Part 3 of 9: Why “Networks” Are the Most Influential Factor in Your Practice and Provider Experience

Introduction: A System Built on Groupings

Healthcare in the United States is fundamentally designed to function in groups.

• Consumers are grouped—most often through employers or insurance exchanges—to spread financial risk.

• Providers are grouped into delivery systems to serve those consumers.

• Insurers function as the intermediary, connecting the two through access and payment.

This three-part structure—grouped consumers, grouped providers, and insurers in the middle—defined the U.S. healthcare system throughout much of the 20th century.

But in the mid-1980s, the model evolved. A new construct emerged: Managed Care.

Managed Care: The Shift to Control

Originally, insurers simply connected consumers to providers and processed claims. Under managed care, they took an active role in controlling both cost and care delivery. To achieve this, insurers introduced tools such as:

• Prior authorization

• Narrow networks

• Utilization management

• Standardized fee schedules

To administer these controls effectively, providers had to be grouped—not just for contracting, but also to be ranked, tiered, and managed collectively. This shift marked the transition from individual provider autonomy to network-based oversight.

The Fragmentation Challenge and the Rise of Intermediaries

Chiropractic and physical therapy are professions historically made up of independent, community-based clinics. While well-positioned to deliver patient-centered care, this independence came at a cost: lack of structural scale.

In the Managed Care era, this vulnerability opened the door for intermediaries. Starting in the 1980s, third-party companies began organizing independent providers into “networks” they could rent or sell to insurers. Their pitch was simple:

1. A pre-credentialed network of providers for insurers.

2. A centralized administrative interface for contracts, utilization management, and claims.

For small clinics, intermediaries provided access to insurance networks they could not otherwise reach. For insurers, they offered efficiency: one contract to manage hundreds of providers.

Over time, consolidation reshaped the landscape. As insurers adopted capitated payment models (per-member-per-month), national intermediaries with infrastructure and capital replaced smaller regional ones. Today, fewer than ten national intermediaries control the majority of chiropractic and physical therapy network access. Their reimbursement schedules, utilization rules, and contract terms are now the primary force shaping provider experience.

Intermediary Models: PPOs vs. IPAs

Two main intermediary structures exist:

• Preferred Provider Organizations (PPOs)

  • Operated by private, for-profit companies.

  • Contract with individual providers, then roll them into a network.

  • Sell network access to insurers and employers.

  • Manage fee schedules and utilization controls.

  • Aligned with insurers, not providers—the insurance company is the true customer.

• Independent Practice Associations (IPAs)

  • Formed and governed by providers.

  • Negotiate collectively with payers.

  • May manage data, credentialing, or utilization.

  • Focused on autonomy and shared governance.

In the 1980s, IPAs dominated. Today, PPOs control an estimated 85–90% of the chiropractic and PT intermediary market, while IPAs account for just 10–15%. PPOs won because they aligned with insurer incentives—offering scale, administrative convenience, and higher margins by suppressing provider reimbursement.

Most major insurers now own or are affiliated with PPOs, creating vertically integrated systems that retain profit and influence care without passing value back to providers.

Why Providers Join PPOs

If PPOs make life harder for providers, why participate? The answer is simple: access to patients.

In many states, insurers don’t contract directly with small, independent clinics. To be in-network, providers must go through a PPO. And that matters: over 80% of new chiropractic and PT patients start with a provider who accepts their insurance.

Being in-network grows patient volume, but at a steep cost. PPOs keep reimbursement flat for years, rarely increasing rates unless network adequacy requirements force them to.

How PPOs Shape Provider Experience

1. Controlling Reimbursement

   • PPOs profit by paying providers less.

   • Many operate under capitated deals, receiving a fixed per-member-per-month payment from insurers. Every dollar not paid to providers becomes profit.

   • Tools like take-it-or-leave-it contracts, low fee schedules, high co-pays, lack of cost-of-living adjustments, and prior authorization all suppress payouts.

2. Adding Administrative Complexity

   • Individual contracting: Unlike most of healthcare (where contracts are by tax ID), many PPOs insist on contracting each provider individually. A three-provider, three-location practice could face nine separate contracts per payer.

   • Claim reduction programs: Prior authorizations and utilization rules increase paperwork, often with little patient benefit.

   • Technology barriers: Many PPOs lack standard electronic data exchange (EDI), forcing manual uploads and slowing workflow.

This fragmentation especially affects chiropractors, who often face one-to-one contracting, while larger PT groups have been able to negotiate more favorable group terms—highlighting how provider leverage matters.

The Bottom Line

Chiropractors and physical therapists are grouped because the system requires it. But in the absence of provider-led organization, most are grouped into for-profit PPO networks that prioritize insurer interests over provider sustainability.

The result is that a meaningful share of every premium dollar flows not to patient care, but to administrative organizations profiting from the gap between insurers and providers.

This reality underscores why provider-led networks—such as Clinically Integrated Networks (CINs)—are so important. When providers organize themselves, they reclaim leverage, reduce administrative waste, and ensure more healthcare dollars go where they belong: directly to patient care.

Next Up

In Part 4, we’ll examine how this dynamic doesn’t just affect providers—it directly shapes the provider experience, practices success, and even influence entire healthcare disciplines.