Friends,
Three years of peer-reviewed data established the direct care system's performance advantage. In comparison with national civilian hospitals, military treatment facilities outperformed on 8 of 11 inpatient quality indicators, a finding published in Health Services Research in 2022 based on 326,076 MTF admissions across 37 facilities. Surgical mortality O/E ratio: 0.91 at MTFs against 1.00 nationally. Medical mortality O/E: 0.98 against 1.03.
A preliminary cohort of 325,712 patients covering FY2022 to FY2024, presented at the USUHS State of the Science symposium on April 13, suggests that advantage persists after three years of reform. The researcher, Wendy Vaughan of the Center for Health Services Research, has not yet published the work. The private sector outperformed the direct care system on one measure, per her preliminary presentation.
Two days later, the House Armed Services Committee Readiness Subcommittee convened its military readiness hearing for FY2027. The budget under review proposes to formally separate the direct care system from purchased care for the first time since 1991. The proposal also narrows COMP's defined beneficiary population to active duty service members, leaving the status of the eight million dependents, retirees, and families currently receiving direct care unresolved until the budget justification books publish.
Issue 2 covered the budget architecture: the COMP and PSCP account structures, the $42.5 billion discretionary total, the mandatory injection, the operational pipeline executing now. This issue covers what four independent research threads delivered the same week, and what they mean for the assumptions underneath that structure.
The performance record
Zogg and colleagues compared heart failure mortality at 27.0 per 1,000 at MTFs against 32.3 per 1,000 locally. Eighty percent of MTFs outperformed their local civilian counterparts on patient safety composites. The simulations in that paper matter before any budget conversation about shifting care. Across every modeled reduction in MTF access, the study projected increases in CABG mortality, heart failure mortality, and post-operative respiratory failure. Those projections covered FY2016 to FY2018, before the reforms that accelerated the shift toward community care.
Vaughan's cohort covers FY2022 to FY2024. The reforms are three years in. The gap persists.
The Leapfrog Hospital Safety Grades reach the same conclusion through a different lens. Fifteen military hospitals received Leapfrog's highest "A" grade in Fall 2024, a 75% rate among eligible facilities. In Fall 2025, 18 of 20 eligible military hospitals received A grades, 90% of eligible facilities, against a national average of 32%.
Three independent data sources. Different fiscal-year windows. The same directional finding.
The FY2027 budget does not dispute this performance record. It restructures around it. The account responsible for it narrows.
The capacity problem the restructuring doesn't fix
DHA Deputy Director Dr. David J. Smith told the USUHS symposium on April 13 that since FY2019, the MHS has lost between 25% and 38% of patient capacity at the nine largest military treatment facilities. That figure comes from his characterization of internal program data, not a published document. The published record confirms the direction.
A 2021 study in JAMA Surgery documented a 25% decline in general surgery procedures generating key surgical activities at military hospitals between FY2015 and FY2019, alongside a 19% decrease in surgeons' KSA points. A 2023 study in Annals of Surgery Open confirmed continued declines in surgical volume and staffing through the subsequent period, including pandemic-era disruptions. GAO-25-106988, published July 2025, found authorized military medical positions fell approximately 7% from FY2015 to FY2023, while assigned personnel fell approximately 16%. DHA projects a shortage of more than 8,000 clinical military medical personnel persisting until at least 2027.
The December 2023 Deputy Secretary of Defense memorandum directed DHA to attract at least 7% of available care back to MTFs by December 31, 2026. Nine months from now.
The WRNMMC-Kaiser Permanente partnership, announced February 12, 2026, is the most visible operational attempt to act on that directive. Kaiser was selected from 30 applicants who responded to DHA's September 2025 competitive call for civilian health system partners. Walter Reed's physicians now provide complex neurosurgical care to Kaiser Permanente members in the Capital Region, on cases that maintain the surgical proficiency direct care providers need to treat combat casualties. The official DHA announcement describes the agreement as providing a framework that can serve as a model for other partnerships. The framework allows expansion into additional service lines, including potentially cardiothoracic surgery and interventional cardiology, per Smith's symposium remarks.
It will not replicate automatically. Each partnership requires its own competitive process, its own facility agreements, its own patient population negotiations. The Kaiser deal took a year and a field of 30 to produce. Each subsequent partnership will require the same. Firms building pipeline around MTF readiness infrastructure should be tracking when the next calls for solutions are issued and positioning before the solicitation drops. DHA has a template. The December 2026 deadline creates the urgency.
