“Sickcare” and why the dollar, not the patient, is king

The illustrative example of the Military Health System

I won’t revisit already-trodden paths—just a quick overview to set the mood.

There exists an extensive, well-researched, and well-documented body of work showing that “healthcare”¹ in the U.S. is not at all concerned with our health. Rather, what we have is a “sickcare” system that benefits from a fee-for-service price structure. We haven’t yet figured out how to incentivize population health via some sort of fee-for-outcome mechanism; in fact, we actively promote unhealthy lifestyles like being obese-yet-malnourished shut-ins. Thus, the sickcare industry benefits from keeping us perpetually sick and always coming back for more: more surgery, more pills, more physical therapy—more billable services.

There are some businesses that seek to deliver actual healthcare. However, I will note that they are not part of the so-called “healthcare system”. Your health plans, your HMOs, your health insurance—they want nothing to do with these.

In short, I’m taking it as a given that the U.S. “healthcare system” is not about health at all; it’s about sickness and the profit to be made therefrom. It is a business with clear incentive structures and a spotty ethical track record. If you are not convinced of this, I invite you to do some more research first; I don’t intend to make the argument here.

Rather, my goal in this article is to focus on a major player in this “sickcare” business sector: the Military Health System, or MHS, administered by the Defense Health Agency, or DHA. Observant readers will recall that I have recently referred to the DHA as a tumor in military healthcare (a “DHoma”, to be specific). Here are some additional facts to support this assertion.

---

So here goes:

Exhibit A: the ASSIST Brief

This is a quarterly brief prepared by each military hospital (MTF) and presented to our DHA overlords. The brief’s agenda is set by DHA, but the contents are supplied by each individual MTF based on their local metrics.

For example, one of the mandatory agenda items may be “length of time it takes to hire a new civilian employee”. The MTF has to calculate its own average time to hire, and then to present its local metrics as they compare to DHA’s goal. In case you’re wondering, my hospital’s average time to hire was about 144 days as of December, and DHA’s target is 75 days. This means beatings for us for missing the goal, even though more than half of that 144 actually represents steps in the hiring process that are managed by DHA, not by us. Even if we had a same-day turnaround on every step of the process that we “own”, we would still miss the 75-day target, because DHA takes longer than that just to do their steps.

Our most recent ASSIST Brief was 31 slides. Of those 31:

• 4 were admin (intro / summary), so I’m not including them in the denominator

• 16 (59%) had to do with the business of healthcare (how quickly we hire new employees, how accurately we account for our time and workload, how much “revenue²” we produce, etc.)

• 9 (33%) focused on the timeliness of service or the utilization rates of our appointment mix; sort of halfway between business and actual healthcare

• 2 (7%) were about clinical metrics or healthcare quality (mishaps, hospital-acquired infections, readmission rates, etc.)

So during our primary interaction with the senior-most leaders of DHA, we spend more than half of the time talking about the business of our hospital, a third of the time talking about whether patients can get in to be seen, and 1/13th of the time talking about the quality of care we deliver.

Exhibit B: the Review and Analysis Dashboard

This is an online tool that provides “near-real-time” evaluations of select metrics in six major graded areas. They are:

• Access to Care (ability to get in for an appointment):  16 metrics / 28%

• Business Performance (revenue generated, efficiency):  7 metrics / 12%

• Resources – HR (Human Resources): not yet implemented—but in all fairness, DHA has only been around since 2013; they’ll figure it out eventually

• Resources – MEDLOG (Medical Logistics, equipment and supplies):  12 metrics / 21%

• Quality & Safety (mishaps, infections, readmissions):  9 metrics / 16%

• Outcomes (population health, disease screening):  13 metrics / 23%

So only 39% of our “report card” measures how well we actually take care of our patients. This percentage will drop when the HR metrics get added.

Exhibit C: the Statement of Operations

The SOO is a “contract” between the MTF and DHA. Through the SOO, DHA establishes the funding it will provide to that MTF; in exchange, the MTF promises to produce a certain amount of workload (provide a certain amount of healthcare to its enrolled population).

Some key points from our Fiscal Year 2024 SOO:

• We must increase our enrolled patient population by 2,569, or else our funding will be reduced in future years. Of note, official reports indicate that there are approximately 1,000 eligible patients in our service area who are not enrolled to us. Where we’re supposed to find the other 1,600 is… not specified.

• We must increase our workload in outpatient, inpatient, mental health, and minor procedures by 12% each. If we don’t, our funding will be cut next year. Of note, this is not based on any analysis of the amount of care we can deliver, or what the local patient population demands; it is a flat, across-the-board 12% mandated growth for all MTFs of comparable size to ours. You know, like that time that Apple said that each of its retail stores must increase sales in every category (iPhone, iPad, Mac, and accessories) by 12%, or else receive less inventory. And when Ford said that any dealership that didn’t sell 12% more cars this year would get fewer cars next year. This is a standard tactic used by large, successful companies all the time, and there’s nothing fallacious about setting arbitrary, across-the-board growth targets.³

• We must increase our dental workload by 14% (also a flat number applied across the board, not based on our capability or patient demand). And our funding will be cut if we don’t hit this target. Of note, we have met or exceeded our dental goals for several years in a row. “Good job knocking it out of the park and squeezing every bit of workload possible out of your patient population! Now do 14% more, or else.”

• We currently average 202 surgeries per month; we must increase this number to 375 per month. Again, a flat “surgeries per OR per day” goal applied evenly to all MTFs, with no consideration of what our staff can do or what our patients demand. And again, the axe poised over our funding for next year. We’re still scratching our heads trying to figure out how we’re going to nearly double the number of our patients who need surgery. I’m considering gently tapping pedestrians in our hospital’s parking lot with my car—this ought to drive up business!⁴

• Did I mention that if we don’t meet these goals, our funding will be cut? It’s a bit like saying: “you’re not killing enough of the enemy, so we are going to give you less ammunition”.

