Private-sector healthcare providers key to TRICARE benefits provision

[Terri, Carrie, “The US Military Health System: Promoting Readiness And Providing Health Care,” Health Affairs vol 38, no. 8: Military Health Systems, August 2019, https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2019.00239, accessed June 19, 2023, GDS-LL]

Balancing Make-And-Buy Decisions

Throughout its history, the MHS has relied upon a balance of make-and-buy decisions.3 With respect to furnishing the health care it “makes,” the MHS delivers services through its direct care system. And much like other employers, the DoD buys health care services from private-sector providers through an increasingly sophisticated system of purchased care. Both systems are described below, as they represent different complements of capabilities and resources.

Direct Care System

The cornerstone of the direct care system includes military treatment facilities, both fixed and mobile, that are owned by the government and staffed by uniformed and civilian health care professionals.3,7 The size and shape of these capabilities have shifted over time based upon requirements, including operational demands. The facilities are mostly located on military installations in areas that are densely populated by eligible beneficiaries. In FY 2018 the MHS provided direct care at 51 military hospitals and medical centers and 381 ambulatory clinics and employed over 144,000 health care professionals, split between military and DoD civilian personnel.8 Military treatment facilities offer a mix of inpatient, outpatient, emergency, and pharmacy services.

Purchased Care System

The MHS supplements the military treatment facilities’ capabilities with care purchased from the private sector through provider networks established and managed by contractors known as third-party administrators.3,7,14 The DoD relies upon the TRICARE network to provide most ongoing health care services for active duty dependents, as well as retirees and their dependents. For active duty beneficiaries the DoD purchases care from the private sector only when necessary to supplement military treatment facility capacity (for example, when active duty personnel at these facilities are deployed and capacity may be diminished). Below we outline how the purchased care system evolved and has shaped the MHS’s objectives and policies.