The FY2027 budget creates two separate accounts with separate oversight and separate program offices. What it does not create: a plan to close the 8,000-provider gap, reverse the capacity loss Smith described from unpublished internal data, or resolve who the eight million non-active-duty beneficiaries currently in the direct care system belong to once COMP formalizes its active-duty focus.
The evidence the MHS published and didn't follow
In August 2025, TRICARE for Life ended pharmacy coverage for anti-obesity medications prescribed with obesity as the primary diagnosis. Medicare-eligible military retirees lost access to Wegovy, Zepbound, Saxenda, and the other major drugs in the class. TRICARE Prime and Select coverage was unaffected.
Three independent USUHS research presentations delivered evidence running against that decision the same week the symposium ran.
The first: a preliminary cost-benefit analysis of anti-obesity medications in the TRICARE for Life population finding that all categories of weight-loss drugs produced cost-effective care and lower cardiovascular event rates, including among the over-65 population whose coverage was eliminated. Unpublished. Presented at the symposium.
The second: Maj. Taylor Neuman's 2024 study in Obesity established a baseline utilization rate of 0.56% among eligible beneficiaries in FY2018 to FY2022. His 2026 follow-on study in Military Medicine found that rate had risen to 5.5% by FY2023 to FY2024. Across 9.6 million beneficiaries at commercial GLP-1 pricing, the pharmacy cost trajectory is visible without a single published dollar figure. His symposium remarks delivered the operational fact neither paper captures: service members are already using these medications outside the MHS, without clinical oversight, because their careers depend on meeting weight standards. The coverage restriction did not stop the utilization. It moved it outside the system's visibility.
The third is the most precisely sourced. Lt. Col. Rachel Lieberman and colleagues published "Semaglutide Decreases Risk of Non-Arteritic Anterior Ischemic Optic Neuropathy in Type 2 Diabetic Patients" in Military Medicine in 2025 (DOI: 10.1093/milmed/usaf522). The context matters. A 2024 single-center study from Massachusetts Eye and Ear, 710 patients at one referral practice, flagged NAION, a sudden painless vision loss, as a potential semaglutide risk. That finding traveled fast. Subsequent large cohorts elevated concern: a December 2024 Danish national cohort of 424,152 type 2 diabetes patients found a 2.19-fold increased hazard, and a February 2026 study of U.S. veterans found a twofold risk against a comparator class.
Lieberman used 1,212,775 patients from the MHS Data Repository. 2,447 NAION events. The largest examination of this question in the world.
Semaglutide users with type 2 diabetes in the MHS cohort had 64% lower NAION risk than patients on other medications.
The evidence on NAION is genuinely contested. A 2026 meta-analysis pooling six observational studies across 4.8 million patients found no statistically significant association between semaglutide and elevated NAION risk against non-GLP-1 comparators. The MHS finding runs against the grain of the majority literature in diabetes populations. The MHS had the population to test the original alarm at scale. It did the work. It published the result. The coverage restriction and the MHS's own peer-reviewed research were moving in opposite directions before the policy took effect. They still are.
The pattern is not an outlier. This budget expresses the same dynamic at $22.2 billion scale: the side with the weaker performance record in the published literature receives the larger appropriation, and the evidence base that would justify a different choice is produced by the same institution making the choice.
At 12 casualties a day, the system breaks
Every data point above concerns peacetime performance. The research USUHS delivered on large-scale combat operations concerns what happens when the system is asked to do what it exists for.
Andrew Schoenfeld of Harvard Medical School and Mass General Brigham published modeling of NATO trauma system performance in large-scale combat operations in JBJS Open Access in 2025, using discrete-event simulation for a 1,000-soldier combat infantry battalion operating without air superiority.
Mortality rates spike from 10% to 61% at 12 casualties per 24 hours.
The Flying Column, a rapid-deployment reserve surgical team designed to augment forward surgical capacity, showed no statistically significant mortality improvement at any casualty rate. The one intervention that moved the needle was repositioning the Role III field hospital within one hour of ground transport from the battlefront: successful evacuation rates improved from 15.5% to 25% at 192 casualties per 24 hours.
U.S. military killed and wounded in action over 20 years in Iraq and Afghanistan totaled more than 58,000. In September 1914, French casualties exceeded 213,000 in the opening weeks of the Western Front.
