Preferred Provider Organisation

Posted in Human Resources Terms, Total Reads: 743

Definition: Preferred Provider Organisation

The term refers to a kind of health insurance arrangement that defines choice upon its participants in relation to hospitals to visit and doctors to consult to within the network of preferred providers. It thereby lets policyholders obtain the benefit of lower fees by opting for doctors and hospitals that are covered under the plan. Coverage under a PPO necessitates ongoing payment of premiums by policyholders to the insurance company.

Because PPOs are subscription-based medical care arrangements, PPOs themselves obtain income by charging access fees to the insurance company for the use of their network. PPOs determine fee schedules by working with providers and also contract with one another for better offerings given certain geographical limitations.


PPO methodology is quite well established across the USA. A subscription based membership is taken up people, which offers them discounts on medical care. In return, PPOs earn by charging the insurance companies. PPOs have gained popularity because of the flexibility they offer to the people.

Hence, this concludes the definition of Preferred Provider Organisation along with its overview.


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