The Pentagon’s Fig Tree: Reforming The Military Health System


Editor’s Note: This is the second installment of a series by two former Pentagon officials on defense reform


Sylvia Plath famously writes about the consequences of  indecision in her novel The Bell Jar. In recounting a dream, the main character of that book says:

I saw myself sitting in the crotch of this fig tree, starving to death because I couldn’t make up my mind which of the figs I would choose. I wanted each and every one of them, but choosing meant losing all the rest, and, as I sat there, unable to decide, the figs began to wrinkle and go black, and, one by one, they plopped to the ground at my feet.

Reform of the Military Health System (MHS) has long been the tree under which senior leaders at the Department of Defense have sat, perennially wanting figs of a different sort: better outcomes from a system befuddled by incommensurate goals.

It might be useful to ask a naïve question: What is the purpose of the military health system? For the military services, it is about readiness — creating both a medically ready force and a ready medical force, to use the felicitous phrase one often hears in the Pentagon. But for many servicemembers and their families, as well as Congress, the MHS is primarily about access to quality care. It is, alas, rarely acknowledged that these missions are not necessarily compatible. To maintain a ready medical force, the MHS needs a steady flow of patient visits into the military-run medical treatment facilities (MTFs). For the purposes of readiness, these cases should be of the type a provider might see when deployed. But to ensure high-quality, accessible care, the MHS needs a broad network of high-volume providers, as studies have shown that safety and effectiveness are closely related to throughput. High-volume providers are almost always found not in the MTFs, but in the private sector. By attempting to achieve these multiple goals simultaneously — readiness, accessibility, and a high quality of care — the MHS risks succeeding fully at none.

The MHS is vast. TRICARE, the name for the group of health care plans offered to servicemembers and their families (as well as retirees), covers 9.5 million people. As a percentage of the total Department of Defense budget, MHS expenditures have more than doubled over the last 20 years. Today, it comes with a price tag totaling approximately $50 billion that consumes 10 percent of the department’s budget. Astonishingly, one in three colonels is part of the administration or operation of the MHS. Care is delivered through two broad mechanisms. The “direct care” system comprises 54 hospitals, 365 medical clinics, and 281 dental clinics, all run by the military services (with the exception of a few outpatient clinics and two hospitals in the Washington, D.C., area, Walter Reed Medical Center and Fort Belvoir, which are maintained by the Defense Health Agency). The “purchased care” system involves thousands of private sector providers who agree to accept payment on a fee-for-service basis pegged to Medicare reimbursement rates.

The direct care system — the in-house services delivered at medical treatment facilities (MTFs) — is very expensive relative to care in the private sector, which already provides 65 percent of services. A recent study from the Institute for Defense Analyses found that only five of the 41 domestic military hospitals produced inpatient workload at a lower cost than the private sector. Overall, the cost of providing direct care inpatient workload at the 41 domestic Department of Defense hospitals would have been 34 percent lower had the workload been performed in private sector facilities. Outpatient care in the purchased care sector had a similar cost advantage. Additional, unpublished research we saw while working at the Pentagon indicated that increasing use of the purchased care sector could save American taxpayers billions of dollars each year.

More controversially, mountains of data indicate that purchased care is better, safer care. This is no slight to the many incredible doctors, nurses, and medics in the MHS. Their heroism and commitment to caring for our wounded over the last 15 years of war cannot be questioned. But the iron law of health care is that volume matters. The more procedures a given doctor performs and a given hospital hosts, the better the patient outcomes. Surgery performed by high-volume surgeons at high-volume facilities has lower complication rates, lower re-admission rates, lower mortality rates, shorter lengths of stay, and lower overall costs. And it’s a simple fact that civilian facilities provide a great deal more relevant patient care than do our MTFs. The Leapfrog Group, a leading health care consultancy, sets an annual volume standard of 200 open-heart procedures for a facility to be deemed safe (consistent with Aetna and Blue Cross thresholds). In Utah, to pick a state out of the hat, 92 percent of open-heart surgeries are performed in high-volume facilities. In Maine and Kentucky, it’s 87 percent and 75 percent respectively. For the military, the number is zero. Zero. In fact, two-thirds of open-heart surgeries performed in MTFs were at facilities with fewer than 50 such procedures, 75 percent below recommended safety standards. That equates to over 200 military patients every year who are at risk for suboptimal care.

