4. Dr. Nowell should try to achieve break-even point either by increase revenue through increasing number of patient or reduce cost by dismissing workers and assets utilization. Dr. Neweli should consider two main challenges: - Efficiency: external providers can set the market price at 160$: the unit should manage to decrease costs to compete in the market; he has to evaluate how to retain patients: if external providers set the price at 160$. in the long run we could face an additional decrease in volumes . exibility: the unit has to deal with huge decreases in capacity utilization and he needs to be ready to dismiss assets and workers; on one side. it could be better to invest in quality to increase competitivit).l and then volumes in the long run, but it this is not possible outsourcing the service could be the right solution. Alternatively. if workers cannot be dismissed. we propose him to operate in one shifttday, then all workers in the unit {except administrative} are going to be part-time, with a decrease in step-functional costs