Converting from Military to Civilian

THE MILITARY HEALTH SYSTEM IS IN THE MIDDLE OF A TRANSFORMATIONAL PROCESS OF CONVERTING A NUMBER OF MILITARY HEALTH CARE POSITIONS TO CIVILIAN.

The Military Health System (MHS) provides health support for the full range of military operations and for military servicemembers and their families, military retirees, retiree family members and survivors. The Defense Health Program (DHP) appropriation supports worldwide medical and dental services to eligible beneficiaries, veterinary services, medical command headquarters, graduate medical education and other training of medical personnel, and occupational and industrial health care. The DHP appropriation supports operations of 70 inpatient facilities, 409 medical clinics, 417 dental clinics and 259 veterinary clinics, and funds multiple TRICARE contracts that augment health care delivery.

In fiscal year 2005, MHS employed approximately 42,400 federal civilian employee full-time equivalents whose costs were funded by the DHP. MHS also employed about 90,000 military medical, dental and support personnel. The cost of these military personnel who support DHP-funded activities is funded by each military department’s military personnel appropriation.

In December 2003, DoD directed the military departments to convert certain targeted numbers of military positions, including some health care positions, to federal civilian or contract positions based on evaluations that showed many military personnel were being used to accomplish work tasks that were not military-essential and could be performed more cost efficiently by civilians. According to DoD officials, the conversion process began in late 2003/early 2004 with the creation of a task force, chaired by the Director of Office of Program Analysis and Evaluation (PA&E), including members from offices of the Assistant Secretary of Defense for Health Affairs and the surgeons general for the Air Force, Army and Navy, to identify military medical and dental positions that could be converted to federal civilian or contract positions.

The task force examined 121 occupational medical and dental specialties for potential conversion. It applied a DoD medical readiness personnel sizing model to identify the baseline medical readiness personnel requirements for each military department, taking into consideration only those positions that members believed would not be required for medical readiness, would not degrade clinical capabilities, would not reduce access to medical or dental care to beneficiaries, or would not increase costs to DoD.

As the military departments began to implement the conversions, each military department reassessed the availability and affordability of civilian replacement personnel in the geographical areas where conversions were planned. Adjustments were then made to the military departments’ plans to reflect local medical commanders’ assessments.

According to officials with the offices of the surgeons general for the Air Force and Army, conversions of military health care positions in their military departments are planned to be replaced on a one-for-one basis with civilian or contract personnel. However, according to a Navy official, the Navy decided to link a reassessment of appropriate medical and dental staffing levels in its medical centers to the conversion process. This reassessment, among other things, reviewed the number and type of staffing required to meet clinical productivity goals and quality standards. The Navy concluded that there was no need to hire civilian personnel replacements for 345 of the 1,772 positions converted for fiscal year 2005 after reviewing the staff reassessment results.

THE NUMBERS

During fiscal years 2005 through 2007, the departments have converted or plan to convert a total of 5,507 military health care positions to civilian positions, representing 6.1 percent of the total DHP military personnel. Specifically, the departments converted 1,772 positions (32 percent of the total planned conversions) in fiscal year 2005, 1,645 positions (30 percent) in fiscal year 2006, and plan to convert 2,090 positions (38 percent) in fiscal year 2007.

The Navy is the most significantly affected of the three military departments by the military to civilian conversions. The Navy has converted or plans to convert 2,676 military health care positions, representing 49 percent of the total positions converted or planned for conversion in DoD. In addition, the Navy was the only department that converted positions in fiscal year 2005, converting a total of 1,772 positions—32 percent of the total number of planned/converted positions. By contrast, the Air Force has converted or plans to convert 1,214 positions, or 22 percent of the total conversions, and the Army has converted or plans to convert 1,617, or 29 percent of the total conversions.

ENOUGH PEOPLE TO HIRE?

Each of the military departments has made varying degrees of progress in hiring civilian personnel to fill military health care positions. According to military department officials, the Air Force ceased hiring actions to fill its fiscal year 2006 converted positions in January 2006 and the Army in February 2006 after enactment of the National Defense Authorization Act for fiscal year 2006. However, their experiences to date suggest they have not encountered significant difficulties hiring civilian personnel to fill converted positions.

Of the three departments, the Navy has the most experience hiring civilian replacements, filling two-thirds of the positions it converted in fiscal year 2005. According to a Navy official, the Navy converted a total of 1,772 military health care positions to civilian positions for the year.

