Guest Editorial
What a PPO is ... Period!
I recently read Mr. Wayne Smolda’s guest editorial in the January 1996 issue of AutoInc. magazine. I am astounded! I cannot believe anyone associated with the auto body repair industry would have written this article.
Please understand, I have no love for the auto repair shops that Mr. Smolda describes as "low-grade." This, however, takes a back seat to the frustration caused by the so called "modern facilities" that have managers still conducting business as if they were living in the 1960s. They mislead their clients by conforming to every demand from insurers, including the use of substandard aftermarket parts and omitting charges for procedures that are necessary in the proper repair of late-model vehicles.
Insurance companies thrive on these facilities because their outward appearance looks pretty good to the potential customers. In too many cases, insurers convince customers that shops with well-prepared damage reports are simply "too high." The fact is that their appraisals are fair and correct to repair the existing damages and the "1960s mentality" shops are guilty of pricing that will not produce repairs that bring vehicles back to pre-accident condition. Guess who comes out short in this scenario?
Now, let’s approach the issue of preferred provider organizations (PPOs) becoming a reality. Anyone that has studied this PPO insurance concept knows that it will in fact eliminate consumer choice. It will dictate the repair procedure for the vehicle and offer a list of qualifying facilities available to the policyholder. If the shop of the insured’s choice is not on the list, they are out of luck! No choice! It is my contention that there will be no quality repair facilities on the insurance company’s list of "chosen repair shops."
Let’s look at the criteria to be placed on an insurance company’s list of the shops to pick from in this PPO scenario. Copious use of aftermarket parts will be normal, discounts on original equipment manufacturer (OEM) parts, special labor rates on discounted bottom lines, materials cost reduction and caps, sublet bills with no profit structure and numerous other items too lengthy to mention are all likely.
Mr. Smolda insists that the "good body shops" will benefit and that PPO policyholders will have numerous choices. Mr. Smolda lists one of the policyholders’ choices as "consumers must go to one of several contract shops on an insurers PPO listing." I fail to see this as a choice. This clause dictates, rather than offers, choice.
I propose that the purpose behind PPOs is to eliminate consumer choice, create big savings for insurance companies and devastate policyholders when repairs are needed. Mr. Smolda, you suggest that policyholders will save money. My convictions are that insureds who need repairs under a PPO will in fact be losers through the agony of the deflated value of poorly repaired vehicles. This expense will be substantial when compared to the small premium savings offered by the PPO policy.
Mr. Smolda’s choice of testimonials is excellent, but let’s analyze what George Bernard Shaw said: "The irrational man tries to get the world to adapt to him." That is exactly what the great insurance conglomerates are attempting. They want to dictate their criteria and get the world (collision repair shops and policyholders) to adapt to them.
Insurance companies are not offering PPO policies with the use of quality repair shops in mind, concern to save policyholders money, or offer consumers smooth claims handling procedures. Insurers have no concerns for policyholders or collision repair facilities. It is a money game! They think only in terms of profit.
There is a lot of documentation in this country about extreme job reductions within the insurance industry. I believe that if they should successfully insert the PPO program, there will be further reductions within their current staffs. I have many business acquaintances and friends in the insurance business. These are good, hard-working people and I think that they should be as concerned about the introduction of PPOs as the repair shops are.
Mr. Smolda, please don’t think I’m being critical of your entire article. I happen to agree with one part--we should be thinking like business people. I suggest that you wake up and practice your quote. This is America, freedom of choice is a precious privilege.
by George H. White, Jr.
Owner of Excel Auto Body in Marion, Ind.ASA Main Page || AutoInc. Main Page
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AutoInc. Magazine ®, Vol. XLIV No. 5, May 1996