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Health Maintenance Organizations (HMOs)....

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Intern
Joined: 24 Apr 2010
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19 Jul 2010, 19:11
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Difficulty:

85% (hard)

Question Stats:

53% (02:28) correct 47% (02:26) wrong based on 935 sessions

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I could not get the rigth answer for this question, this came up in a kaplan exam. I also dont understand the explanation. Could someone pick the best answer and explain how to get to it. I will be posting the answer later.

Doctor: Health Maintenance Organizations (HMOs) should not be used to replace traditional fee-for-service methods of delivering health care. The less health care that HMOs deliver, the greater the profit these companies receive. Accordingly, there is a perverse incentive for these companies to deliver very little health care, regardless of the ill patient's needs.

Which of the following, if true, casts the most doubt on the doctor's conclusion?

a)Doctors are paid less by HMOs than they receive under a fee-for-service system, which allows HMOs to charge less for the service they provide.
b)An effective way for HMOs to cut health care delivery costs is to prevent diseases from occurring by providing considerable amounts of preventive health care.
c) If HMOs deliver less health care, competitive pressures will force these companies to lower the rates they charge for health care coverage, returning the profit margin to former levels.
d)Fee-for-service methods of delivering health care have perverse incentives to provide unnecessary health care at inflated costs.
e)HMOs are the only proven way to reduce the high health care costs produced by a fee-for-service system without governmental interference.
Intern
Joined: 17 Aug 2009
Posts: 30
Location: India
Concentration: General Management, Finance
Schools: Babson (A), Smith (D)
GMAT 1: 580 Q49 V21
GMAT 2: 650 Q49 V29
GPA: 3.85
WE: Information Technology (Computer Software)
Re: Health Maintenance Organizations (HMOs)....  [#permalink]

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19 Jul 2010, 21:36
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2
Doctor: Health Maintenance Organizations (HMOs) should not be used to replace traditional fee-for-service methods of delivering health care. The less health care that HMOs deliver, the greater the profit these companies receive. Accordingly, there is a perverse incentive for these companies to deliver very little health care, regardless of the ill patient's needs.

a)Doctors are paid less by HMOs than they receive under a fee-for-service system, which allows HMOs to charge less for the service they provide. - This does not attack the underlined claim
b)An effective way for HMOs to cut health care delivery costs is to prevent diseases from occurring by providing considerable amounts of preventive health care. - Again irrelevant, does not attack why they deliver little health care
c) If HMOs deliver less health care, competitive pressures will force these companies to lower the rates they charge for health care coverage, returning the profit margin to former levels - Yes, if HMO's deliver very little health care, it affects their profit margin, hence undermines the bolded claim
d)Fee-for-service methods of delivering health care have perverse incentives to provide unnecessary health care at inflated costs. - This does not concern or attach the Doctor's claim about HMO's
e)HMOs are the only proven way to reduce the high health care costs produced by a fee-for-service system without governmental interference. - Strengthens the argument

Hence the answer which weakens would be C. Hope this helps.

Sandeep
--------------------
Give and take Kudos
General Discussion
Intern
Joined: 12 Jul 2010
Posts: 18
Re: Health Maintenance Organizations (HMOs)....  [#permalink]

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19 Jul 2010, 20:45
I went for B.

Curious to see how people will tackle this one.
VP
Joined: 17 Feb 2010
Posts: 1081
Re: Health Maintenance Organizations (HMOs)....  [#permalink]

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21 Jul 2010, 11:09
well explained sandeepnerli.

Intern
Joined: 12 Jul 2010
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Re: Health Maintenance Organizations (HMOs)....  [#permalink]

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22 Jul 2010, 14:18
I agree with seekmba!

