**Excludes applications from volunteers just entering the armed forces, as the services generally do not place these physicians in training programs as a first assignment.

While some applicants may not be of adequate quality, the
numbers involved appear to be small; one source for the
above data indicated the figure is about 10%. Thus,
there is a large excess of qualified applicants. Given this
excess of applicants, consideration should be given to
eliminating special pay for physicians in residency train-
ing. (Even without special pay, military residents' com-
pensation would be close to 50% above that received by
their civilian counterparts.)

The policy of permitting most scholarship recipients to
complete residency training not only fails to direct
physician workload capability to the near-term years
when it is most needed; it also increases the cost per
obligated year of service obtained because it increases the
time between scholarship outlay and .eceipt of payback
service. As noted in the discussion of policy on scholar-
ship length, increasing this time increases real costs
because of the implicit interest cost legitimately charged
against the initial outlay. Again, DOD should provide a
quantitative analysis justifying the policy of widespread

granting of residency deferral, examining both the cost and the supply of physicians at the time service will be obtained.

IV-B-3-d.

Use of 45-Day Active Duty Period

Most medical scholarship holders are spending their 45 days of active duty at their school, rather than at a military facility.

(Source: Data provided by the three services)

This large number on active duty at school may result from
several factors. For one, it is less costly to stay at
school, as
as travel and per diem need not be paid. Second,
some students are in school year round. Third, the Army
and the Air Force, but not the Navy, have a policy of
allowing students to remain at their schools for active
duty if the student is involved in a research project or
some other special activity. Finally, programs of useful
activity for the 45-day tour are still under development.

Serious consideration should be given to bringing more medical scholarship students to active duty at a military facility for training and exposure to a military environment. They should be able to contribute to useful work at a health care facility, doing the sorts of work medical students often do in summer jobs.

IV-B-3-e.

Allocation of Scholarships Among Professions

The three services have some discretion in the allocation of their scholarships among the health professions. As of October 1975 (the date of the most recent status report) the percentage distribution of each service's scholarship holders was:

In contrast, the planned DOD-wide allocation was

(Source: Data in annual status report, Office of Assistant Secretary of Defense for Health Affairs)

In view of the clear evidence that recruitment and retention of physicians is much more difficult than that of dentists, the Army and Navy action in switching scholarships from medicine to dentistry seems unwise. Indeed, the Navy has the greatest percentage of dental scholarships but is not expected to accept dental volunteers. To join the Navy as a dentist, one has to sign on for a reserve commission while in dental school. The Navy's distribution of scholarships does not appear to be an effective use of resources. The Air Force, on the other hand, has switched scholarships from dentistry to medicine, an appropriate response to the relative ease of obtaining the needed numbers of dental personnel.

IV-B-4.

Uniformed Services University of the Health Sciences The Uniformed Services University of the Health Sciences was authorized by the same legislation as was the scholarship program. A medical school, graduating on the order of 175 students a year, is intended to be the centerpiece of

the University. Graduates of the school will have a sevenyear service obligation. Because of its relatively small number of students, this school will have a much smaller effect on the number of DOD physicians than either direct recruiting or the scholarship program. The latter will remain the dominant program for sponsored education.

The medical school will be a relatively expensive method
of obtaining physicians. Comparing it with the scholar-
ship program, a March 1976 GAO study* estimated a cost to the
military of $37,000 for four years of medical education
under the scholarship program versus $190,000 per graduate
for the medical school.

IV-B-5.

Economizing in the Use of Physicians

DOD has done relatively little in economizing on the use of
physicians in administrative positions. Except in the Navy,
there are few non-physician directors of health care faci-
lities. As of summer 1976, the DOD situation was as
follows:

(Source: Data provided by the three services)

Cost-Effectiveness Analysis of Two Military Physician
Procurement Programs: The Scholarship Program and the
University Program.

On the other hand, the military has pioneered in the use of ancillary personnel in health care delivery, thereby reducing the number of physicians needed in that activity.

A more systematic analysis of the possibilities for economizing in the use of physicians and dentists, together with proposals, appears in Chapter VII, Section D.

IV-C.

DOD's Perception of its Physician Staffing Situation The independent analysis of DOD's physician staffing situation is now complete. The agency's analysis of its physician staffing situation at the time VIP legislation was under consideration and comments on that perception follow.

In official statements* to congressional committees about the then proposed physicians' bonus pay legislation, the Department of Defense in late 1973 stated the existence of the following problems:

1.

2.

3.

4.

5.

A "vast disparity between earnings of young military
physicians and young civilian physicians.

"

An expected shortfall in physician manpower of 30
percent by FY 1978.

Extremely low retention rates of draft-produced
physician accessions (Berry planners and draftees).

Losses among senior physicians who conduct specialty
training programs that have already begun to produce
a degradation of the training programs. These train-
ing programs are stated to have been the most valuable
retention device and almost the sole source of career
medical officers.

Small numbers of identified physician accessions in
the second half of the 1970s and the early 1980s
as draftees and Berry planners decrease in numbers
while products of the scholarship program and uni-
formed services medical school are not yet available.

Documents referred to with respect to the list of problems
are letter of November 27, 1973, DOD Under Secretary
Clements to Senator Stennis, Chairman, Armed Services
Committee; letters of November 29 and November 30, 1973,
Acting DOD General Counsel Niederlenheimer to Senator Stennis
and to Representative Hebert, Chairmen, Armed Services
Committees; and statement of December 13, 1973, by Richard
Wilbur, formerly DOD Assistant Secretary for Health and
Environment to Senate Armed Services Committee.