According to Interstudy, a nonprofit organization that studies health maintenance organizations (HMO’s), they estimate that, in comparison to last year, when only 36 percent of the nation’s 607 HMO’s was profitable, this year 73 percent will be.


(A) they estimate that, in comparison to last year, when only 36 percent of the nation’s 607 HMO’s was profitable, this year 73 percent will be

"they" is wrong since "Internstudy" is plural

(B) compared to only 36 percent of the nation’s 607 HMO’s being profitable last year, they estimate 73 percent would be this year

same as A

(C) only 36 percent of the nation’s 607 HMO’s were profitable last year; it estimates that this year 73 percent will be

Correct.

(D) it estimates 73 percent of the nation’s 607 HMO’s would be profitable this year; last year that was only 36 percent

"that" is wrong because [remember this: "that", "those" can never substitute for precedent subjects/noun in GMAT! they are usually used in comparison and followed by modifiers. Example: the amount of food eaten by me is more than that eaten by him.

(E) only 36 percent of the nation’s 607 HMO’s last year were profitable, whereas they estimate it this year to be 73 percent

same as A
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The sentence states that a non-profit organization estimates that 73% will be profitable this year...last year only 36%.

So From the question we can see a pronoun error. A Non-Profit Organization-they is wrong.

A single organization must have a singular pronoun. Any option that uses they eliminate.

A- they incorrect
B- they incorrect
C- correct. It-one company correct and will correctly used...will be this year...
D- Incorrect although it correctly used but it should state that only 36% of HMO'S were profitable...was is incorrect.
E- they incorrect

choice A, B and E contain "they". we can not find a noun for "they". so, choice A, B and E are gone

structure in choice D is not wrong grammatically
according to the study, the city is good. this is correct.
but choice D suffer problem of "it". grammatically, "it" refers to "interstudy" and choice D is grammatical. but semantically, meaning is redundant because "according to" means "it estimate" and we use "it estimates" two times.

redundance on gmat is intolerable.

the ellipsis in choice C is hard. non native like me never can write this kind of ellipsis. but I dont care. I focus on finding the error. presenting the strange but correct pattern is a trick gmat often does.
dont stay away from strange pattern.

Here's the official explanation provided by the GMAC for this question:

This sentence describes reported estimates of how many HMOs will be profitable this year and how many were last year. The underlined portion of the sentence must clearly compare this year's percentage of profitable HMOs to last year's. Interstudy is described as a single organization, so the singular it would be appropriately used to refer to it. The phrase only 36 percent of the nation's 607 HMOs is a plural subject referring to multiple HMOs, and thus should be used with a plural verb form.

Option A: The plural they has no clear antecedent. It could confusingly appear to refer to HMOs rather than to Interstudy. If they is supposed to refer to Interstudy, the phrasing According to Interstudy … they estimate is oddly redundant. The phrasing in comparison to last year… this year 73 percent will be is verbose and seems to compare last year not with this year, but with 73 percent of HMOs being profitable this year. The plural subject only 36 percent of the nation's 607 HMOs does not agree with the singular was.

Option B: The antecedent of the pronoun they is unclear; they rather than referring to Interstudy, confusingly appears to refer to HMOs, which absurdly seem to be compared to only 36 percent of the nation's 607 HMO's being profitable last year.

Option C: Correct. The sentence straightforwardly states what percent of the HMOs were profitable last year, according to Interstudy. The plural subject only 36 percent of the nation's 607 HMOs agrees with the plural verb form were. After the semicolon, the singular it is used correctly to refer to the single organization Interstudy.

Option D: If the pronoun it is meant to refer to Interstudy, the phrasing According to Interstudy … it estimates is oddly redundant. The subjunctive would be does not agree with the indicative present tense estimates, given that what is being estimated is an actual state of affairs. The pronoun that has no clear antecedent.

Option E: The antecedents of they and it are unclear. The final clause is ambiguous; it is unclear whether this year modifies they estimate or to be 73 percent.

The correct answer is C.

Please note that I'm not the author of this explanation. I'm just posting it here since I believe it can help the community.
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According to Interstudy, a nonprofit organization that studies health maintenance organizations (HMO’s), they estimate that, in comparison to last year, when only 36 percent of the nation’s 607 HMO’s was profitable, this year 73 percent will be.

We don't need an antecedent in choices A and D; in choices B and E, 'they' refers to singular subject Interstudy. Answer is C.

(A) they estimate that, in comparison to last year, when only 36 percent of the nation’s 607 HMO’s was profitable, this year 73 percent will be

(B) compared to only 36 percent of the nation’s 607 HMO’s being profitable last year, they estimate 73 percent would be this year

(C) only 36 percent of the nation’s 607 HMO’s were profitable last year; it estimates that this year 73 percent will be

(D) it estimates 73 percent of the nation’s 607 HMO’s would be profitable this year; last year that was only 36 percent

(E) only 36 percent of the nation’s 607 HMO’s last year were profitable, whereas they estimate it this year to be 73 percent
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A, B, and E use "they" to reference "a nonprofit organization", but the pronoun should be "it"

D changes the meaning from last year to this year

C is correct and can be rephrased as "36 percent were profitable last year, an organization estimates that this year 73 percent will be"