ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation
Which of the following is the most significant difference between a public sector hospital and a private sector for-profit hospital?
The key difference is funding and objectives: a public hospital is largely tax-funded and judged on service delivery and value for money, while a private for-profit hospital is funded by owners and paying customers and judged mainly on profitability. Both must control costs and employ qualified staff.
- AThe public hospital need not manage its costs
- BThe public hospital is mainly funded through taxation and judged on service delivery and value for money, whereas the private hospital is funded by owners and customers and judged on profitCorrect
- CThe private hospital cannot employ qualified clinical staff
- DThe public hospital has no stakeholders other than government
Explanation
Public sector bodies are typically funded by taxation and assessed on service levels and value for money (economy, efficiency, effectiveness). Private firms rely on owner capital and customer revenue and are judged on profitability. The other options are false: public bodies must control costs and have many stakeholders.
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