Use of a preferred provider by employees of the preferred provider

Little is known about the use of services in a preferred provider organization. We studied Pacific Medical Center (PMC) in Seattle which offered a preferred provider arrangement to its employees who selected a Blue Cross-Blue Shield type of plan. PMC offered to waive copayments and reduce deductibles for those employees when they (or their dependents) used PMC. PMC was thus a preferred provider. In the first 16 months of this program, 632 subjects made at least one claim; of these, 444 (70 percent) used the preferred provider at least once. The use of PMC was highest for male employees (84 percent had at least one visit), next for female employees (74 percent), and lowest for dependents (58 percent). Approximately one-third (32 percent) used PMC exclusively, 30 percent used other providers exclusively, and 37 percent used a combination of PMC and other providers. These may be thought of as best-case estimates, since the subjects--particularly the male employees--had a high level of familiarity with the program and ease of access, while the dependents had high familiarity but less convenient access. Female employees may have used PMC less because of relationships already established with other physicians. Outpatient and inpatient charges were more than twice as high for those who used both PMC and other providers as for those who used one provider exclusively. It may be that the preferred provider arrangement encourages higher charges or, alternatively, that it provides additional flexibility for those who have the most need for care.