For the 1,772 conversions that it hired in fiscal year 2005, the Navy did not begin recruiting civilians to fill the converted positions until July 2005 to allow for (1) Navy military treatment facilities to assess their staffing needs, (2) military personnel to vacate the converted positions, and (3) consultations with human resource offices to develop federal civilian job announcements. Also, the Navy decided not to fill all of the military health care positions it converted. After reassessments of medical and dental staffing levels at its facilities, the Navy decided to fill only 1,361, or 77 percent, of the 1,772 converted military positions. Over a seven-month period for these 1,361 positions, the Navy had successfully recruited 907, or 67 percent, of the civilians needed, as of January 31, 2006.

A Navy official told the GAO that there had been no significant difficulties in filling such a large number of federal civilian positions within a short period of time. However, public and private employers report a limited supply of certain types of medical and dental personnel both on a national level and in certain geographical areas. In 2005, the Bureau of Labor Statistics reported that nurses were considered difficult to hire and retain by nonmilitary employers and forecast that employers will continue to compete for nursing services.

In addition, in December 2005 the Health Resources and Services Administration, an agency of the Department of Health and Human Services, reported that about 20 percent of the U.S. population lives in a primary medical care health professional shortage area. According to a Navy official, based on this information, the Navy is recruiting on a national level to hire four types of personnel—physicians, dentists, pharmacists and laboratory officers—at its various facilities. For its other types of medical and dental positions, the Navy is seeking to hire civilian personnel by targeting local markets. Also, the Navy is using various special pay provisions to allow it to compete with other employers, such as Department of Veterans Affairs’ medical centers in selected geographical areas.

Because the Air Force and Army only began converting military health care positions to civilian positions in fiscal year 2006, their experiences hiring civilians to fill converted positions are more limited than the Navy’s experience. However, as of January 2006, the Air Force had successfully recruited 149, or 37 percent, of the 401 positions converted within four months. The Army recruited 305, or 30 percent, of the 1,029 military health care positions converted within four months. Air Force and Army officials told us that they have not experienced significant difficulties in hiring civilian replacement personnel.

IS THERE A COST—AND IS IT WORTH IT?

The GAO concluded that it is unknown whether the conversion of military health care positions to civilian positions will ultimately increase or decrease costs for DoD because:

• It is uncertain what actual compensation levels will be required to successfully hire most civilian replacement personnel.

• The programming rates the departments are considering using in their certifications to Congress about the cost of the conversions to DoD do not include the full compensation costs for military personnel.

While officials in the offices of the surgeons general for the Air Force, Army and Navy believe that the military-to-civilian conversions will not increase costs, we believe it is uncertain how much it will cost to hire civilian replacement personnel for recent and planned conversions of military health care positions and whether this cost will exceed the cost for the military positions. While the military departments have made progress in hiring civilian personnel within a short time, many civilian personnel remain to be hired. As of January 31, 2006, the Navy had recruited 67 percent of the personnel it plans to hire for the conversions made in fiscal year 2005, and the Air Force and Army had recruited 37 percent and 30 percent, respectively, of the positions they converted in fiscal year 2006. However, according to DoD officials, as of March 6, 2006, the Air Force, Army and Navy had not compared the actual costs to hire these federal civilian employees with what it had cost them to employ military personnel in these positions.

While the Air Force, Army and Navy are already well under way in converting about 5,500 military health care positions to civilian positions, they are not currently in the position to know how the conversions will affect the cost to DoD. Because none of the military departments has plans to use cost data prepared by PA&E, they risk using methodologies to certify program costs that omit several significant factors, such as training, recruitment, and educational assistance.

Without ensuring that they are accounting for the full costs—both direct and indirect—of converting the military health care positions to civilian positions, the military departments will be unable to provide Congress with accurate comparative costs for their conversions. Further, Congress will be unable to judge the extent to which the military departments’ certifications are based on anticipated compensation costs for completed and future civilian hires unless the military departments include such delineations in their congressional certifications.

To ensure that the military departments account for the full costs of military health care positions converted or planned for conversion when they report to Congress, the GAO has recommended that the Secretary of Defense direct the Secretaries of the Air Force, Army and Navy to coordinate the development of their congressional certifications for military health care conversions with the PA&E in order to consider the full cost for military personnel and for federal civilian or contract replacement personnel in assessing whether anticipated costs to hire civilian replacement personnel will increase costs. It further recommended that DoD address in their congressional certifications for military health care conversions the extent to which total projected costs for hiring federal civilian or contract personnel include actual compensation costs for completed hires and anticipated compensation costs for future hires.

Although not disagreeing with the recommendation to coordinate their cost estimates with the PA&E, DoD has commented that the PA&E final report is not expected to be available before it (DoD) is to make the reports final, thus making coordination difficult.

As to the congressional certifications for the conversions, DoD believes that the recommendation is unnecessary as requirements are already in place requiring similar actions be taken. ♦

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