The U.S. Department of Defense (DoD) has increasingly confronted financial, managerial, and operational challenges in sustaining health benefits for service members and their families: for example, medical costs are projected to increase to 12 percent of DoD's total budget in 2015, from a level of 8 percent in 2007. To address these challenges, DoD is working to transform business practices within the Military Health System. As part of this effort, DoD has considered setting targets for health care utilization in its military treatment facilities (MTFs) and rewarding or penalizing MTFs according to their performance. In this volume, the authors discuss the potential and limitations of using MTF utilization and costs as measures of MTF leaders' performance. Nicosia, Wynn, and Romley report the findings of (1) their qualitative review of performance assessment in the nonmilitary health care sector and (2) their quantitative analysis of how MTF utilization and cost metrics are limited by random variation in the data, and how MTF size and resource-intensive catastrophic cases affect this variation. .

"Prepared for the Office of the Secretary of Defense"--T.p. "Center for Military Health Policy Research"--T.p.

Introduction -- The context for assessing the performance of military treatment facilities -- Performance assessment in health care -- Performance assessment and MTF size -- Performance assessment and catastrophic cases -- Conclusion -- Appendix A: some statistical issues in performance assessment -- Appendix B: detailed results of benchmark analysis of MTF outcomes -- Appendix C: outpatient utilization and MTF size -- Appendix D: catastrophic hospital admissions -- Appendix E: detailed results of analysis of catastrophic hospital admissions.