 

focused on the shared and consolidated services.

• Ease of Implementation: This would require minimal change to 

the current service organizational structure.

• Enhance Interoperability: Eliminates the Joint Hospitals in 

the National Capital Region as well as San Antonio.

• Ease of Implementation: This option would require the 

Joint Task Force National Capital Region Medical to 

transition to a different structure. The services’ cultures 

could limit the implementation of common services and 

processes.

Similar to the previous option, this structure would create a defense 

health agency combat support agency led by a 3-star general or flag 

officer, but would place Military Treatment Facilities under the authority, 

direction, and control of the agency. Military personnel not assigned to a 

deployable unit would be under the direction of the defense health 

agency, but the services would continue to own their personnel, and all 

civilian personnel would be under the direction of the agency.

DOD’s Estimate of Projected Net Savings: $87.4 million per year.

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• Dispute Resolution/Lines of Authority/Accountability: 

Management of all medical treatment facilities under one 

authority (Director, Defense Health Agency); the Defense 

Health Agency Director would report directly to the Assistant 

Secretary of Defense (Health Affairs).

• Achieve Significant Cost Savings Through Reduction in 

Duplication and Variation: The defense health agency would be 

focused on the most common theme emphasized by the Task 

Force – an organizational model that would accelerate 

implementation of shared services models that identify and 

proliferate best practices and consider entirely new approaches 

to delivering shared activities. Further, placement of medical 

treatment facilities under the defense health agency would allow 

for even more rapid implementation of unified clinical and 

business systems, which could create significant savings.

• Other: Would align management of purchased care (TRICARE) 

and direct care (Medical Treatment Facilities) under one entity, 

creating potential for greater coordination and cost-effective 

distribution of resources between the two sources of care. 

• Dispute Resolution/Lines of Authority/Accountability: This 

model may elevate management disputes to the highest 

levels of the DOD, as local line command disputes with the 

defense health agency command structure may need to be 

adjudicated at the level of the Secretary of the Military 

Department /Assistant Secretary of Defense (Health 

Affairs) level.

• Medical Readiness: Concerns were expressed that an 

organization this large with this many authorities could 

jeopardize services priorities. A comprehensive defense 

health agency could reduce command and leadership 

development opportunities.

• Ease of Implementation: Moving all medical treatment 

facilities to the defense health agency would be a major 

reorganization.

• Other: Could mix the defense health agency mission 

between support of MHS-wide functions and direct 

operation of hospitals and clinics. The Military 

Department’s representatives on the Task Force believed 

that operation of the direct care system is a Military 

Department responsibility.

Defense Health Agency 

with Military Treatment 

Facilities Placed under the 

Agency
Appendix II: Detailed Description of the 

Potential Governance Structures and DOD’s 

Assessment of Their Strengths and 

Weaknesses

Page 46 GAO-12-911 Defense Health Care

Weaknesses of a DHA with MTFs under the Agency

This option would create a Defense Health Agency to exercise authority, 

direction, and control over the Military Treatment Facilities. However, 

service intermediate headquarters would be replaced by a single defense 

health agency-run organization.

DOD’s Estimate of Projected Net Savings: $21.4 million per year.

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• Lines of Authority: This organizational construct would have 

clear lines of authority and there would be central control of the 

Military Treatment Facilities.

• Enhance Interoperability: This option would allow for single 

processes for key functions.

• Dispute Resolution: Key issues would be elevated quickly 

to the highest levels.

• Ease of Implementation: This option would be more of a 

“civilianized” model which may be difficult to implement in 

the current military structure. It may also reduce command 

leadership opportunities and professional growth.

A unified medical command with service components option would create 

a tenth combatant command led by a 4-star general or flag officer, with 

forces supplied by service components. Service intermediate 

headquarters would manage the Military Treatment Facilities, but 

personnel not assigned to deployable units would be assigned to the 

unified medical command. A Joint Health Support Command would 

manage the TRICARE health plan and shared services.

Defense Health Agency – 

Geographic Model

Unified Medical 

Command 

Governance 

Structures 

Unified Medical Command 

with Service Components
Appendix II: Detailed Description of the 

Potential Governance Structures and DOD’s 

Assessment of Their Strengths and 

Weaknesses

Page 47 GAO-12-911 Defense Health Care

DOD’s Estimate of Projected Net Cost: $203.6 million per year.

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• Dispute Resolution/Lines of Authority/Accountability: Clear lines 

of authority would be established.

• Achieve Significant Cost Savings Through Reduction in 

Duplication and Variation: There would be central control of 

common business and clinical processes, and implementation 

would be achieved more readily with command and control 

throughout the medical structure to ensure compliance.

• Ease of Implementation: Joint Task Force National Capital 

Region Medical, if retained in its current form, could be 

addressed as a region directly reporting to the Commander, 

U.S. Medical Command.

