Final answer:
Insurance companies leverage their large client base to negotiate lower healthcare costs for services within PPO networks, benefiting both the consumer and the company financially.
Step-by-step explanation:
Employers or insurance companies negotiate a lower fee for service with hospitals and healthcare providers in a specific geographic region for Preferred Provider Organizations (PPOs). Due to their extensive client base, these companies have leverage to obtain rates that benefit both the company by reducing expenditure on claims and consumers by providing cost savings
. Although this can lead to a focus on areas with well-insured patients, PPOs are able to make healthcare more accessible and affordable through such negotiations.
Insurance companies negotiate a lower fee for service with hospitals and healthcare providers in a specific geographic region for Preferred Provider Organizations (PPOs).
Insurance companies have a larger pool of clients, which allows them to negotiate lower rates than individuals. This benefits both consumers, who can access healthcare at a lower cost, and the insurance company itself, as it saves money when paying out claims.
An example of this negotiation process is when insurance companies work with hospitals to establish contracts that outline the fees for specific services and treatments.