JANNAT GROUP

Mam Zooishan Hayat

Abdul Qadeer

M. Faizan Ur Rauf

Usman Ali

Jamshaid Ali

Subhan Jannat

GROUP MEMBERS

Shahid

DECISION MAKING AND PROBLEM SOLVING

Session – 1

LASIK Vision Corporation

Faizan ur Rauf

BC 11032

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

Henderson.

Introduction

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.

Introduction

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).

Hugo Sutton

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.

Excimer Laser

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.

Partnership

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.

Henderson

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.

Efficiency

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.

Ultrasound Scanner

Abdul QudeerBC11132

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

Traditional Vs Re-engineered

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.

Traditional Vs Re-engineered

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.

Henderson’s vision

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.

Henderson’s vision

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”.

Lawsuit

Jamshaid AliBC11062

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”?

President & CEO

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.

Cost & Expansion

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.

Cost & Expansion

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

Henderson firing

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

Henderson firing

Abdul Qudeer

BC 11123

SubhanJannatBC11065

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.

Price War

In January 2001, edition of Toronto’s Globe and mail reported that Lasik Vision was acquired by

another discounter, Icon Laser eye centers.

Acquired

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”.

Dell Computer

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)

Merging

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.

Bankrupt