The 1980s has marked the beginning of a new alternative health care delivery system: the preferred provider organization (PPO). This system has developed from the health maintenance organization model and is predominant in California and Colorado. A PPO is a group of providers, usually hospitals and doctors, who agree to provide health care to subscribers for a negotiated fee that is usually discounted. Preferred provider organizations are subject to peer review and strict use controls in exchange for a consistent volume of patients and speedy turnaround on claims payments. This article describes the factors leading to the development of PPOs and the implications for occupational therapy.