Nice explanation,sandeepnerly! +1 to you!
Manager
Joined: 11 May 2010
Posts: 157
Re: Health Maintenance Organizations (HMOs)....  [#permalink]

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22 Jul 2010, 20:00
1
I pick C after a while, I was torn among B, C, D

Arguments:

Conclusion: HMO < FFS
Premise:
- HMO deliver less healthcare, profit rise
- HMO will deliver very little healthcare (therefore we should keep FFS)

We need to weaken HMO < FFS, in this case, the way to weaken is to attack the reasoning

A - Talk about doctor paid, this is just fact, no bearing on the conclusion -> WRONG

B - This is a very appealing answer, but if that is true then HMO still can gain a lot of profit according to the reason of the argument -> not weaken -> WRONG

C - HMO deliver less healthcare, pressure => no more as profit, can't continue deliver less healthcare -> Weaken -> Correct

D - We need to attack HMO, FFS could be bad, but we don't care -> Out of Scope -> WRONG

E - Reduce high cost of FFS, but still gain profit by deliver less healthcare -> not weaken -> WRONG
Manager
Joined: 08 Jan 2010
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Re: Health Maintenance Organizations (HMOs)....  [#permalink]

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28 Jul 2010, 21:37
C.........above explanations are good ......
Senior Manager
Joined: 23 May 2010
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Re: Health Maintenance Organizations (HMOs)....  [#permalink]

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29 Jul 2010, 06:12
C..
question was pretty weird for me ..then I read the choices and understood. and picked C ...
Intern
Joined: 13 Dec 2013
Posts: 40
GPA: 2.71
Re: Health Maintenance Organizations (HMOs)....  [#permalink]

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09 Jan 2015, 06:43
perseverant wrote:
I could not get the rigth answer for this question, this came up in a kaplan exam. I also dont understand the explanation. Could someone pick the best answer and explain how to get to it. I will be posting the answer later.

Doctor: Health Maintenance Organizations (HMOs) should not be used to replace traditional fee-for-service methods of delivering health care. The less health care that HMOs deliver, the greater the profit these companies receive. Accordingly, there is a perverse incentive for these companies to deliver very little health care, regardless of the ill patient's needs.

Which of the following, if true, casts the most doubt on the doctor's conclusion?

a)Doctors are paid less by HMOs than they receive under a fee-for-service system, which allows HMOs to charge less for the service they provide.
b)An effective way for HMOs to cut health care delivery costs is to prevent diseases from occurring by providing considerable amounts of preventive health care.
c) If HMOs deliver less health care, competitive pressures will force these companies to lower the rates they charge for health care coverage, returning the profit margin to former levels.
d)Fee-for-service methods of delivering health care have perverse incentives to provide unnecessary health care at inflated costs.
e)HMOs are the only proven way to reduce the high health care costs produced by a fee-for-service system without governmental interference.

Just a thought, in hard CR questions almost all choices are identical and seem like good answers.
The best way to go about it is by re reading the conclusion & the premise.
Here it talks about the lack of health care HMO's might provide because of the "incentive" they get for it.

The only statement that directly addresses this is C
Intern
Joined: 02 Jan 2015
Posts: 32
GMAT Date: 02-08-2015
GPA: 3.7
WE: Management Consulting (Consulting)

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28 Jan 2015, 01:33
sandeepnerli wrote:
Doctor: Health Maintenance Organizations (HMOs) should not be used to replace traditional fee-for-service methods of delivering health care. The less health care that HMOs deliver, the greater the profit these companies receive. Accordingly, there is a perverse incentive for these companies to deliver very little health care, regardless of the ill patient's needs.

a)Doctors are paid less by HMOs than they receive under a fee-for-service system, which allows HMOs to charge less for the service they provide. - This does not attack the underlined claim
b)An effective way for HMOs to cut health care delivery costs is to prevent diseases from occurring by providing considerable amounts of preventive health care. - Again irrelevant, does not attack why they deliver little health care
c) If HMOs deliver less health care, competitive pressures will force these companies to lower the rates they charge for health care coverage, returning the profit margin to former levels - Yes, if HMO's deliver very little health care, it affects their profit margin, hence undermines the bolded claim
d)Fee-for-service methods of delivering health care have perverse incentives to provide unnecessary health care at inflated costs. - This does not concern or attach the Doctor's claim about HMO's
e)HMOs are the only proven way to reduce the high health care costs produced by a fee-for-service system without governmental interference. - Strengthens the argument

Hence the answer which weakens would be C. Hope this helps.

