A new development in the restructuring of American health care is the dramatic growth of preferred provider organizations (PPOs). Based on a national telephone survey, this paper assesses the future direction of PPOs by examining segments of the market that are believed to be lead indicators of future activity. It includes analyses of “new” versus “old” PPOs, the ten largest PPOs, and the entrance of hospital chains into the insurance market. We conclude that the dramatic growth of PPO enrollment in 1985 is likely to continue in the future, but with increased movement toward vertical integration and joint ventures among providers and insurers.

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