VA and DOD’s history of sharing resources to provide integrated health care services to their beneficiaries in and around North Chicago has occurred in three phases. The third phase culminated in the establishment of the FHCC, which was formalized by an Executive Agreement signed by the Secretaries of VA and DOD in April 2010. The FHCC is unique among other VA and DOD sharing relationships in its level of collaboration, governance structure, and financial model. The history of VA and DOD integrating health services in North Chicago can be described in three distinct phases. (See fig. 1.) These phases cover the time period from 2003 to 2011 and include the official establishment of the FHCC in October 2010.  Phase I began in 2003 when VA and DOD began sharing health care resources between NCVAMC and NHCGL. NHCGL, then known as Naval Hospital Great Lakes, transferred its inpatient mental health services to NCVAMC. In the same year, VA and DOD formed a working group to address issues related to sharing resources between the two sites. In 2004, the NHCGL blood donor processing center was transferred to NCVAMC.  Phase II began in 2005 with the $13-million renovation and modernization of the NCVAMC, including its operating rooms and an expansion of the emergency department. In 2006, NHCGL’s inpatient medical, surgical, pediatric, and intensive care units, operating rooms, and emergency department were transferred to NCVAMC. With the transfer of inpatient services, the naval hospital became a naval health clinic, since the facility no longer provided inpatient services.  Phase III began in 2007 when construction began on new parking areas, followed in 2008 by the groundbreaking for the construction of a new ambulatory care center. The FHCC Advisory Board was established in 2009 to help provide guidance for the integration and future operation of the facility, which was authorized in the NDAA for Fiscal Year 2010. In October 2010, the former NCVAMC and NHCGL facilities merged to become the FHCC, following completion of a $130-million DOD-funded construction project. The FHCC consists of all the services, buildings, and locations formerly operated by either NCVAMC or NHCGL including the new 201,000-square-foot ambulatory care center and its parking lot and garage, a 45,000- square-foot renovation of the NCVAMC, and various outpatient and recruit clinics formerly operated by either NCVAMC or NHCGL. (See fig. 2 for photographs of newly constructed or renovated areas of the FHCC.) The ambulatory care center, which is physically connected to the NCVAMC, houses outpatient services including pediatrics, women’s health, and mental health. In addition, it has on-site laboratory, radiology, and pharmacy services, enabling patients to access these ancillary services in the same location as their outpatient services. Phase III continued into 2011 with the move into the new ambulatory care center and the delivery of patient services there. In April 2010, the Secretaries of VA and DOD signed the Executive Agreement that established the FHCC. The Executive Agreement defines the relationship between VA and DOD for establishing and operating the FHCC, in accordance with the NDAA for Fiscal Year 2010, and contains provisions in 12 integration areas regarding specific aspects of FHCC operations. These 12 areas are: (1) governance structure; (2) access to health care at the FHCC; (3) research; (4) contracting; (5) information technology (IT); (6) fiscal authority; (7) workforce management and personnel; (8) quality assurance; (9) contingency planning; (10) integration benchmarks; (11) property (i.e., construction and physical plant management); and (12) reporting requirements. Within the 12 areas are provisions describing how the FHCC should be operated or what VA and DOD will do as part of their efforts to jointly operate the facility. Some provisions relate to establishing and operating the FHCC and have designated deadlines, such as implementing IT strategies. Other provisions do not have specified deadlines or will not be met until a certain point in the integration, or are contingent on other conditions being met. For example, a provision in the reporting requirements integration area calls for a final report at the end of the 5-year demonstration in 2015. Since the report is due at the end of the 5-year demonstration period, this particular provision cannot yet be implemented. The Executive Agreement also includes 15 integration benchmarks that VA and DOD plan to use to determine the integration’s success. Assessment of the integration benchmarks throughout the 5-year demonstration project will help inform whether the FHCC partnership should continue beyond the demonstration period authorized by the NDAA for Fiscal Year 2010. The FHCC is unique among VA and DOD joint ventures in three key ways. First, the FHCC’s integration of the provision of care and operations represents the highest level of collaboration among the nine