students case studies

2. Mam Zooishan Hayat

4. DECISION MAKING AND
PROBLEM SOLVING
Session – 1
LASIK Vision
Corporation

8. Lasik Vision Corporation founded in 1997 with
the cooperation of Hugo Sutton & Michael
Henderson.

9. At its peak in 2000, Lasik Vision Corporation
had over 30 clinics operating in North America
while TLC Laser Eye centers of Toronto had 62
clinics.

10. Hugo Sutton is an eye surgeon & clinical
associate professor at the university of British,
Columbia.
Since in 1978, Sutton had been operating
his own eye clinic, initially specializing in
cataract surgery.
In the intervening years, technological
advances such as the excimer laser had
transformed refractive surgery (the process of
correcting the myopia & hyperopia).

11. It’s a low-teck risky procedure using lathes &
sutures into a viable proposition for patients
who could spend $5000.
After the surgery, they could discard their
glasses or contacts.
The efficient new procedure allowed surgeons
to reduce the fee for the service, thus making it
even more attractive for the patients.

12. In 1991, the partnership with two other
surgeons. Sutton set up his own refractive
surgery clinic.
By 1996, the Lasik technique has been
changed from sparing patients the months of
healing and now they can be treated in just few
days.

13. A business executive & husband of one of
Sutton’s patients.
Henderson felt that this was a very
powerful technology, so in June 1997, Michael
Henderson joined Sutton’s company.

14. Henderson was drive an efficiency, he
fired employees & hence increased the
workload for the remainder.
To improve the efficiency, he said not to
use expensive equipments .
For example, he opposed installing an
ultrasound scanner.

15. Actually this scanner measures the individual
layers of each cornea. This scanner improves
the Lasik technique’s success ratio. Sutton
overruled him on this idea,
but many of Henderson’s ideas were
implemented.

17. The traditional model involved acquiring
patients through Optometrist referrals.
Optometrists provide postoperative care &
received a portion of $4000 to $5000 fee.

18. In the reengineered model, the optometrists
were cut out of the loop. Also every step in the
care delivery system was standardize. Patients
were attracted directly with aggressive
advertising & a price well below competitor’s
initially $2995.

19. Henderson’s vision of mass volume with low
margins was launched in February 1998.
traditionally other competitors such as, TLC ran
higher priced & low volume operations.

20. At the same time, Sutton believed in aggressive
treatment. According to one of his collegues
(Dr. Dan Reinstein) Sutton’s nature is
pioneering. And so by definition, he is more
likely to have less conservative.

21. Unfortunately, many patients were not properly
informed that they were less than ideal candidates
for the surgery.
In a competitive medical environment, patients
emerging from surgery with unsatisfactory results
led to lawsuits.
As a result, in August 1998, a rare public statement
from the B.C. college of Physicians & Surgeons
said that “Sutton has agreed to modification of his
practice & he has voluntarily agreed not to perform
these surgical procedures on patients in the higher
risk categories”.

23. In the light of Sutton’s troubles, Henderson
became President & CEO in April 1999 & began
pushing the company into massive expansion
actually started with Toronto in September
1998.
Henderson continued expansion until 8 more
sites had been added in September 1999.
Henderson insisted that pricing was the key. In
TV advertisement, Henderson personally
extolled the Lasik Vision message “Why pay
more”?

24. Standing next to a large graphic proclaiming
“$1475 per eye”.
By yearly in 1999, the price was dropped to
“$1598 for both eyes”. But Henderson preferred
to see it even lower.

25. In December 1999, Henderson announced his
intention to step up the pace of expansion.
Beginning in March 2000, Lasik vision would
start expanding at the rate of one new site per
week to open about 20 clinics in United States.

26. All this development & expansion took place
while trouble was existed between the doctors
& Henderson over financial & managerial
improper handlings.

27. Henderson was aggressively skimming profits
off the company for himself. Thus in June 2000,
Henderson was fired from the company.

29. By 2001, the industry was mired in the ugly
price war initiated by Lasik Vision and many
companies were spending 10 to 13 percent of
revenue on advertising.
Lasik’s own stock slid from $6 in April 1999 to
about a $10 in December 2000. As a result of
all this, a stability in price was eliminated.

30. In January 2001, edition of Toronto’s Globe and
mail reported that Lasik Vision was acquired by
another discounter, Icon Laser eye centers.

31. At that time Lasik called itself the Dell computer
of laser vision correction:
“we offer a high quality product direct to
customers & we cut distribution costs without
compromising patient care”.

32. In 28 August 2001, Toronto Globe reported that
the number 1 & number 2 Laser eye
companies,
TLC Laser centers
&
St. Louis
(based Laser Vision centers incorporation)

33. As a result of this, It also mentioned that these
two companies had refused to participate in the
price war initiated by Lasik Vision,
And this Price War ironically had resulted in
both Lasik Vision & its acquirer, Icon, going
bankrupt.