Patient choice of providers in a preferred provider organization.

This article is an analysis of patient choice of providers by the employees of the Security Pacific Bank of California and their dependents who have access to the Med Network Preferred Provider Organization (PPO). The empirical results show that not only is the PPO used by individuals who require relatively little medical care (as measured by predicted office visit charges) but that the PPO is most intensively used for low-risk services such as treatment for minor illness and preventive care. Also, the most likely Security Pacific Health Care beneficiary to use a PPO provider is a recently hired employee who lives in the south urban region, has a relatively low income, does not have supplemental insurance coverage, and is without previous attachments to non-PPO primary care providers. In order to maximize their ability to reduce plan paid benefits, insurers who contract with PPOs should focus on increasing PPO utilization among poorer health risks.