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GENERAL OF THE AIR FORCE General CHESNEY. Let me answer that. The language is unclear. We could not tell whether it exempted just doctors or nurses or everyone, and we could not tell whether the number of doctors and nurses and medics came out of the entire Air Force, for instance.

So we have taken some cuts, yes.

Senator GLENN. Well, we specifically addressed that and that was certainly not the intent, and there has been a misinterpretation of that. The staff will sure look into that one.

OK, go ahead with the rest of your statement, Dr. Chesney, and then we will get on that, because if there has been a misinterpretation of that it is just exactly that, a misinterpretation, because we did not mean to—that language was supposed to be very clear, because we have recognized for the past 3 years the situation, our medical situation in our military, and we have been trying to work to correct it, not make it worse.

Go ahead with your statement.

General CHESNEY. Mr. Chairman, it is a great pleasure to be here today to present our Air Force program to you. I will put my entire statement in for the record and I have only two or three brief things to mention.

Senator GLENN. It will be included in full.

General CHESNEY. We are very pleased with the progress we have made in our war readiness program in the Air Force. The programs we have, the buys that we have, put us to a point where we think we could at least care for most of our patients in wartime right now, give some care to all, not optimal care to all. But we are ready right now for wartime in Air Force medicine.

Our most pressing concern today is the very constrained medical O&M budget this year. We faced a tremendous shortfall in fiscal year 1988. We are somewhere around $55 million short of finishing the year right now, and each of our major commands has a dropdead date at which time they will run out of O&M money.

I am confident that the Air Force line will help us with some additional funding in this, but this comes at a time when we are trying to reduce the CHAMPUS cost by doing most of the medical care in-house, and if we have to stop this and send the patients out to CHAMPUS it will of course increase CHAMPUS at a time when we think we can save money by caring for patients both in-house and in our Air Force clinics.

We have pursued a number of things to improve our medical care and our cost savings, including sharing programs with the Veterans Administration and with the other services, a program we call health care finder, where we obtain care for our patients wherever we cannot do it.

We are getting ready to implement a catchment area management test at two bases to see if we cannot save money and also give better care for our patients. And we have looked at our staffing. Overall our number of people, our number of staff, is close to what we can handle in the facilities that we have.

We have shortages in radiology, psychiatry, ob/gyn, nurse-anesthesia, those things. And although our total staffing is fairly good, those shortages continue to bother us.

I want to emphasize our commitment to quality health care and to recapturing CHAMPUS costs, and we will try to provide the strong leadership that we need to do this this year and in the out years.

Thank you, sir.
[The prepared statement of General Chesney follows:]


The Surgeon General
United States Air Force

Mr. Cha i rman and Members of the Committee

It is my pleasure to be here this morning to discuss peacet ime health care.


The Air Force Medical Service, like our colleagues in the Army and

Navy is challenged to provide a greater array of health care services to a growing beneficiary population with limited resources. My ma jor goal and the

focus of my attention is to provide quality patient care and reduce CHAMPUS


My most pressing concern is the very constrained medical operation and

maintenance (O&M) budget.

We currently face a shortfall in FY 88.


situation has forced us to make significant reductions in facility maintenance

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the Air Force line will help us with some additional funding.

However, I am

very concerned that we may be forced to reduce health care services to some

beneficiaries which will compound our problem by shifting greater workload to

the CHAMPUS program which is a more expensive alternative for the government.

This is very frustrating for us because it forces us to restrict workload in the

direct care system at a time when it is more cost effective to expand it by

recapturing CHANPUS work load.

Hospitalization in an Air Force hospital is

significantly less expensive than in a civilian hospital.

For example, the

average cost per day in 1987 was $420 per day in Air Force hospitals compared to

$697 per day in civilian hospitals.

Similarly, the cost of an Air Force clinic

visit was $50 compared to the government cost of $80 in a civilian clinic.

We are actively working to implement a DAG based system of resource

allocation in the Air Force.

Our goals in this endeavor are to (1) improve upon

existing incentives that promote efficient and effective health care, and (2) to

develop a workload measurement system that better depicts the per formance of our health care delivery team.

Consequently, we envision our health care delivery

system will move in the same general direction as the civilian health care

sector, that is, increased ambulatory care and greater emphasis on health


New Initiatives

During 1987, we began several new initiatives that were designed to

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are making plans to realign ambulatory care organization structures at other

USAF Hospitals worldwide.

Another initiative was the development of designated Ambulatory Care Teams

within the hospital that assign responsibilities to team members for the total

administrative and nursing support of each practitioner and the patients under

their care.

The results have been improved provider and patient satisfaction

and increased efficiency of ambulatory service operations.

Health Care Finder

To gain better management control and offer better access to services, we

embarked upon the Health Care Finder program to assist milltary families in

finding quality, accessible, affordable health care when the care needed is

beyond the capability of the Air Force medical treatment facility. This has been

accompl i shed by setting up networks of civilian hospitals, individual providers

and other institutions with prenegotiated agreements based on CHAMPUS allowable

charges and credentials reviews.

This program has grown significantly since its

beginning at nine bases over a year ago.

Today, each medical treatment facility

throughout the QONUS has established a Health Care Finder program.

To date,

more than 16, 136 individual providers, 151 hospitals and 75 Preferred Provider

Organizations and Health Maintenance Organizations have agreed to participate in


the program.

We have matched patients with quality health care providers whose

charges are equal to or less than CHAMPUS costs.

What does this mean to the


It can mean the difference between a patient cost of $60 or a bill for

$860 for a hip replacement in Phoenix, Ar i zona.

Or $25 for maternity care as

campared to $625.

VA Shar ing

We have also pursued innovative sharing agreements with the Veterans


This program benefits both the VA and DOD beneficiary providing

a wider range of health care services.

We now have more than 60 MTFS involved

with some form of sharing, ranging from computer supported diagnostic testing to

inpatient care.

Our most ambitious effort to date has been our joint endeavor

with the VA in Albuquerque, New Mexico.

There instead of a costly hospital

replacement project, the Air Force has moved into the new VA medical center.

The estimated cost savings in construction costs alone is between $9 million and

$10 million. We still continue to provide outpatient services from our existing facility. We have broken ground for a new ambulatory health care facility on

the VA campus.

We expect to occupy that new facility in the spring of next


USAF Regional Hospital Minot is under construction.

It will have 5

designated VA beds with occupancy planned for April 1988.

Another Joint

venture with the VA is under consideration with the USAF Regional Hospital

Elmendorf, Alaska for a programmed FY 91 construction project.

Other sites

currently under study include:

Nellls AFB, Nevada; Davis-Monthan AFB, Arizona

and Patrick AFB, Florida.

Shar ing with the VA at select locations can provide a

greater range of services for our beneficiaries while reducing both government

and beneficiary cost.


Both the Army and Navy have found their PRIMUS and NAVCARE clinics to be

effective extensions of the direct care system for primary care.


contractor managed outpatient facilities have proven popular with patients


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