The United States Hospital Industry is an Unusual Market GMAT Reading Comprehension

Reading Passage Question

The United States hospital industry is an unusual market in that nonprofit and for-profit producers exist simultaneously. Theoretical literature offers conflicting views on whether nonprofit hospitals are less financially efficient. Theory suggests that nonprofit hospitals are so much more interested in offering high-quality service than in making money that they frequently input more resources to provide the same output of service as for-profit hospitals. This priority might also often lead them to be less vigilant in streamlining their services—eliminating duplication between departments, for instance. Conversely, while profit motive is thought to encourage for-profit hospitals to attain efficient production, most theorists admit that obstacles to that efficiency remain. For-profit hospital managers, for example, generally work independently of hospital owners and thus may not always make maximum financial efficiency their highest priority. The literature also suggests that widespread adoption of third-party payment systems may eventually eliminate any such potential differences between the two kinds of hospitals.

The same literature offers similarly conflicting views of the efficiency of nonprofit hospitals from a social welfare perspective. Newhouse (1970) contends that nonprofit hospital managers unnecessarily expand the quality and quantity of hospital care beyond the actual needs of the community, while Weisbrod (1975) argues that nonprofit firms — hospitals included — contribute efficiently to community welfare by providing public services that might be inadequately provided by government alone.

‘The United States hospital industry is an unusual market in that nonprofit and for-profit producers exist simultaneously.’ is a GMAT reading comprehension passage with answers. Candidates need a strong knowledge of English GMAT reading comprehension. This GMAT Reading Comprehension consists of 3 comprehension questions.

The GMAT Reading Comprehension questions are designed for the purpose of testing candidates’ abilities in understanding, analyzing, and applying information or concepts. Candidates can actively prepare with the help of GMAT Reading Comprehension Practice Questions.

Solution and Explanation

1. Which of the following best describes the overall content of the second paragraph of the passage?

(A) It describes views concerning a particular aspect of one of the types of hospitals discussed earlier.
(B) It describes an additional benefit of one of the types of hospitals discussed earlier.
(C) It offers a potential solution to a problem inherent in the structure of the United States hospital industry.
(D) It provides an additional contrast between the two types of hospitals discussed earlier.
(E) It describes one of the consequences of the character of the United States hospital market.

2. According to the passage, Newhouse's view of the social welfare efficiency of nonprofit hospitals differs from Weisbrod's view in that Newhouse

(A) contends that government already provides most of the services that communities need
(B) argues that for-profit hospitals are better at meeting actual community needs than are nonprofit hospitals
(C) argues that nonprofit hospitals are likely to spend more to provide services that the community requires than for-profit hospitals are likely to spend
(D) argues that nonprofit hospitals ought to expand the services they provide to meet the community's demands
(E) believes that the level of care provided by nonprofit hospitals is inappropriate, given the community's requirements

3. The passage suggests which of the following about the managers mentioned in the highlighted text?

(A) They have generally been motivated to streamline hospital services as a result of direct intervention by hospital owners.
(B) They are more likely than managers of nonprofit hospitals to use unnecessary amounts of resources to provide services.
(C) Their most important self-acknowledged goal is to achieve maximum financial efficiency so that hospitals show a profit.
(D) Their decisions regarding services provided by their hospitals may not reflect hospital owners' priorities.|
(E) They do not place a high priority on maximizing profits, despite their desire to achieve efficiency.

4. The passage is primarily concerned with

(A) discussing the advantages of increased efficiency in a particular type of hospital
(B) assessing obstacles to efficiency in a particular type of hospital
(C) describing conflicting assessments in the theoretical literature concerning particular types of hospitals
(D) challenging evidence used to support an argument advanced in recent theoretical literature concerning a particular type of hospital
(E) emphasizing the advantages of one particular type of hospital over another type

5. The author mentions duplication between departments primarily in order to

(A) illustrate an area in which nonprofit hospitals fail to provide adequate services
(B) describe the outcome of nonprofit hospitals' emphasis on maintaining managerial freedom
(C) recommend a particular change that would allow nonprofit hospitals to streamline their services
(D) suggest a way in which nonprofit hospitals may fail to achieve maximum financial efficiency
(E) explain why nonprofit hospitals may be able to provide more services than for-profit hospitals

Suggested GMAT Reading Comprehension Samples

• Nitrogen, Which Comprises 78 Percent of Earth's Atmosphere GMAT Reading Comprehension.
• An Experiment Conducted Aboard Space Lab in 1983 GMAT Reading Comprehension
• Coral Reefs Increasingly Face a Number of Threats GMAT Reading Comprehension
• Shortness, Reduced Mobility and Sore Joints May not Come to Mind GMAT Reading Comprehension
• When I Talk About UFOs in my Introductory Astronomy Classes GMAT Reading Comprehension
• There is a New Cell-Phone Ring Tone that can't be Heard by Most People GMAT Reading Comprehension
• A Growing Taste for Shark Steaks and Shark-Fin Soup has for the First Time in 400 Million Years GMAT Reading Comprehension
• Erythropoietin, Known also as EPO, is a Glycoprotein Hormone that Controls the Production of Red Blood Cells GMAT Reading Comprehension
• Ideas Involving the Theory of Probability Play a Decisive Part in Modern Physics. GMAT Reading Comprehension
• Isolated From the Rest of the World by Circumpolar Currents and Ice Fields, the Dry Valleys of Antarctica Never See Snowfall. GMAT Reading Comprehension
• In the Fast New Choreography of American Compassion, Explanation is Twirled into Excuse GMAT Reading Comprehension
• No One Thing Over Which we have Control Exerts so Marked an Influence Upon our Physical Prosperity GMAT Reading Comprehension
• The Spotted Hyenas, or Crocuta Crocuta, Found Through Sub-Saharan Africa GMAT Reading Comprehension
• For Biologists, The Term “eye” Describes any Light-Sensitive Organ GMAT Reading Comprehension
• Newton’s Surprising Success at Developing the Laws of Motion GMAT Reading Comprehension
• Physical Theory Implies that the Existence of Astronomical Entities GMAT Reading Comprehension
• The Study of Climate Change has Established Retreating Glaciers GMAT Reading Comprehension
• Every culture that has adopted the cultivation of maize​ GMAT Reading Comprehension
• At the present time, 98% of the world energy consumption GMAT Reading Comprehension
• The Internet makes possible the instantaneous transmission​ GMAT Reading Comprehension