Kaitlyn Holly, working across Mass General Brigham and USUHS, published a historical staffing study of U.S. Role II and III surgical facilities from 1900 to the present in Spine. Her finding: the current force composition, including the staffing ratios, the echelon sequencing, and the Golden Hour framework, was built for Iraq and Afghanistan. Large-scale combat requires modular units, interchangeable role structures, Role III hospitals within one hour of ground transport, and a heavier concentration of surgical and ICU specialists than the current model provides.
Smith told the symposium military medicine is already treating combat casualties and re-learning lessons from the last war. The modeling says the system re-learning those lessons will break at 12 casualties per day in the next one.
DHA Research Program Branch Chief Richard Shoge told the symposium that DHA research programs went unfunded for FY2027. That was a symposium statement, not a published document. If accurate, the pipeline that translates USUHS findings into the standards field medics and MTF surgeons actually use is operating without its primary program funding in the year the restructuring takes effect.
What the four threads mean together
These four threads constitute a single argument the FY2027 budget has not yet answered.
The COMP/PSCP separation is structurally coherent. The separation creates distinct oversight, distinct budget lines, and distinct program offices for two missions with genuinely different operational logics. The argument for the separation is real.
Separation has a structural defense worth taking seriously. Under a unified DHP, purchased care demand growth cannibalized direct care budget lines because both competed inside the same account. In FY2025, purchased care already consumed 51% of the DHP. Separate accounts ring-fence COMP from that demand pressure for the first time. That argument is structurally sound as far as it goes.
The FY2027 O-1 data reveals where it stops going: COMP's mandatory injection of $3.1 billion lands entirely in Base Operations and Communications. Zero dollars reach In-House Care or the research enterprise. More critically, COMP's defined scope of "active duty service members" creates a patient volume problem the ring-fence cannot solve. The direct care system's performance advantage comes from clinical volume. The surgical readiness the Schoenfeld modeling says matters at 12 casualties per day depends on providers seeing enough complex cases to stay sharp. Narrowing COMP's defined population to approximately 1.3 million active duty beneficiaries reduces that volume, which accelerates the capacity degradation the separation is supposed to prevent. The counterargument becomes evidence for the argument: separate accounts protect COMP only if COMP's scope is defined to include the patients whose cases generate the clinical readiness the system exists to sustain. That definition is what the justification books have not resolved.
The research poses a different argument. COMP receives $20.3 billion for the direct care system that outperforms. PSCP receives $22.2 billion for the purchased care system that doesn't perform as well. The differential favors PSCP by $1.9 billion. (COMP $20.342B and PSCP $22.175B per the FY2027 O-1 exhibit, comptroller.war.gov, April 3, 2026.) The cost differential partially reflects genuine structural factors: purchased care operates at commercial pricing across high-volume civilian networks, and DoD's own analyses show direct care inpatient costs run higher on a per-case basis when readiness value is excluded from the calculation. What those analyses do not resolve, and what the FY2027 budget does not address, is how COMP closes an 8,000-provider gap, reverses the capacity losses, or defines who the eight million non-active-duty beneficiaries belong to under the new architecture. Cost structure explains the gap in dollars. It does not explain the absence of a published plan to rebuild what the dollars are supposed to sustain.
VADM Darin K. Via characterized DHA as a combat support agency in February. Smith confirmed it at the symposium: combat support is job one. The research delivered this week confirms the direct care system is the side of military medicine that serves that mission.
The budget funds the other side at a higher rate.
Three actions before the markup closes
For program managers and contracting officers: the COMP/PSCP split creates two distinct program offices with two distinct oversight structures. Every active DHA program needs a clear account-level answer now. Does this contract serve the COMP direct care mission, the PSCP purchased care mission, or both? That answer determines which program office owns the option year, which budget line the work defends against, and which review criteria apply when DOGE-era scrutiny reaches military health IT. The COMP justification books, expected to publish by end of April, contain the program-element narratives and policy language that define COMP's scope. Read them before your next BD review.
For BD and capture teams: the criteria that will determine what survives this restructuring are the criteria the USUHS research is measuring: patient outcomes, provider readiness, operational relevance to large-scale combat operations. Firms that can translate their program's contribution into those terms have standing. Firms defending only cost will lose. The WRNMMC-Kaiser model is the template DHA will replicate. Positioning for the next competitive call for solutions before it drops is the move. DHA has a template and a December 2026 deadline. It will move quickly.