The volume for individual surgeons is also dangerously low. Consider spinal fusions. It is recommended that surgeons perform 32 to 50 of these procedures every year to maintain competency, and facilities should oversee at least 100 case every year. In 2013, only 25 percent of military surgeons that completed at least one spinal fusion met the lower bound of 32 cases per year, and only 11 percent met the upper bound of 50 procedures. Or take knee replacements. The minimum safety standard is 50 per surgeon each year and 100 for a facility. Only 10 percent of the military’s orthopedic surgeons that completed at least one knee replacement met the standard, and only 13 percent of knee replacements were performed in MTFs that met that standard. Hip replacements are still another example. Only 9 percent of Department of Defense surgeons completing at least one hip replacement met the minimum safety standards, and only 43 percent of hip replacements were performed in MTFs that met the standard.

The low productivity (if not the variable quality of care) of MTFs is openly acknowledged by the Department of Defense. Indeed, this is seen as a feature, not a bug, of the MHS. The military Surgeons General, altogether a very admirable group, recently appeared before the Senate Armed Services Committee, where they unsurprisingly asserted that the MTFs “are the bedrock of medical readiness.” To that end, they testified, overstaffing for beneficiary care is both intended and unavoidable; poor productivity is to be expected and is properly seen as the unavoidable if pricey cost of maintaining a ready medical force. It is certainly true that uniformed medical personnel are assigned military duties that take them away from the provision of health care, a complication their private sector counterparts don’t share. But those requirements can’t explain away the wide productivity gap between MHS practitioners and their civilian peers. Instead, the argument goes, the MTFs act as a sort of bullpen for deployable doctors, nurses, and medics. If they appear to be overstaffed, it because the demand for labor is mistakenly believed to be set by the lax needs of beneficiary care when it is actually set by strenuous, if unrealized, deployment requirements.

The notion that MTFs are overstaffed by design would make more sense if the caseload of the direct care system supported battlefield medicine. But it doesn’t. The great majority of diagnoses at MTFs are for newborn care, pregnancy, and maternal health. MTFs are essentially birthing centers with no caseload alignment to the demands of an operational environmental. Indeed, the top ten diagnoses in MTFs do not match a single trauma-related combat injury. And, as the caseload skews toward the needs of young families, so too does the specialty mix of military doctors, who are surprisingly free to choose their own medical niche without regard for military requirements. For example, the Army has about 12 trauma surgeons on active duty, but houses three times as many orthodontists and pediatric psychiatrists on full-time orders. The Cassandras of military medicine are already wailing a steady, if unheeded, warning: The MHS does not broadly create nor specifically maintain a ready medical force, and it may even militate against that goal. As a leading combat trauma surgeon has bluntly written, military hospitals cannot truly be considered to be combat medical readiness platforms unless they make a significant shift “from an organizational culture chiefly focused on full-time beneficiary care in fixed facilities and part-time combat casualty care—the ‘HMO that goes to war’—toward an organizational culture that treats battlefield medical readiness as its essential core mission.”

The conflicting views about the purpose of the MHS and the questions about its success in meeting any purpose at all largely explain the sterility of the annual “TRICARE reform” debate, of which we are both grizzled veterans. The Surgeons General, cognizant of the need for more patient volume at MTFs and especially covetous of specialty cases, understandably want TRICARE to drive patients into the military-run facilities. They advocate, accordingly, for no copayments or fees for the use of MTFs and are solicitous of proposals to increase cost-sharing in the purchased care sector. They are also interested in ways that the MTFs can serve patients in civilian medical networks and in the Veterans Affairs system, both potentially rich sources of patients. By contrast, would-be modernizers largely want to increase reliance on the purchased care sector while increasing patient cost-sharing, all in the hopes of constraining utilization, which is far higher at MTFs than in the civilian health care market. Invariably, these unreconciled and irreconcilable views lead to recriminations and finger-pointing, as reform efforts each year are reduced to a false choice between the status quo and placing more costs on servicemembers and their families.

