An assessment of the anticompetitive effects of preferred provider organizations.

Although preferred provider organizations (PPOs) sponsored by third parties are likely to offer benefits to society through increased competition, those sponsored by providers may generate a risk of anticompetitive collusion. Such cartellike collusion could result in price fixing, less aggressive utilization review, and restrictions on entry and innovation in the market. In this article, we provide guidance on the potential risks posed by provider-sponsored PPOs. We suggest that public policy should generally promote PPOs and remove regulatory barriers to their growth because of their cost containment potential. Policy design should, however, reflect an awareness of the potential anticompetitive outcomes of provider-sponsored PPOs and should promote antitrust oversight of their activities.