But at least if our workload is expected to grow, this means that our staffing will grow—right? I mean, surely DHA recognizes that if we are to produce more, we will need more staff to do it with?

Well…

Exhibit D: the Joint Table of Distribution

The JTD is a document that establishes DHA’s manpower needs. It forms the basis for staffing; every civilian we hire, every Army / Navy / Air Force medic we send to Basic Training, every doctor and every dentist and every nurse—they all occupy a position in the JTD.

So what does DHA’s JTD tell us? Surely it’s going to show growth in our numbers inside the hospital—that’s how we’re going to generate the 12% year-over-year growth that our SOO mandates.

DHA manning levels over the last 3.5 years. NOTE: MTF manning for 2020 not available.

“DHA” refers to DHA headquarters: the senior executives running the show, their support staffs, and the army of analysts and consultants that monitor performance and generate policy. You know, like that wonderfully coherent DoD policy on transgender servicemembers.

“Markets” refers to the intermediate management structure; this is the level between DHA HQ and the individual hospitals. It makes sure that the people up at DHA don’t have to work too hard. The Markets actually manage the MTFs.⁵

Finally, “MTFs” shows the staffing of the hospitals themselves.

It certainly does look like hospital staffing has grown. But it might be more informative to look at all of this in percentage terms.

So what we’re seeing is that the Markets took a serious hit (-27%) to their manning in 2021. They’ve remained more or less stable since then.

DHA HQ, on the other hand, grew by an obscene 76% in 2022, and then another 6.5% in 2023.

The MTFs gained 10.6% in 2022, and then an anemic 3.2% in 2023.

(And no, the drop in the Markets’ manning is not what drove the growth in DHA HQ—it wasn’t a simple transfer of managers from Markets to the HQ. The Markets lost 530 positions in 2021, but DHA HQ gained 4,038 in ‘22—almost exactly the amount by which all military hospitals put together grew in 2023).

Unfortunately, DHA stopped publishing its JTD after October 2023, even though they had been publishing it every month for years. I can’t tell you why they stopped; I’m sure it has nothing to do with the glaring waste this exposes to anyone who bothers to look. But I can tell you for a fact that our hospital isn’t growing by 12-14%, commensurate with our increased workload targets. Military positions are in a zero-growth environment right now (Congress has not authorized an increase in force size), and civilian positions are actually decreasing. Due to a lack of funding for civilian hiring.

Exhibit E: the continuing story of our Hyperbaric Medicine Clinic

Some readers may recall my earlier article about a horrifically wasteful administrative hoop we’re having to jump through in order to keep providing a potentially lifesaving service to the local community.

Update: DHA lawyers have objected to our request. The primary objection is that some patients may not have health insurance, or might be otherwise unable to pay.

Please note that the law doesn’t actually require us to collect payment (see the referenced article for details)—it only requires us to bill the patient. Some of these billings will not lead to payment; the patient may be uninsured or even indigent, and thus unable to pay. This is normal, and happens all the time.

However, because we can’t guarantee that we will always make a profit from providing the treatment, DHA’s lawyers don’t want us to keep treating local civilians—even though no other local hospital can provide the same treatment.

Exhibit F: administrative overhead

One of the metrics we report in our ASSIST Brief is our administrative overhead. That is to say, the percent of our personnel who spend time doing something other than patient care: administrators, managers, clerks, secretaries, executives, analysts, supply, maintenance, housekeeping, etc. Our hospital’s admin overhead is 20.4%; DHA’s goal is 25% or less. Anything over 28% is considered unacceptably admin-heavy. Some MTFs are in the 50% range.

So our hospital is actually much more efficient than the average MTF, and far exceeds DHA’s efficiency goals.

You know who has 100% admin overhead? DHA HQ. They perform zero patient care. They do nothing but admin. And they just grew by 76%.

In fact, it may be informative to look at the MHS’s overall admin overhead ration. Compare the ratio of the sum of (DHA HQ + Markets) to the total manning of the MHS. You’ll see that it went from 5.6% in October 2021, to 7.9% in October 2022, and 8.0% in October 2023. That’s a whole lot of senior political appointees and un-fireable civil service bureaucrats, and it’s growing.

These are your tax dollars at work. At least your money is being used to deliver top-quality healthcare to the troops!

1. This used to be known as “medicine”. However, this term was considered insufficiently inclusive. Because “medicine” is identified with “physician” or “doctor of medicine”, it was exclusionary against dentists, nurses, ancillary providers, PAs, technicians, and everyone else involved in the delivery of “healthcare”. Yet another problem solved via name change!

2. “Revenue” is in quotes because we don’t actually charge most of our patients. All military and most retirees and family members are treated for free. However, we record the work we do and assign a dollar value to it based on our sub-capitated rate or the Medicare rate (don’t worry if you don’t understand these—I don’t, either). The point is, each appointment generates a certain number of Theoretical Dollars for us.

3. I’m laying it on pretty thick here… but I can’t help myself. I’m no Fortune 500 CEO, but even I know that setting arbitrary growth targets that do not take into account local market factors is a recipe for failure.

4. For the record: no, I am not actually planning to hit people with my car in order to drive up business at my hospital. We don’t do trauma surgery. If I hit someone with my car, they’ll have to be transported to a local civilian hospital. If it weren’t for that, I might…

5. Technically, the Markets have been abolished and replaced by Networks. But the JTD hasn’t been updated to reflect this fact yet, so I’m omitting it from the discussion.