There are more fruitful ways to improve the MHS, ways that would both enhance readiness and improve beneficiary care. For readiness, two steps are necessary. First, the Department of Defense needs to define the essential medical capabilities that it must always sustain for combat success. We believe that this category is not simply defined by the type of cases that arise in a deployed environment. After all, eczema, heatstroke, and the flu are more common than gunshot wounds, even in serious conflict. Rather, as in a classic make-or-buy decision, the essential capabilities are those that cannot be easily purchased or developed outside the military. Examples might include trauma surgery, prehospital care, burn care, prosthetic expertise, and medical logistics. For these disciplines, extraordinary effort must be made to maintain and extend the prowess developed by the MHS over the last decade. It is entirely possible that this can be (at least partially) accomplished at the five or six largest MTFs.

Second, to the extent that even large MTFs cannot provide these essential medical capabilities at the scale needed for combat operations, the Department of Defense must partner with leading civilian trauma centers to both place active-duty doctors in high-volume settings and to recruit medical reservists, which will require more flexibility and innovation in the use of the reserve component. This is all consonant with a proposal made earlier this year by the National Academy of Sciences, which explicitly called for integration of military and civilian trauma in which the predominant training experience would occur in large tertiary hospitals and trauma centers where the necessary case severity and workload reside. The National Academy warns that a failure to heed its recommendation may see a rise in avoidable death rates and amputations in the next war, just as we sadly experienced in the early years of the Iraq deployment, where it is estimated that approximately 1,000 combat deaths were preventable. (As Gen. Peter Chiarelli has mordantly observed, it is far better for the soldier to sustain a casualty in year five than year one of a war.) The good news is that the military services are already doing some of this. Army medicine has teamed with a trauma center in Miami, the Air Force has partnered with trauma centers in Baltimore, Cincinnati, and St. Louis, and the Navy has worked with a trauma center in Los Angeles. We just need to copy our own successes.

Yet if most MTFs are formally sidelined from the readiness mission, only a handful can remain. Once the readiness and beneficiary missions are separated, the advantages of the purchased care sector are just too powerful to ignore. In some markets, the MHS should partner with leading civilian institutions to build a comprehensive and regional health system that embraces information technology, digital health, and the most current care modalities to keep pace with emerging reforms in the civilian health delivery system. In many places, though, MTFs should be closed down or converted to outpatient clinics. In some ways, this is really just an acceleration on the tack the Department of Defense has pursued for the past 30 years by closing down over 75 hospitals in those markets where existing community resources could absorb the provision of care. Whole new models of collaboration might even serendipitously develop. The administration for MTFs might be, at least in some places, be put under civilian management; Senator John McCain has suggested as much.  Already, health care at Fort Drum is provisioned entirely by a private community health center partially staffed by military physicians. The cooperation of Congress will be particularly important in these efforts.

Even with these reforms, the MHS will struggle, as the natural fissure within a dichotomous in-house/outsourced delivery system is a barrier to care integration. Under its current contracts, the Department of Defense is not able to monitor the civilian network for safety and quality, and MTF primary care managers do not fully capture patient care delivered outside its facilities. More broadly, given the high fixed costs of direct care, there is a fundamental tension at work. An MTF can try to find innovative ways to increase its workload, which improves the readiness mission. Or, an MTF could try to better manage utilization, which could lead the MTF to become a victim of its own success as there would be fewer patients over which to amortize its capital investment. In any event, the goal of more patient volume at MTFs is likely to prove illusory.

