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DoD to begin next major phase of military hospital consolidation

Lt. Col. Juli Fung-Hayes (center), a U.S. Army Reserve emergency medicine physician with the 2nd Medical Brigade, leads a medic team from the 396th Combat Support Hospital, headquartered at Fairchild Air Force Base, Washington, through a trauma and critical care scenario in a field hospital during a promotional photo shoot for Army Reserve marketing and recruiting at Fort Hunter Liggett, California, July 18, 2018. (U.S. Army Reserve photo by Master Sgt. Michel Sauret) Lt. Col. Juli Fung-Hayes (center), a U.S. Army Reserve emergency medicine physician with the 2nd Medical Brigade, leads a medic team from the 396th Combat Support Hospital, headquartered at Fairchild Air Force Base, Washington, through a trauma and critical care scenario in a field hospital during a promotional photo shoot for Army Reserve marketing and recruiting at Fort Hunter Liggett, California, July 18, 2018. (U.S. Army Reserve photo by Master Sgt. Michel Sauret)

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Military Health System Transformation | Defense Health Agency

FALLS CHURCH, Va. -- The Department of Defense is preparing for the next major step in consolidating military hospitals and clinics under a single agency, one of the largest organizational changes within the U.S. military in decades.

On Oct. 1, the Army, Navy and Air Force begin the final two years of a multi-year transition to shift administration and management of their medical facilities to the Defense Health Agency by October 2021, changes that are "transformational and far-reaching," said Navy Vice Adm. Raquel Bono, the DHA Director (Retiring Navy Vice Adm. Bono is the former DHA director. Army Lt. Gen. Place assumed command as DHA Director Sept. 3, 2019)

 "For the first time in our modern military's history, a single agency, the DHA, will be responsible for all the health care the Department of Defense delivers to our 9.5 million beneficiaries," Bono said. "Whether you receive your care at an on-base facility or through our TRICARE civilian networks, DHA will oversee your care.  This consolidation will drive higher levels of readiness for operational and medical forces and integrate health care services to standardize practices across the entire Department, which means patients will have a consistent, high-quality health care experience, no matter where they receive their care."

The primary driver for this change is the National Defense Authorization Act of 2017. Congress mandated that a single agency will be responsible for the administration and management of all military hospitals and clinics to sustain and improve operational medical force readiness and the medical readiness of military members, improve beneficiaries' access to care and experience of care, improve health outcomes, and eliminate redundancies in medical costs and overhead across three separate Service-run systems.  DHA will be responsible for health care delivery and business operations across the Military Health System including budgets, information technology, health care administration and management, administrative policies and procedures, and military medical construction.

Bono said that even though congressional directives mandate this change, "it's the right thing to do."

"We have more than 40 years of independent studies and internal reviews that demonstrate the current structure of the Military Health System is unsustainable," she said.  "What makes us unique from other health systems is that we are heavily embedded with combat forces around the world focused on operational medical readiness and the health of our warfighters. The transformational changes underway will improve that focus, support the DoD's priority for a more lethal force, and improve our ability to deliver high quality health care to all of our beneficiaries. Improving medical readiness is the key driver of the overall effort."

During this transition, the quality of care won't change for beneficiaries of the Military Health System. More important, Bono said, is that over time, it will improve that care by enabling changes to improve access, patient experience, and outcomes.

"Ultimately, what this transition means for all of us in the Department of Defense is a more integrated, efficient and effective system of readiness and health, and integration of health care services that leads to a more standardized and consistent experience of care for patients," Bono said. "Central to that is having one agency oversee MTF operations while supporting the Services' effort to focus more on readiness."

Since October 2018, the DHA has been operating eight hospitals and clinics as part of the first phase of what was at first a four-year transition period. In June, the overall timeline adjusted to three years to reduce the amount of duplicative management by the Military Departments and the DHA, said Dr. Barclay Butler, the DHA's assistant director for management and MTF transition head.  "The primary driver of that is to measurably and precisely coordinate the reduction of the Military Services' Medical Department support and oversight of the MTFs to the DHA," Butler said. "We want to create a simple and clear transfer of authority that positively impacts healthcare for our patients."

