Health Economic Capacity Program to Maximize the Military Health System (MHS) Budgetary “Bang for its Buck”


In the years to come the Military Health System (MHS) will be changing as is the health systems within the US in general. The MHS will be struggling to reduce the increasing burden of disease within its population, particularly among the military dependents and the retirees, while containing healthcare costs. The MHS budget of $54 billion for FY 2012, supports the physical and mental health of 9.7 million beneficiaries worldwide and has increased by 16% from 2009. It is projected that the MHS budget will reach about $95 billion by 2030.

While the US spends about 17% of its Gross Domestic Product (GDP) in healthcare, a e recent report, Shorter Lives, Poorer Health, by the Institute of Medicine (IOM) comparing US health status and indicators to those of 16 “high-income” peer countries describes that Americans live shorter lives and experience more injuries and illnesses compared to individuals in these other high-income countries. These problems in the US health status range across all age groups and all sub-populations. A surprising finding from this report is that even highly advantaged Americans such as those with high incomes and are white may experience worse health outcomes compared to their counterparts in these other countries high income countries. Some of the main drivers of these differences in health outcomes between the US and these other high income countries such as obesity, injuries, psychological health, diabetes, heart diseases and chronic lung diseases are also prevalent in the MHS. For instance, the prevalence of smoking in military service members is about 30%, compared to approximately 19% in the general US population. Rates of obesity are also increasing in the MHS with an estimated obesity prevalence of 20% in MHS beneficiaries 40 to 49 years old.

We propose several innovative approaches to using existing MHS Data Repository (MDR) and supplemental data to inform health policy and practice. . This proposal builds strongly on the key priorities that senior MHS leadership has identified in the 2012 stakeholder report, specifically the quadruple aims of readiness, population health, experience of care and per capita cost. Specific examples of focus areas within each aim are listed below.

  1. Readiness: a. Psychological health: b. Casualty care
  2. Population of health: a. Smoking b. Obesity c. Clinical preventive services
  3. Experience of care: a. Screening rates for low density lipoproteins (LDL) in beneficiaries with cardiovascular disease (CVD) b. Screening rates for hemoglobin A1C in beneficiaries with diabetes mellitus c. Readmission rates for beneficiaries with congestive heart failure, coronary artery disease and chronic obstructive pulmonary disease
  4. Per capita cost: a. Emergency room utilization Metrics estimated for each of these areas of interest include incidence, prevalence, healthcare utilization and cost of care per case per year by region and MTF catchment area, staffing and specialty mix per case and variations in staffing and mix of specialists. We propose to initially target the Evaluation of Tobacco Cessation Guidelines as illustrative of our technique and procedures. In this one-year pilot proposal, we will first determine the economic and epidemiologic burdens of tobacco use by the military population. We will stratify this analysis by race, military rank, and different catchment areas. The focus will be on estimating the cost-benefit and cost-effectiveness of MHS smoking cessation programs. We plan to use MDR data to estimate the burden of disease related to tobacco. Then we will work with service public health agencies to obtain the distribution, staffing and funding of health promotion activities for tobacco cessation. We can then evaluate current smoking cessation programs in terms of availability and effectiveness. These results can directly inform practical business and system decisions to contain cost of tobacco-related illness care within the MHS. Therefore we will identify the needed metrics for appropriate evaluation and implement their collection in several large military facilities.
    Specific deliverables will be as follows:
  5. Determine the burden of disease in terms of prevalence, incidence, and associated health services utilization
  6. Estimate the economic burden or medical cost of care for the most prevalent conditions within the MHS
  7. Estimate the economic burden of the most prevalent conditions by regions, catchment areas or MTFs
  8. Estimate the staffing specialty mix by regions, catchment areas, MTFs and conditions
  9. Use economic modeling to optimize TRICARE benefits to incentivize direct purchase care and minimize purchased care
    There will be practical policy and programmatic applications from this health economic capacity that will allow the MHS to make sound business decisions such as the reduction of variation in health care costs by region and disease, manage health provider staffing and cost effective measures to reduce inflation of TRICARE costs.

The project budget for this analysis is

  1. $250,000 for the pilot project for 12 months to include 2 full time equivalents, supplies and travel
  2. $550,000/annually for three years to complete the additional aims to include 4 (2 additional from the pilot) full time equivalents, supplies and travel.

It is projected that cost avoidance (savings) from the pilot project will be in the range of $8 million to $12 million annually, secondary to a reduction in the prevalence of smoking and associated diseases, representing a return on investment (ROI) of about 46.

It is also conservatively projected that costs avoidance (savings) from the main project will be in the range of $27 million to $32 million. Much of these savings will come from redirecting beneficiaries from using expensive outpatient and inpatient services in the purchased care system to the direct care system. This would represent an estimated ROI of about 20.

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