As medical technology continues to advance, the delivery of care will be distributed away from the hospital and the clinic, perhaps to emerging real time or asynchronous communication platforms that avoid the need for office visits all together. Under the Affordable Care Act and recent commercial health insurance reforms, providers are increasingly encouraged to absorb financial risk for the health of their patients. In the near future, value-based payment models will leave providers with little option. Gone are the days when utilization was a source of revenue. Partially or fully capitated plans treat utilization as a cost, with facility revenue and physician compensation tied to reductions in expenditures under quality metrics that improve patient care. Providers are facing pressure to form integrated care systems co-managed by a team of providers charged with whole population management. Geisinger, Intermountain Health, and Kaiser Permanente exemplify the promise of these new models. All three systems are vertically integrated. They own their own health plan, hospitals, clinics, and physician groups, and they have developed their own health information technology systems to enable better care coordination and disease management. This is the “Triple Aim”: lower unit costs, better outcomes, and better patient experience. With its employed physician model and expensive infrastructure, MHS is not aligned with these developments and will find it increasingly difficult, if not impossible, to balance workload, quality, and cost.


This year, both the Senate’s and the House of Representative’s versions of the National Defense Authorization Act propose a restructuring of the MHS. Some of these changes include consolidation of TRICARE plans, expanding the range of telehealth services, and simplifying MHS governance by empowering the Defense Health Agency. These are laudable steps, but they do not go far enough.

The next secretary of defense needs to do more to modernize the MHS. The ideas we articulate here would save money — probably a lot of money. More importantly, though, they will save lives. The MHS has too much infrastructure, the wrong mix of providers, and predominantly serves the needs of beneficiaries who could easily have their health care needs satisfied by civilian providers at far less cost and with equal or better quality. It won’t be easy to make these changes, of course. MHS governance is fractured by parochial allegiances, constant staffing turnover, and a penchant for inertia, all of which inhibit a shared effort to address institutional challenges. Moreover, health care is fiendishly complex, and people without a background in health care— basically, the entire cadre of Pentagon senior officials — can easily be intimidated into inaction. Yet hope can be found from the recent example of Secretary Robert Gates.

In 2009, Secretary Gates mandated the “golden hour policy,” despite resistance from the Pentagon bureaucracy. The new policy required helicopter transport of critically injured service members from the battlefield to a hospital in 60 minutes or less. Prior to this mandate, the military’s goal was twice that — two hours from call to hospital arrival. Gates directed that helicopters previously set aside for rescuing downed pilots be reassigned to medical evacuation, because not a single fighter jet or bomber had been shot down in the war. The controversial policy proved to be an extraordinary success. Gates’ unilateral action has been credited with saving more than 350 lives.

Great leadership requires moral courage — an ability to make decisions inside a politically charged environment when outcomes are uncertain and facts are ambiguous. It is this quality that separates a McClellan from a Grant. Reform of the MHS might seem too banal to justify such lofty talk, but Gates showed otherwise, demonstrating how the effects of E-ring decisions can be measured in lives, just like decisions made on the battlefield. Without the personal backing of the secretary of defense, the needed changes to the MHS will never arrive. The size and scope of the medical system means that secretary cannot definitively rebut the invariable objections that the bureaucracy will lodge. “There is no problem,” some will say. “The solution won’t work,” others will argue. “What you propose is actually counter-productive,” still more will add. These are the three stages of bureaucratic grief. They can paralyze many. The next secretary must have the moral courage to avoid indecision.


Brad Carson served as acting Undersecretary of Defense for Personnel and Readiness from 2015-2016. Previously, he was Under Secretary of the Army and General Counsel of the Army. He also was a U.S. Congressman. He is a veteran of Operation Iraqi Freedom. He can be contacted at

Morgan Plummer departed the Obama administration after serving on the immediate staffs of the Under Secretary of Defense for Personnel and Readiness, Under Secretary of the Army, and Deputy Secretary of Defense. Prior to that, he served more than ten years on active duty in the U.S. Army. He can be contacted at

Image: U.S. Army photo by Lori Newman