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The hospital-based preferred provider organization and its potential impact on hospital pharmacy.

In response to competitive pressures in the marketplace, hospitals are becoming involved in the prepayment of services. This is exemplified by the hospital-based preferred provider organization (PPO). This article reviews the PPO concept, the economic forces behind its proliferation, and its potential impact on hospital pharmacy. The PPO reinforces incentives for the hospital and pharmacy to be efficient in the production and use of inpatient services. However, it may be a vehicle by which the hospital pharmacy can expand into new areas, outside the realm of inpatient care.