MHA 707 EXAM C Comprehensive Test Bank Final 180 New Questions with Answers & Detailed Rationales Healthcare Systems & Administration | Based on LSUS MHA 707 Curriculum | Updated 2026/2027

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MHA 707 EXAM C Comprehensive Test Bank Final
180 New Questions with Answers & Detailed
Rationales Healthcare Systems & Administration |
Based on LSUS MHA 707 Curriculum | Updated
2026/2027



1. In the context of healthcare economics, which of the following best explains
why traditional economic models of supply and demand fail to adequately
describe the healthcare market?
- A) Healthcare services are typically purchased directly by consumers without
third-party involvement
- B) The demand for healthcare is perfectly elastic regardless of price
- C) The presence of third-party payers and information asymmetry
fundamentally alters price sensitivity and consumer choice
- D) Healthcare providers operate in a perfectly competitive market structure


Answer: C
Rationale: Healthcare markets deviate from traditional economic models due
to third-party payers (insurers) that shield consumers from the full cost of
care, and information asymmetry where providers possess more knowledge
than patients. These factors distort price signals and consumer decision-
making. The correct answer is C. Option A is incorrect because most
healthcare is paid for by third parties. Option B is incorrect because healthcare
demand is not perfectly elastic. Option D is incorrect because healthcare
markets are not perfectly competitive.

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2. A hospital is considering implementing a bundled payment model for joint
replacement surgeries. Which of the following represents the most significant
financial risk the hospital would assume under this arrangement?
- A) The cost of readmissions and post-acute care services that exceed the
bundled payment amount
- B) The administrative burden of billing multiple payers for each service
component
- C) The loss of revenue from patients who choose competing hospitals
- D) The inability to recruit specialist surgeons for the program


Answer: A
Rationale: Bundled payments provide a single payment for an entire episode
of care, including post-acute services. The hospital bears financial risk for all
costs within the bundle. If readmissions or post-acute care costs exceed the
bundle amount, the hospital absorbs the loss. Option B is incorrect because
bundled payments reduce billing complexity. Options C and D are strategic
risks but not the primary financial risk of bundled payments.




3. The National Health Expenditure Accounts (NHEA) measure health care
spending in the United States. Which of the following statements about the
NHEA is FALSE?
- A) NHEA includes both health consumption expenditures and investments in
medical structures and equipment
- B) Health Consumption Expenditures (HCE) is a subset of NHE that includes
personal health care, government administration, and net cost of private
health insurance

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- C) Personal Health Care (PHC) includes all medical goods and services used to
diagnose, treat, and prevent health problems in specific individuals
- D) NHEA is published annually by the Centers for Medicare & Medicaid
Services (CMS)


Answer: D


Rationale: The NHEA is published by the Department of Health and Human
Services (DHHS), not CMS. Options A, B, and C are all accurate statements
about the NHEA structure. The NHEA provides official estimates of health care
spending in the US and is comprehensive, multidimensional, and consistent in
its methodology.




4. Approximately 90% of National Health Expenditures (NHE) are spent on
which category of conditions?
- A) Acute, self-limiting conditions
- B) Chronic diseases and mental health conditions
- C) Preventive care services
- D) Emergency department visits


Answer: B


Rationale: Approximately 90% of National Health Expenditures are spent on
chronic diseases and mental health conditions. Chronic diseases are defined
as conditions that last one year or more and require ongoing medical
attention or limit activities of daily living. This concentration of spending

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reflects the high cost of managing long-term conditions. The top 5% of
utilizers account for about half of all health care spending.


5. Cost-plus reimbursement in healthcare refers to a payment model where:
- A) Providers receive a fixed payment per patient regardless of services
provided
- B) Providers are reimbursed for actual costs incurred plus an additional
percentage for profit
- C) Providers receive a single payment for an entire episode of care
- D) Providers are paid based on quality metrics and patient outcomes


Answer: B
Rationale: Cost-plus reimbursement describes a payment model where the
organization tracks all costs associated with each patient and is reimbursed
for actual costs plus an additional percentage of those costs (including built-in
profit). This model is commonly used in hospital settings for services already
provided. Option A describes capitation. Option C describes bundled
payments. Option D describes value-based purchasing.




6. Which of the following represents the correct order of health care
expenditure categories from largest to smallest as a percentage of National
Health Expenditures (NHE)?
- A) Hospital care, Prescription drugs, Physician services
- B) Hospital care, Physician services, Prescription drugs
- C) Physician services, Hospital care, Prescription drugs
- D) Prescription drugs, Physician services, Hospital care