Developing a PPO: challenges and benefits

When deciding upon which kind of alternative delivery system to develop, Saint Vincent Charity Hospital and Health Center, Cleveland, selected the preferred provider organization (PPO) mode because of four basic advantages: (1) the health care consumer's freedom to choose providers; (2) effective cost containment; (3) coordination of services among allied providers; and (4) health promotion programs. More specifically, the Ohio Health Choice Plan (OHCP) benefits hospitals by assisting to maintain or increase market share, facilitating prompt claims payments, and improving financial mix. Physicians benefit not only because they receive prompt payment and are not a risk but also because the fee-for-service system is retained and their market shares can also be preserved or enhanced. Employers' advantages include savings through controlled utilization, positive employee relations, and improved management information. Employees' benefits include lower out-of-pocket costs and freedom of choice. As a full-service PPO, the organization provides benefits plans designed to meet each employer's needs as well as actuary services, claims screening and processing, benefits coordination, utilization control, management reporting, health promotion activities, and networking capabilities. Four major challenges do confront PPOs: 1. Start-up and operating costs can be significant; 2. The administrative skills required are different from those used in traditional health care systems; 3. The commitment in implementing and operating a PPO; and 4. All participating providers must genuinely accept the PPO. A PPO's success also can be measured in three ways: the development of a strong network; size of enrollment; and effectiveness in utilization control.(ABSTRACT TRUNCATED AT 250 WORDS)