From Oct. 1 of this year through October 2021, the transition will focus on four primary objectives:

  • Centralized administration and management: On Oct. 1, all hospitals and clinics in the continental United States transition to the DHA, with the Army, Navy and Air Force medical departments maintaining a direct support role. Butler said this means that while DHA assumes overall management, the existing intermediate commands of the Military Departments will continue management duties until the transfer is complete to ensure uninterrupted medical readiness operations and patient care. The Military Departments and the DHA are currently working out final plans to maintain continuity of operations.
  • Establish Health Care Markets:  At the center of the reorganization is the creation of health care markets. The DHA will stand up 21 large markets during the transition period to manage MTFs in local areas. A market is a group of MTFs in a geographic area - typically anchored by a large hospital or medical center - that operate as a system sharing patients, providers, functions, and budgets across facilities to improve the coordination and delivery of health care services. "These markets are really key to the entire reorganization," Butler said.  "Market offices will provide centralized, day-to-day management and support to all MTFs within each market."  Readiness support is at the heart of a market's responsibilities, Butler added, and they will ensure the clinical competency of all MTF providers within the market. The 21 large markets will collectively manage 246 medical facilities and centers of excellence. 
  • Establishment of a Small Market and Stand-Alone MTF Organization: For stateside hospitals and clinics not aligned to a large market, this office, referred to as SSO, will provide managerial and clinical oversight. As with the large markets, the Military Departments will continue managing the MTFs until they are realigned under the SSO. There are 16 small market MTFs and 66 stand-alone MTFs assigned to the SSO.
  • Establish Defense Health Regions overseas:  The transition period for standing up Defense Health Regions in Europe and Indo-Pacific begins in 2020.  All MTFs overseas would then report to their respective DHA regional offices. The Indo-Pacific region has 43 MTFs, while the European region has 31.

(For a complete list of markets and their assigned MTFs, go to the MHS Transformation web page at

"Change can be challenging, and this is a complex transition," Butler said. "We will see changes in reporting relationships and communication channels while instituting standardized clinical policies and procedures and business practices. We place a premium on communicating often as we move through this together with the Military Departments."

Bono said that from a patient perspective, these changes should be transparent. "Our patients expect the same high quality care regardless of who is in charge. Doctors, nurses, and technicians will continue to focus on practicing medicine and improving their skills and readiness. In the end, this really is about the patient - integrating into one system will improve readiness for our medical professionals and result in better care and better health outcomes for our patients."

For more on the DoD's medical reorganization, go to the military health web site at for fact sheets, an informational video, and more articles.

About the Defense Health Agency (DHA)

The DHA, established on Oct 1, 2013, is the nation's military medical Combat Support Agency, a joint, integrated organization that enables the Army, Navy, and Air Force medical services to provide a medically ready force and ready medical force to Combatant Commands in both peacetime and wartime. In cooperation with the Joint Staff Surgeon and Military Department medical organizations, DHA leads the Department of Defense’s integrated system of readiness and health through a global health care network of military and civilian medical professionals, including nearly 450 military hospitals and clinics around the world, to improve and sustain operational medical force readiness and the medical readiness of the Armed Forces.  The DHA supports the delivery of integrated, affordable, and high-quality health services for 9.5 million active duty service members, retirees, Reservists and Guardsmen, and their families at military hospitals and clinics or through the TRICARE network.

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Continuing Implementation of the Reform of the Military Health System


This memorandum directs the continued implementation of the Military Health System (MHS) organizational reform required by 10 U.S.C. § 1073c, and sections 71 land 712 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019. The DoD policy for this reform is guided by the goals of improved readiness, better health, better care, and lower cost. The Department will advance these objectives through specific organizational reforms directed by Congress and the continued direction of the Secretary of Defense·anct the National Defense Strategy.

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