existing VA and DOD joint ventures. VA and DOD have periodically assessed their joint venture arrangements to determine the level of collaboration between partners, which they measure on a continuum from “separate” to “consolidated.” They use this continuum to assess program elements of a joint venture’s partnership such as governance, education and training, and research. VA and DOD officials reported to us that overall, the FHCC has more program elements, such as its clinical services and staffing, which fall on the “consolidated” end of the collaboration continuum than any of the other joint venture sites. Second, the FHCC operates under a single line of governance to manage medical and dental care, and has an integrated workforce of approximately 3,000 civilian and active duty military employees from both VA and DOD—a feature that is unique to the FHCC. Although the FHCC’s leadership and workforce are integrated, they also remain directly accountable to both VA and DOD through the Joint Executive Council and the Health Executive Council. VA and DOD officials told us that none of the other joint venture sites has an integrated governance structure and instead maintain separate VA and DOD lines of authority. The third way in which the FHCC is unique among VA and DOD joint ventures is its financial model. The FHCC has a single funding source to which VA and DOD will contribute, unlike the other joint venture sites which have separate VA and DOD funding sources. The NDAA for Fiscal Year 2010 established the Joint DOD-VA Medical Facility Demonstration Fund (Joint Fund) as the funding mechanism for the FHCC, with VA and DOD both making transfers to the Joint Fund from their respective appropriations. FHCC officials (including both VA and DOD officials) have made progress implementing the provisions of the 12 Executive Agreement integration areas. Four of the 12 integration areas have been fully implemented, 7 are in progress and proceeding according to plan, and 1 area, IT, has been delayed and continues to present challenges. In addition, the FHCC’s lack of a military treatment facility (MTF) designation has presented challenges for FHCC operations and health care providers. FHCC officials have addressed all provisions for 4 of the 12 Executive Agreement integration areas, are progressing in their implementation of 7 other areas, and have experienced delays in the implementation of 1 area, IT. (See table 1.) Officials have completed implementation of the governance structure, access to health care at the FHCC, research, and contracting integration areas. Governance structure. The Executive Agreement defined the structure of the FHCC’s governance structure and leadership, with a VA official serving as the director and a naval captain serving as the deputy director. (See fig. 3.) As of October 1, 2010, the former director of NCVAMC became the director of the FHCC, and a command change brought in a new naval captain to become deputy director, taking over command from the former NHCGL commanding officer. In addition, the advisory bodies described in the Executive Agreement are in place. The FHCC has an Advisory Board—co-chaired by and comprised of senior officials from VA and DOD—that monitors the FHCC’s performance and advises on strategic direction, mission, vision, and policy. The Advisory Board also provides input into the performance evaluations of FHCC leadership and serves as a communication link between VA and DOD executive leadership and the FHCC through the Joint Executive Council and the Health Executive Council. Also, a Stakeholders Advisory Council—comprised of members from various regional and local organizations representing FHCC interests—provides feedback on how well the FHCC is meeting customers’ needs and whether the FHCC is meeting VA and DOD missions. VA and DOD officials also designed the major operational components of the FHCC to have shared VA and DOD leadership. The six clinical and administrative divisions that report to the director and deputy director are led by an associate director and an assistant director, one from VA and the other from the Navy. Access to health care at the FHCC. To address access to health care at the FHCC for veterans and DOD beneficiaries, the NDAA for Fiscal Year 2010 and the Executive Agreement established a patient priority system that is unique to the FHCC for use in the event of resource constraints. FHCC’s patient priority system is based on the priority list for TRICARE, DOD’s program to provide health care to its beneficiaries, and incorporates VA beneficiaries. More specifically, the system prioritizes active duty servicemembers above veterans and other DOD beneficiaries as follows: 1. members of the Armed Forces on active duty; 2. veterans and non veteran VA beneficiaries, and TRICARE Prime- enrolled active duty dependents; 3. TRICARE Prime enrolled retirees, their dependents and survivors; 4. TRICARE Standard active duty dependents; and 5.