Exhibit II-18 (Cont'd) SAVINGS ESTIMATE IB. Outpatient Direct Care establish charge at direct care facilities for retiree and dependent beneficiaries ($10 per visit with $100 annual maximum per person). Estimated visits in FY 1983 1/ Less 40% to eliminate the impact Relevant visits 51,892,220 x 0.6 31,135,332 X $10 Multiply by $10 per visit Potential savings $311, 353, 320 Reduce by 25% to allow for impact of of x 0.75 $233,514,990 1/ 2/ Sample quarter from "Department of Defense - Selected Medical Care Statistics" shows active duty participation at 39 percent. 25 percent is an assumption. There are over 7 million Exhibit II-18 (Cont'd) SAVINGS ESTIMATE IIA. Inpatient CHAMPUS change inpatient care co-payment to $12 per day or $50 per admission, whichever is greater, for dependents of active duty personnel. Note: is $6.30 per day Additional savings would result from increasing the $25 minimum admission charge to $50. IIB. Inpatient Direct Care Change current inpatient care co-payment at direct care facilities to $12 per day or $50 per admission, whichever is greater, for all dependent beneficiaries and retirees. Total revenue from increased co-payments (IIB.1 + IIB.2 + IIB.3) 3/ It is assumed that participation by active duty members is approximately 40 percent; participation by retirees is approximately 20 percent. Of the 20 percent participation by retirees, it is estimated that 7 percent represents officer retirees and 13 percent represents enlisted retirees (based on 1982 DOD personnel data, which indicate that approximately 35 percent of total retirees are officer retirees and 65 percent enlisted retirees). II. ISSUE AND RECOMMENDATION SUMMARIES (CONT'D) D. HEALTH ISSUES (CONT'D) OSD 31: UNIFORMED SERVICES UNIVERSITY OF THE HEALTH Summary Recommendation The Department of Defense (DOD) should discontinue operation of the Uniformed Services University of the Health Sciences (USUHS) because it cannot be justified as a cost-effective and practical source of physicians for the military services. Financial Impact $34.5 million annually Potential Savings: Closing USUHS Background USUHS was established in 1972 by P.L. 92-426. University business is conducted by a Board of Regents consisting of nine civilians who are appointed by the President and approved by the Senate. The Secretary of Defense, the three Surgeons General, and the Dean of the University (appointed by the Board) serve as ex officio members of the Board. Funds for operation are appropriated in the DOD budget. The FY 1983 budgeted cost is approximately $46 million. USUHS began operation in 1976, and the first class graduated in 1980. There were 32 graduates in 1980, 68 in 1981, and 108 in 1982. Projections are for 124 graduates in 1983, 130 in 1984, and 156 per year from 1985 through 1991. USUHS provides less than 10 percent of the military's required physicians. During FY 1978 budget discussions, a decision was made to close USUHS. This action was initiated by the Office of Management and Budget (OMB) and was somewhat reluctantly supported by the Assistant Secretary of Defense for Health Affairs. This decision was reversed through the combined efforts of the Congress and the services (Surgeons General). Congress was concerned that a decision had been made to close USUHS without its consultation or an exhaustive study of the situation. Hearings on the issue were conducted by the House Armed Services Committee. Methodology The Office of the Secretary of Defense (OSD) Task Force conducted interviews with DOD officials regarding the operation of the University and alternative methods of training and obtaining physicians. Documents were obtained on health care education program costs, and budgets were extracted from the 1983 Medical Operations Budget Request. Findings The per physician cost to DOD of USUHS physicians is approximately four times that of physicians obtained from the Health Professions Scholarship Program (HPSP), the primary source of physicians for the military. The arguments which have been used to justify continuation of USUHS are higher retention rates of USUHS-trained physicians and unique skills attainment. However, it does not appear to |