Ted thought the plan would lead to the hospital’s demise because the outpatient facility had a limited capacity. If cosmetic surgery services increased, then the other services, which involved sports medicine, would have to decrease. (The hospital had no way to add capacity in either area, so if one type of service increased, the other had to decrease.) Ted said that although the records did show that per-patient profits for sports medicine and cosmetic surgery were about the same, his intuition told him it wasn’t so. Anne told ted to fax her the most recent cost recent cost report, and she would start working on the case immediately. The report follows :