• Dispute Resolution/Lines of Authority/Accountability: The 

current structure of civilian authority over components of 

the MHS (the Assistant Secretary of Defense (Health 

Affairs)) and Military Department Secretaries) would not be 

maintained; the first civilian official in the authority chain

would be the Secretary of Defense.

• Achieve Significant Cost Savings Through Reduction in 

Duplication and Variation: In any unified medical command 

structure that maintains service Components (the common 

model for all unified commands) the overall management 

headquarters overhead would increase above “As Is” and 

all other organizational models.

• Ease of Implementation: This action would represent a 

significant departure in governance for all existing 

organizations (Assistant Secretary of Defense (Health 

Affairs), TRICARE Management Activity, Military 

Department Secretaries, Military Service Chiefs, Service 

Medical Departments). For the Air Force, this includes 

creating a medical component command for operation of 

Air Force medical treatment facilities; the Navy would need 

to redesign how garrison billets are mapped to operational 

requirements.

This structure would create a tenth combatant command for medical care. 

However, the unified medical command commander would exercise 

control over personnel and the Military Treatment Facilities. Service 

intermediate headquarters would be replaced by a single organization.

DOD’s Estimate of Projected Net Cost: $152.3 million per year.

Unified Medical Command, 

Geographic Model
Appendix II: Detailed Description of the 

Potential Governance Structures and DOD’s 

Assessment of Their Strengths and 

Weaknesses

Page 48 GAO-12-911 Defense Health Care

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• Dispute Resolutions and Lines of Authority: This organizational 

structure would have clear lines of authority and there would be 

central control of the Military Treatment Facilities. The shared 

services (i.e. education and training, research and development, 

health information technology, logistics) would be centrally 

managed. The TRICARE Regional Offices would be aligned with 

the Military Treatment Facilities in the same chain of command.

• Enhance Interoperability: This option would focus the 

development of common business processes.

• Ease of Implementation: The Joint Table of Distributions would 

eliminate any multi-service market issues because the unified 

medical command would control the multi-service markets.

• Achieve Significant Cost Savings Through Reduction in 

Duplication and Variation: Reduction in overhead personnel 

would be relative to the current MHS structure. Services would 

focus on deployable forces with the unified medical command as 

the platform for medical professional force development and 

benefit delivery.

• Lines of Authority: This would be a major change for the 

Service Surgeons General.

• Enhance Interoperability: Some required service assets 

would not be under service control — sourcing would be 

from the unified medical command.

• Ease of Implementation: This would be a massive change 

for the way the DOD does business. Hospital based and 

wartime medical forces would be split. An alternative is to 

embed deployable wartime forces in a Joint Table of 

Distribution in the unified medical command.

• Achieve Significant Cost Savings through Reduction in 

Duplication and Variation: The Command may be focused 

on effectiveness over costs.

Unified Medical Command, HR 15403

This option would create a tenth combatant command for medical care 

with forces supplied by service components. Subordinate service 

commands would manage the Military Treatment Facilities, but within the 

framework of a Healthcare Command led by a 3-star general or flag 

officer to manage the service components.

DOD’s Estimate of Projected Net Cost: $238.8 million per year.

 

3 H.R. 1540, which became the National Defense Authorization Act for Fiscal Year 2012, 

Pub. L. No. 112-81 (2011), when initially passed by the House, contained a provision (sec. 

711) that would have required the establishment of a unified medical command. That 

provision was not ultimately enacted, and was replaced by section 716 during conference.
Appendix II: Detailed Description of the 

Potential Governance Structures and DOD’s 

Assessment of Their Strengths and 

Weaknesses

Page 49 GAO-12-911 Defense Health Care

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• • Dispute Resolution/Lines of Authority/Accountability: Clear 

lines of authority would be established as well as central 

management of shared services (i.e. education and training, 

research and development, health information technology, 

logistics). Military Treatment Facilities would be centrally 

controlled.

• • Enhance Interoperability: Allows for Joint Task Force National 

Capital Region Medical to be easily inserted into this structure 

as a regional or sub-regional command. Common business 

processes would be implemented across the Military Treatment 

Facilities.

• • Ease of Implementation: The service component execution 

would minimize organizational change.

• • Achieve Significant Cost Savings Through Reduction in 

Duplication and Variation: The Command would likely be 

focused more on effectiveness over costs.

• • Dispute Resolution/Lines of Authority/Accountability: 

Some required service assets would not be under service 

control. There would be civilian oversight for budget 

located at the Secretary of Defense level which would 

bypass the Office of the Secretary of Defense Principal 

Staff Assistant.

• • Enhance Interoperability: Hospital based and unit based 

medical forces would be split.

