Veterans healthcare is at the beginning of what will likely be a major transformation over the coming years. One element of this transformation will be an increased use of community-based care. The Department of Defense went through a similar transformation 25 years ago that provides lessons learned to help make the change smoother and avoid pitfalls that DOD experienced. This paper reviews the DOD experience in expanding its use of private sector care, the challenges that have emerged within DOD based on the initial choices it made and steps the Department of Veterans Affairs can take now to avoid these challenges.