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New Defense Health Agency Works Cost Savings into Medical Supplies

  • Published
  • By Dana Crudo
  • Health.mil
FALLS CHURCH, Va., --  Military Health System leaders have established a medical logistics division within the new Defense Health Agency with the goal of having the most efficient global supply chain in government.

As of Oct. 1, the Defense Health Agency manages many of the administrative and shared services functions for the Army, Navy and Air Force medical departments, including health information technology, pharmacy operations and medical logistics.

"Medical logistics affects every aspect of the Military Health System mission. We knew we could achieve even greater integration, standardization and efficiency while improving customer satisfaction," said Karen Guice, principal deputy assistant secretary of defense for health affairs. "That is what we plan to do, starting with the establishment of the Medical Logistics Shared Services" division.

The new logistics division will work with the Army, Air Force and Navy to standardize and monitor the purchasing and provision of medical supplies and equipment, with an eye on efficiency and reducing costs.

As a result, military treatment centers will have less autonomy in ordering medical supplies and equipment, said Navy Capt. James 'Bernie' Poindexter, acting division chief of Medical Logistics Shared Services. Officials from the Army, Navy, Air Force and Defense Health Agency have agreed to ensure compliance with the new purchasing standards.

Poindexter and his counterparts expect to reduce spending on medical supplies, equipment and services by $189 million over five years starting in fiscal 2015.

The DHA will "harness the purchasing power of the military to find more opportunities to save," Poindexter said. "We need to deliver on the savings we projected for the Military Health System."

These DHA cost-saving goals also complement the Defense Logistics Agency's plan to produce billions of dollars in savings on all military supplies. The DLA is the combat logistics support agency for the entire Defense Department, providing nearly 100 percent of the goods that military forces need to operate such as food, fuel, uniforms and medical supplies.

The DLA plan calls for renegotiating vendor contracts to get better pricing for materials and reducing overhead costs by consolidating distribution facilities and warehouses. These steps are expected to produce major savings across the board.

DLA Director Navy Vice Adm. Mark Harnitcheck has set a goal of saving $13 billion in six years, Poindexter said. Currently, the Defense Department spends $4.5 billion annually on medical materiel through the Defense Logistics Agency.

As troops are drawn out of Afghanistan, the department will spend less on things like food and fuel. However, medical supplies will always be needed, making it all the more important to find new opportunities to achieve economies and efficiencies.

"Every health care encounter, regardless of intensity, requires some sort of medical materiel," Poindexter said. "We cannot deliver health care without it."