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Related Experiment Videos

Continuity and change in preferred provider organizations.

T Rice1, J Gabel, S Mick

  • 1School of Public Health, University of North Carolina, Chapel Hill 27514.

Health Policy (Amsterdam, Netherlands)
|December 10, 1989
PubMed
Summary

Preferred Provider Organizations (PPOs) experienced rapid growth in the US by 1988, covering 37.6 million people. However, they still primarily use discounts and utilization reviews for cost containment, lacking innovative strategies.

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Area of Science:

  • Healthcare Management
  • Health Economics
  • Managed Care Organizations

Background:

  • Preferred Provider Organizations (PPOs) are a significant component of the US healthcare system.
  • Understanding the evolution and strategies of PPOs is crucial for assessing healthcare cost containment efforts.

Purpose of the Study:

  • To assess the growth and changes in Preferred Provider Organizations (PPOs) in the United States.
  • To evaluate the cost containment strategies employed by PPOs and identify trends.

Main Methods:

  • National survey of over 170 PPOs conducted in 1988 via telephone interviews.
  • Comparison of 1988 survey data with results from similar surveys in 1985 and 1986.

Main Results:

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  • PPOs demonstrated rapid growth, with eligibility expanding from 16.5 million in 1986 to 37.6 million in 1988.
  • PPOs predominantly rely on provider discounts and utilization reviews for cost savings.
  • Limited adoption of innovative cost-containment methods, such as incentive reimbursement or selecting cost-efficient providers.

    • Conclusions:

    • PPOs must evolve their cost-containment strategies to remain competitive.
    • Future success of PPOs depends on their ability to control rising healthcare costs by encouraging more efficient resource utilization by providers.
    • Failure to innovate may lead to market share loss to alternative managed care models.