• • Ease of Implementation: This would require all three 

services to significantly change, with the biggest impact on 

the Air Force.

• • Dual-hatted surgeons general could face perception 

issues from home service and the unified medical 

command.

A single military service Secretary would be assigned all headquarters 

management functions, such as management of the TRICARE health 

plan and shared services. The designated service also would control a 

Defense Healthcare System agency that would include the service 

component commands, which in turn would command the Military 

Treatment Facilities.

DOD’s Estimate of Projected Net Savings: $94.4 million per year.

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• • Dispute Resolution/Lines of Authority/Accountability: Clear 

lines of authority would be established as well as central control 

of the Military Treatment Facilities and multi-service markets. 

Service readiness assets would be under service control.

• • Achieve Significant Cost Savings Through Reduction in 

Duplication and Variation: There would be single processes for 

key functions

• • Dispute Resolution/Lines of Authority/Accountability: This 

option would create a need for coordination of issues 

between the service Secretaries.

• • Enhance Interoperability: This would split the warrior and 

beneficiary care systems.

Single Service 

Governance 

Structures 

Single Service with Service 

Components 
Appendix II: Detailed Description of the 

Potential Governance Structures and DOD’s 

Assessment of Their Strengths and 

Weaknesses

Page 50 GAO-12-911 Defense Health Care

Under this structure, a single military service Secretary would be 

assigned all headquarters management functions, such as management 

of the TRICARE health plan and shared services. In addition, the 

designated service would command all of the Military Treatment Facilities, 

while all services would remain responsible for providing personnel.

DOD’s Estimate of Projected Net Savings: $94.4 million per year

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• • Dispute Resolution/Lines of Authority/Accountability: Clear 

lines of authority and chain of command from Secretary through 

the Military Treatment Facilities commander would be 

established.

• • Achieve Significant Cost Savings Through Reduction in 

Duplication and Variation: With shared services, there would be 

one set of business and clinical processes and implementation 

would be achieved more readily with command and control in a 

single service. It also could eliminate the issues that arise with 

multi-service markets. This option would create the most 

significant savings in headquarters overhead of any 

organizational option.

•

• • Medical Readiness: With medical personnel still “owned”

by their service components, a requirement for 

coordination between Service Chiefs and Military 

Department Secretaries on readiness and personnel 

issues would remain.

• • Ease of Implementation: There is no known precedent or 

example where this approach has been tested in other 

military medical organizations worldwide. The Navy/US 

Marine Corps medical support model does not have the 

mission for all of the DOD; however, it is representative of 

how a single service model could work. Additionally, this 

option would entail a large scale reorganization to include 

re-mapping of service medical personnel to operational 

platforms.

• • Dispute Resolution/Lines of Authority/Accountability: 

Issues would be adjudicated at a higher level (Military 

Department Secretary).

This option would create a tenth combatant command led by a 4-star 

general or flag officer, with forces supplied by service components, and 

service commands charged with management of the Military Treatment 

Facilities. However, shared services would be split, with the unified 

medical command in charge of readiness-focused areas and a defense 

health agency charged with beneficiary health care and clinical quality.

DOD’s Estimate of Projected Net Cost: $225.3 million per year.

Single Service, Geographic 

Model

Hybrid Governance 

Structures 

Unified Medical Command 

with Service Components 

and Defense Health 

Agency
Appendix II: Detailed Description of the 

Potential Governance Structures and DOD’s 

Assessment of Their Strengths and 

Weaknesses

Page 51 GAO-12-911 Defense Health Care

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• • Dispute Resolution/Lines of Authority/Accountability: This 

option would align command and control forces under a military 

chain of command. It would also align the Assistant Secretary of 

Defense (Health Affairs) role to policy and oversight with 

execution delegated to the unified medical command 

commander and the defense health agency director.

• • Ease of Implementation: This option would maintain service 

structures as component commands in the unified medical 

command. It would also support the Joint Task Force National 

Capital Region Medical structure.

• • Medical Readiness: Service readiness functions would 

be located in the unified medical command.

• • Dispute Resolution/Lines of Authority/Accountability: The 

unified medical command commander would report 

directly to the Secretary of Defense. It could be difficult to 

adjudicate disagreements between the unified medical 

command and the defense health agency at the Deputy 

Secretary of Defense level.

• • Achieve Significant Cost Savings: The execution of the 

shared services and common processes would require 

unified medical command and defense health agency 

agreement.

Similar to the above, this option would pair a tenth combatant command 

with a defense health agency with shared services divided between the 

two organizations. However, the defense health agency through Regional 

Directors, not service components, would manage the Military Treatment 

Facilities.

DOD’s Estimate of Projected Net Cost: $238.8 million per year.

