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# United States Hospitals have traditionally relied primarily on revenue

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25 Mar 2012, 15:24
I have chosen the answer B for this question:

To summarize the passage - US hospitals rely on paying patients to offset any unreimbursed care, but these paying patients rely on insurance to clear the bills. However, insurers have recently been paying only the cost or below the cost of care.

A. Nowhere is there any mention of differentiating what procedures are available to the wealthy compared to the poor.

B. This is the correct answer. Since most patients no longer pay for health care themselves, hospitals will have trouble covering the costs of any care that is unreimbursed. Therefore, the only way to account for these losses is to deny care or suffer losses if they give it.

C. There is no mention of the different types of insurance available.

D. This is untrue according to the passage. The passage states "insurers have been strictly limiting what they pay hospitals for the care of insured patients to amounts at or below actual costs." Therefore, this answer cannot be correct.

E. There is never any mention of philanthropic donations.

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28 Mar 2012, 04:47
+1 to B. Its direct impact of whats happening..

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04 Aug 2013, 12:39
I thought Choice D was confusing because I thought that it meant that the insurers will NOT adjust their reimbursement levels and that would mean, they would be paying more for the services that cost less. However, reading more carefully, the key is realizing that "insurance companies will maintain the CURRENT level of reimbursement" The current level of reimbursement is at or below the ACTUAL cost. So if actual cost decreases, the reimbursement also decreases. Confusing but makes sense that B is the answer.

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06 Aug 2013, 20:28
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mridulbr wrote:
Look at it this way

Conventional scenario: Hospital spends 1000 bucks on treating a patient. The patient pays back 1100 bucks to the hospital for the treatment helping the Hospital make a profit.

Scenario with private health insurance firms: Hospital spends 1000 bucks on treating a patient. The patient's insurer pays back only 900 bucks to the hospital. So the hospital is making a loss.

The last line shows that in the above example an insurance company will at the maximum pay 1000 bucks and not more for treatment. So the hospitals do not stand a chance to make money.

Option D explains that by cutting their operating costs (i.e. bringing down the cost of treatment lower than 900) they will continue to make profits.

Hi Mridul,

I think we need to read option D more carefully.

(D) If the hospitals reduce their costs in providing care, insurance companies will maintain the current level of reimbursement, thereby providing more funds for unreimbursed care

Can we say anything about insurance companies? Whether they will maintain current level of reimbursement or not? Does the passage say anything about when insurers adjust their payments to the hospitals?

Thanks,
Chiranjeev
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04 Sep 2014, 14:26
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20 Feb 2015, 19:53
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United States Hospitals have traditionally relied primarily on revenues from paying patients to offset losses from unreimbursed care. Almost all paying patients now rely on governmental or private health insurance to pay hospital bills. Recently, insurers have been strictly limiting what they pay hospitals for the care of insured patients to amounts at or below actual costs.

Which of the following conclusions is best supported by the information above?

(A) Although the advance of technology has made expensive medical procedures available to the wealthy, such procedures are out of the reach of low-income patients.
(B) If hospitals do not find ways of raising additional income for unreimbursed care, they must either deny some of that care or suffer losses if they give it.
(C) Some patients have incomes too high for eligibility for governmnetal health insurance but are unable to afford private insurance for hospital care.
(D) If the hospitals reduce ther costs in providing care, insurance companies will maintain the current level of reimbursement, thereby providing more funds for unreimbursed care.
(E) Even though philanthropic donations have traditionally provided some support for the the hospitals, such donations are at present declining.

OG Prethinking Analysis: What happens to the unreimbursed care. Either the hospitals must
figure out a new way to cover the costs,or they must deny care.The only other option
is to suffer thelossesincur redbyunreimbursedcare.

Q: Is this the point to look at since the stimulus says almost All patients have taken up an insurance. Which leaves the possibility for the few others to still seek unreimbursed care. Hence the importance given to what happens to unreimbursed care?

