Evaluation of a preferred provider organization.

Preferred provider organizations (PPOs) have emerged as a new approach to organizing health care services; the promise of melding the primary strengths of indemnity insurance with HMO plans was rapidly embraced. The performance of PPOs has not yet been measured critically, despite their growth to over 250 plans. A single, large case study of PPO design and performance is examined, revealing a mixed but hopeful picture of administrative challenges, physician response, patient use patterns, and cost reductions, PPOs offer fertile ground for future research.