For research and program developers: the gap Shoge identified, DHA research programs potentially unfunded for FY2027, is an opening. CDMRP funding is not in the president's budget. It is set by Congress during appropriations markup beginning now. The House Appropriations Defense Subcommittee is the room that matters over the next six weeks. FY2025's continuing resolution cut CDMRP from $1.51 billion to $650 million in a single bill. FY2026 restored it to $1.27 billion. FY2027 is being written. The research USUHS delivered this week is the evidence base that justifies that funding. The researchers who produced it and the appropriators who set it are not yet in the same conversation.
The transfer
Somewhere in the MHS catchment area, a service member cannot get a timely appointment at an MTF. TRICARE routes her to a community provider within 40 miles.
The Zogg et al. data says that hand-off statistically costs her on safety outcomes. Vaughan's preliminary cohort, 325,712 patients across three fiscal years, says it still does.
The provider who would have seen her at the MTF is losing the case complexity that keeps surgical skills sharp. The surgical team that would treat her in a casualty scenario is already at the capacity limits Schoenfeld's modeling says produce 61% mortality at 12 casualties per day.
The FY2027 budget formalizes that hand-off as a $22.2 billion account. It does not make the hand-off less likely. It does not close the provider gap. It does not reconfigure the trauma system the modeling says will break.
She goes to the community provider. The appointment is made. The budget moves on.
Let's roll.
— Mary
Mission Meets Tech
The views expressed in this newsletter are my own and do not represent the official position of any organization. This content is for informational purposes only.
Sources
Sources verified as of April 18, 2026. Performance data sourced from Zogg et al., "In Defense of Direct Care," Health Services Research, 2022 (PMC9264466), covering 326,076 MTF admissions across 37 facilities against 179,176 purchased care admissions; all O/E ratios, mortality figures, and simulation projections confirmed from the full paper. Leapfrog Hospital Safety Grade data sourced from Leapfrog Group Fall 2024 and Fall 2025 public releases. Vaughan cohort findings presented at the USUHS State of the Science symposium, April 13, 2026; work is preliminary and not yet published. Surgical workforce data from Dodds et al., JAMA Surgery, 2021, and Kang et al., Annals of Surgery Open, 2023. Military medical personnel figures from GAO-25-106988, July 2025. The 7% MTF care reattraction directive is sourced from Deputy Secretary of Defense memorandum DTM-24-003, December 2023. WRNMMC-Kaiser Permanente partnership details from the official DHA press release, February 12, 2026; competitive process details confirmed in that release. TRICARE for Life pharmacy coverage change effective August 31, 2025, sourced from TRICARE/health.mil. GLP-1 utilization rates from Neuman et al., Obesity, 2024, and Neuman et al., Military Medicine, 2026. Lieberman et al. NAION study published in Military Medicine, 2025, DOI: 10.1093/milmed/usaf522; cohort of 1,212,775 patients, 2,447 NAION events, OR=0.36 confirmed from full paper. Massachusetts Eye and Ear semaglutide study from JAMA Ophthalmology, 2024. Danish national cohort (424,152 T2D patients, 2.19-fold hazard) published December 2024. U.S. veterans NAION study published in JAMA Ophthalmology, February 12, 2026. 2026 meta-analysis (6 observational studies, 4.8 million patients) published in Ophthalmology. Combat casualty modeling from Cote, Holly, Schoenfeld et al., JBJS Open Access, 2025; all simulation figures confirmed from full paper. Historical surgical staffing analysis from Holly et al., Spine, 2025. U.S. killed and wounded in action figures sourced from official DoD casualty data. September 1914 French casualty figure sourced from Les Armées Françaises dans la Grande Guerre (official French military history) as analyzed by Holger Herwig. COMP and PSCP account figures ($20.342B and $22.175B) from the FY2027 O-1 exhibit, comptroller.war.gov, April 3, 2026. FY2025 purchased care share of DHP (51%) sourced from published DHP budget data. DoD per-case cost analysis sourced from IDA study AD1014964. VADM Via Combat Support Agency designation sourced from DHA.mil, February 12, 2026. CDMRP funding figures from P.L. 119-4 (FY2025 CR) and P.L. 119-75 (FY2026). Remarks attributed to Dr. David J. Smith, DHA Deputy Director, and Richard Shoge, DHA Research Program Branch Chief, were delivered at the USUHS State of the Science symposium, April 13, 2026, and do not appear in published documents; both are attributed as symposium statements in the body.
