PPOs. Implications for management

The development of preferred provider organization (PPOs) is relatively recent--largely since 1980--and there is little definitive experience to date. The PPO concept does, however, address the major concerns of all involved in health care today: the cost of medical care, the projected physician surplus, and increased competition. It provides a way of working with major purchasers of health care, within the context of a fee-for-service practice, to jointly address these concerns. While PPOs are unlikely to be the "wave of the future" (any more than HMOs were), the concept contains idea which are likely to be of continuing value to medical group managers, as they seek to improve the competitive status of their groups. The author addresses the present situation, implementation of a PPO, alternatives available to medical groups, and implications for medical group management.