Sandeep
--------------------
Give and take Kudos

Thanks for the explanation Sandeep, although I'm unclear how E strengthens the argument? The argument, very broadly speaking, is that HMOs are not a good alternative. Whilst it doesn't tackle the specific argument (around perverse incentives) and is therefore somewhat out-of-scope, if anything it still weakens the author's implied viewpoint as it provides a positive for HMOs; in terms of the specific argument, it is neutral rather than strengthening.

I chose B for this question because I focused solely on the conclusion (HMOs 'should not be used to replace traditional fee-for-service methods of delivering health care') and not on the specific premise the conclusion was built on (they are bad because 'there is a perverse incentive...'). I think that B, D and E do provide opposing evidence to the author's conclusion and are not therefore 'irrelevant' as they all strengthen the case for HMOs, but they don't weaken the conclusion specifically in the way that C does because they ignore the author's premise, and so C is the answer. However, I would have thought B, D and E could all have been correct answers in the absence of C, given that the question mentions the author's 'conclusion' and not their 'argument' and therefore the answers don't technically need to mention the author's specific premise.

Please point out if there are any flaws in my thinking here? I'm interpreting the takeaway on this problem as 'a statement which weakens the specific premise behind the author's conclusion is preferable to one which weaken's the conclusion without addressing the specific premise.'
Manager
Joined: 08 Jun 2015
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Re: Health Maintenance Organizations (HMOs)....  [#permalink]

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08 Jul 2015, 15:36
I took (A) as a conflict of interest. However, it only suggests that there's a possibility of omitting or exaggerating the claim, so it doesn't necessarily weaken what the doctor is saying directly.
Intern
Joined: 09 Jul 2015
Posts: 9
Location: India
WE: Marketing (Other)
Re: Health Maintenance Organizations (HMOs)....  [#permalink]

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19 Aug 2015, 06:34
perseverant wrote:
I could not get the rigth answer for this question, this came up in a kaplan exam. I also dont understand the explanation. Could someone pick the best answer and explain how to get to it. I will be posting the answer later.

Doctor: Health Maintenance Organizations (HMOs) should not be used to replace traditional fee-for-service methods of delivering health care. The less health care that HMOs deliver, the greater the profit these companies receive. Accordingly, there is a perverse incentive for these companies to deliver very little health care, regardless of the ill patient's needs.

Which of the following, if true, casts the most doubt on the doctor's conclusion?

a)Doctors are paid less by HMOs than they receive under a fee-for-service system, which allows HMOs to charge less for the service they provide.
b)An effective way for HMOs to cut health care delivery costs is to prevent diseases from occurring by providing considerable amounts of preventive health care.
c) If HMOs deliver less health care, competitive pressures will force these companies to lower the rates they charge for health care coverage, returning the profit margin to former levels.
d)Fee-for-service methods of delivering health care have perverse incentives to provide unnecessary health care at inflated costs.
e)HMOs are the only proven way to reduce the high health care costs produced by a fee-for-service system without governmental interference.

I found C to clearly be the answer. None of the other options were tackling the actual conclusion, which was that these companies are incentivized to deliver less health care because that is how they make more and more profit! We need an answer that refutes this statement, and there is only one option that fits.
Intern
Joined: 06 Apr 2012
Posts: 22
Re: Health Maintenance Organizations (HMOs)....  [#permalink]

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21 Feb 2016, 06:10
The best way to solve this is understanding very well the conclusion. In this case we have to find am answer that correlates the less health care delivered with the profits (not with the cost). C is the only answer that states this correlation.
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18 Apr 2018, 10:31
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