In its first 150 days, the Defense Health Agency has stayed on track to meet major milestones in an unprecedented effort to streamline health care delivery and better integrate the efforts of the different military service branches, the military’s top doctor and the agency’s director said at a recent congressional hearing.

Assistant Secretary of Defense for Health Affairs Jonathan Woodson and Defense Health Agency Director Douglas Robb testified before the House Armed Services Subcommittee on Military Personnel in Washington, D.C. on Feb. 26.

Members of the committee questioned them about the new Defense Health Agency.

Members also heard from an official from the Government Accountability Office, which has been tasked to review the agency’s progress during the initial transition period.

Woodson said that he recently outlined six lines of effort in support of Secretary Hagel’s priorities for the Defense Department. These include “modernizing MHS management with an enterprise focus,” the subject of that day’s hearing.

Enter the Defense Health Agency, established on Oct. 1, 2013, which, Woodson said, “serves as a starting point” for comprehensive reform.

“We have good evidence that joint, integrated care improves results in combat,” he said, adding that the cutting-edge combat care provided by Army, Navy and Air Force military medical personnel working side-by-side during more than a dozen years of warfare paved the way for the creation of the Defense Health Agency.

“This has come about not by chance, but by designing a data-driven, integrated system focused on wounded warrior care and improving outcomes,” said Woodson.

He also underscored that the Military Health System must adapt to meet the needs of its beneficiaries in the 21st century, just as the U.S. health care system is undergoing a major transformation.

The Defense Health Agency handles many common functions for the Army, Air Force and Navy medical departments.

The first five of those common functions, or shared services, were implemented when the agency was established last year. They include the TRICARE health plan; pharmacy operations; medical logistics; health information technology; and facility planning. A sixth shared service, budget and resource management, began operations on Feb. 9. Another one, procurement /contracting, commenced on March 1. Three additional shared services will be added later this year.

Robb highlighted a few early success stories that, he said, “illustrate the value of the path that we are on” and provide “the reason for our optimism for the future.”

In medical logistics, for example, Robb said, the agency had initially projected a nominal investment, or additional cost, would be needed in 2014 in order to achieve future savings.

However, the Defense Health Agency medical logistics team “identified opportunities to change the buying behaviors,” he said. “As a result we are on a path to … save over $10 million.”

“Similarly, in the health information and technology shared service, there are a number of initiatives to reduce redundancy and consolidate IT contracts.”

This “has allowed us to move more quickly than we had anticipated, and we have identified savings of almost $25 million in this fiscal year,” said Robb, who is a lieutenant general in the Air Force.

The most significant potential cost savings, he continued, “still remains in purchased health care” or TRICARE, which is part of the $50 billion annual Military Health System budget.

This involves efforts to improve the administration of TRICARE, he said.

In this arena, a key decision was made to move TRICARE’s customer service in the U.S. entirely online or by phone as of April 1.

“This initiative recognized that walk-in customer service was often inconvenient to many beneficiaries, greatly underutilized (accounting for less than 10 percent of all customer service inquiries) and becoming increasingly cost prohibitive,” Woodson and Robb said in a joint prepared statement submitted to the congressional committee.

“Our business case analysis revealed that the department was paying $30 on average for each walk-in visit, as opposed to $6 per call and much less for online inquiries,” they added.

The first major initiative of the Defense Health Agency in the pharmacy division, meanwhile, was to implement the TRICARE For Life Home Delivery pilot program, which requires TRICARE For Life beneficiaries to obtain their maintenance medications for chronic medical conditions from either military treatment facilities or the TRICARE mail order program.

“We will remain on target to achieve our projected cost savings in this area as well,” Woodson and Robb said in their joint statement.

On Oct. 1, 2013, the Joint Task Force National Capital Region Medical was dissolved and replaced with the newly created National Capital Region medical directorate, which was made part of the Defense Health Agency.

This consolidation resulted in the National Capital Region directorate’s headquarters staff being reduced from 152 employees to 42, a figure that committee chair Rep. Joe Wilson, R-S.C., clearly found impressive. When Woodson mentioned it, Wilson exclaimed, “my goodness.”

According to the statement by Woodson and Robb, further opportunities for reducing staffing within the Defense Health Agency “should come about as … more efficient [business] processes reduce the need for personnel.”

Ranking committee member Susan A. Davis, D-Calif., asked Woodson and Robb about significant increases in staff numbers in the area of health IT.

Woodson said that this is a perfect example of the opportunity afforded by the Defense Health Agency. He noted that the military service branches wanted to shift their health IT responsibilities onto the Defense Health Agency. All health IT personnel were transferred to the new agency. As a result, the Defense Health Agency was able to “immediately see duplications in positions,” Woodson said. Over time, the agency will be able to begin reducing headquarters personnel without diminishing the level of service provided to its internal customers.

In dealings with military partners like the director of the Defense Logistics Agency, Robb said the benefits of the new Defense Health Agency are invariably always clear to everyone.

“They are pleased that we can present a single point of contact for MHS issues,” he said.

“And the refrain from both our internal and external partners was the same: ‘We should have been doing this sooner.’”

“But we are not looking backwards, we’re looking to the future, proud of the work we have accomplished, but even more eager to identify ways that we can integrate our system on behalf of the incredible people we are privileged to serve,” Robb said.

You can read the testimony of Dr. Woodson and Lt. Gen. Robb.