The Department of Defense’s (DOD) military health system (MHS), costingabout $16 billion annually, offers care to 8.2 million military and civilianbeneficiaries. The system has a dual role of medically supporting wartimedeployments—its readiness mission—while caring for active dutymembers, retirees, and their families in peacetime. The Army, Navy, andAir Force provide most of the system’s care through their own medicalcenters, hospitals, and clinics, totaling about 580 treatment facilitiesworldwide. Regional networks of civilian providers supply the remainingcare. MHS has undergone major demographic changes and, today, servesmore retirees than active duty beneficiaries and their respective families.Also, mirroring overall military end-strength decreases during this decade,military treatment facilities (MTF) have been closed or downsized, theirbudgets constrained, and medical practices shifted toward an emphasis onmanaged care. Such conditions have focused attention on the prospectiveneed for MTFs, the coordination of peacetime care among them, andalternative care delivery approaches.Among the areas affected by the changes is the national capital area (NCA),in and around Washington, D.C. There, the three services offer care toabout 400,000 beneficiaries in 26 MTFs, including 3 medical centers.Concerned about potential service overlaps and whether increasedefficiencies are possible, the Congress, in the 1998 Defense AuthorizationAct mandated that we review the need for and coordination of care amongNCA MTFs. This review is the second of two GAO reviews mandated by theact. In the first review, we examined the Navy’s and Army’s attempts in1997 to downsize and close certain graduate medical educationprograms—the primary source of military physicians. In the resultingApril 1998 report, we found that DOD and the two services lacked mutuallyacceptable criteria and methods for targeting the graduate medicaleducation programs. DOD agreed with our recommendation to develop theneeded guidance and is now doing so.As agreed with your offices, this review’s objectives are to (1) evaluate theneed for NCA MTFs and DOD’s strategy for assessing such needs, (2) identify any obstacles hindering DOD’s ability to make coherent needs assessments, and (3) determine whether current care coordination among NCA MTFs could be improved. We also agreed that, because NCA MTFs are integral parts of the overall MHS, we would assess recent DOD initiatives to make MHS management improvements. We conducted our work betweenMarch 1998 and September 1999 in accordance with generally acceptedgovernment auditing standards. For details on our methodology, seeappendix I.