1.
C is suggested only by para 1. Even if we go with that, the answer choice brings in a perspective of what the community needs. This angle is anyway not discussed in lines 4 and 5.

E is more direct. 'x' is what the community needs. Newhouse contends that non-profit hospitals provide 'x+y'. Weisbord contends that government can provide only x-z and non-profits step in to fill the gap.

2. Para 2 does not refer to for-profit hospitals. It only talks about how non-profit hospitals work with respect to the community's requirements.

3. E could have been correct if it had been 'they do not place a high priority on maximising profits, despite they being appointed to do so'.

Hope this helps. Thanks.