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. 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. 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. 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. 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 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. 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. “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.” 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. 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, 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. 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 co- chairs 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, 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. 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 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: 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 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.