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• • Dispute Resolution/Lines of Authority/Accountability: This 

option would align command and control forces under a military 

chain of command. It would also align the role of the Assistant 

Secretary of Defense (Health Affairs) to policy and oversight with 

execution delegated to the unified medical command 

commander and defense health agency director.

• • Achieve Significant Cost Savings: The execution of the shared 

services and common processes would require unified medical 

command combatant command agreement.

• • Medical Readiness: Service readiness functions would 

be located in the unified medical command.

• • Dispute Resolution/Lines of Authority/Accountability: The 

unified medical command commander would report 

directly to the Secretary of Defense. It could be difficult to 

adjudicate disagreements between the unified medical 

command and defense health agency at the Deputy 

Secretary of Defense level.

Similar to the above two options, this option would pair a tenth combatant 

command with another organization, a Defense Healthcare System in 

charge of all of the Military Treatment Facilities managed by one military 

service. Shared services also would be divided between the two 

organizations.

DOD’s Estimate of Projected Net Cost: $238.8 million per year.

Unified Medical Command 

and Defense Health 

Agency, Geographic Model

Single Service with a 

Unified Medical Command
Appendix II: Detailed Description of the 

Potential Governance Structures and DOD’s 

Assessment of Their Strengths and 

Weaknesses

Page 52 GAO-12-911 Defense Health Care

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• Dispute Resolution/Lines of Authority/Accountability: This option 

would establish clear lines of authority for administrative, 

operational, and tactical control of forces with each being vested 

in a different structure. It would also create central control of the 

Military Treatment Facilities.

• Ease of Implementation: In this option, the multi-service markets 

are addressed and joint facilities would be maintained.

• Enhance Interoperability: This option would allow for single 

processes for key functions.

• Medical Readiness: This would split the warrior care and the 

beneficiary care systems.

• Dispute Resolution/Lines of Authority/Accountability: This option 

would create different responsible agents for administrative, 

operational, and tactical control of forces.

The defense health agency would be led by a 3-star general or flag officer 

who would report directly to either a Service Secretary, the Assistant 

Secretary of Defense (Health Affairs) or a combatant commander. The 

agency would control the TRICARE health plan. Additionally, a Medical 

Operations Support Command would be created to control the education 

and training, research and development, and public health. Finally, the 

individual military departments would continue to manage the Military 

Treatment Facilities, albeit through Service designated regional enhanced 

multi-service market offices instead of their current medical commands.

DOD’s Estimate of Projected Cost/Saving: None presented.

DOD’s Assessment of Strengths DOD’s Assessment of Weaknesses 

• None provided. • None provided.

Defense Health Agency 

Hybrid with Regional 

Military Treatment 

Facilities
Appendix III: Comments from the Department 

of Defense

Page 53 GAO-12-911 Defense Health Care

Appendix III: Comments from the 

Department of Defense
Appendix III: Comments from the Department 

of Defense

Page 54 GAO-12-911 Defense Health Care
Appendix III: Comments from the Department 

of Defense

Page 55 GAO-12-911 Defense Health Care
Appendix III: Comments from the Department 

of Defense

Page 56 GAO-12-911 Defense Health Care
Appendix III: Comments from the Department 

of Defense

Page 57 GAO-12-911 Defense Health Care
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 58 GAO-12-911 Defense Health Care

Brenda S. Farrell, (202) 512-3604 or farrellb@gao.gov

In addition to the contact named above, Lori Atkinson, Assistant Director;

Edward Anderson, Jr., Rebecca Beale, Grace Coleman, Foster Kerrison, 

Charles Perdue, Carol Petersen, Terry Richardson, Adam Smith, and 

Karen Nicole Willems made key contributions to this report.

Appendix IV: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 
Related Products

Page 59 GAO-12-911 Defense Health Care

GAO, Defense Health Care: Applying Key Management Practices Should 

Help Achieve Efficiencies within the Military Health System, GAO-12-224

(Washington, D.C.: April 12, 2012).

GAO, 2012 Annual Report: Opportunities to Reduce Duplication, Overlap 

and Fragmentation, Achieve Savings, and Enhance Revenue, 

GAO-12-342SP (Washington, D.C.: Feb. 28, 2012).

GAO, Follow-up on 2011, Status of Actions Taken to Reduce Duplication, 

Overlap, and Fragmentation, Save Tax Dollars, and Enhance Revenue, 

GAO-12-453SP (Washington, D.C.: Feb. 28, 2012).

GAO, Opportunities to Reduce Potential Duplication in Government 

Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-318SP 

(Washington, D.C.: Mar. 1, 2011).

GAO, Defense Health Care: DOD Needs to Address the Expected 

Benefits, Costs, and Risks for Its Newly Approved Medical Command 

Structure, GAO-08-122 (Washington, D.C.: Oct. 12, 2007).

Related Products

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