Last edited by carcass on 22 Feb 2015, 03:45, edited 1 time in total.
Edited the title of the question

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20 Feb 2015, 23:27
Yup, I agree. The point to look at would be where do the revenues to offset losses from unreimbursed care come from, if almost all paying patients rely on insurance which are capped at or below actual costs. The stimulus says that almost all paying patients rely on insurance, which means the revenue to offset losses must come from the remainder of patients who do not rely on insurance and other means that generate revenue for the hospitals.

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07 Jun 2016, 21:55
Hello from the GMAT Club VerbalBot!

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19 Sep 2016, 19:17
Hello from the GMAT Club VerbalBot!

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01 Nov 2016, 21:00
kimmyg wrote:
Official Guide for GMAT Verbal Review, 2nd Edition

Practice Question
Question No.: 75
Page: 147
Difficulty:

United States Hospitals have traditionally relied primarily on revenues from paying patients to offset losses from unreimbursed care. Almost all paying patients now rely on governmental or private health insurance to pay hospital bills. Recently, insurers have been strictly limiting what they pay hospitals for the care of insured patients to amounts at or below actual costs.

Which of the following conclusions is best supported by the information above?

(A) Although the advance of technology has made expensive medical procedures available to the wealthy, such procedures are out of the reach of low-income patients.
(B) If hospitals do not find ways of raising additional income for unreimbursed care, they must either deny some of that care or suffer losses if they give it.
(C) Some patients have incomes too high for eligibility for governmnetal health insurance but are unable to afford private insurance for hospital care.
(D) If the hospitals reduce their costs in providing care, insurance companies will maintain the current level of reimbursement, thereby providing more funds for unreimbursed care.
(E) Even though philanthropic donations have traditionally provided some support for the the hospitals, such donations are at present declining.

US Hospitals have relied on revenues from paying patients to offset losses from unreimbursed care .
Almost all paying patients reply on government or private insurance .
Now insurers have been limiting on what they pay .
Type- Inference
Pre-Thinking - If one of sources of incomes decreases , then hospitals will to find new ways to raise income or suffer losses

(B) If hospitals do not find ways of raising additional income for unreimbursed care, they must either deny some of that care or suffer losses if they give it. - Correct
(D) If the hospitals reduce their costs in providing care, insurance companies will maintain the current level of reimbursement, thereby providing more funds for unreimbursed care.
Out of scope - we do not know what insurance companies will do
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18 Sep 2017, 15:59
United States Hospitals have traditionally relied primarily on revenues from paying patients to offset losses from unreimbursed care. Almost all paying patients now rely on governmental or private health insurance to pay hospital bills. Recently, insurers have been strictly limiting what they pay hospitals for the care of insured patients to amounts at or below actual costs.

Which of the following conclusions is best supported by the information above?

(A) Although the advance of technology has made expensive medical procedures available to the wealthy, such procedures are out of the reach of low-income patients.
- adding "advanced technology" = new info. nowhere in passage is new tech included/mentioned. could very well be current/old tech that is currently being used

(B) If hospitals do not find ways of raising additional income for unreimbursed care, they must either deny some of that care or suffer losses if they give it.
- correct as is

(C) Some patients have incomes too high for eligibility for governmental health insurance but are unable to afford private insurance for hospital care.
- "some" = any #. nowhere in passage is anything mentioned about patients who have income too high vs. patients whose income fall too low.

(D) If the hospitals reduce their costs in providing care, insurance companies will maintain the current level of reimbursement, thereby providing more funds for unreimbursed care.
- we have no reason to believe insurance co's will maintain the current level of reimbursement. what happens if it drops/increases?

(E) Even though philanthropic donations have traditionally provided some support for the the hospitals, such donations are at present declining.
- we are given no info to validate the idea that philanthropic donations are declining.

quickest way to go through this problem is POE. learn it. love it. use it.

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Re: United States Hospitals have traditionally relied primarily on revenue   [#permalink] 18 Sep 2017, 15:59

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