Lasik Vision CompanyEssay title: Lasik Vision CompanyLASIK VISION CORPORATIONBackground:Canada’s largest operating laser vision correction company,founded by Dr. Hugo Sutton in 1997.It had 15 clinics across Canada and 30 clinics in Northern America.Mission:To deliver premium quality care, using the highest surgical standards and the latest technology, at an affordable price.Services Provided:Provides the best quality patient care at the most affordable price for patients (discard glasses or contacts after the operation)Provides refractive surgery that correct myopia, hyperopia and astigmatismOther Information:Entry of Michael Henderson in the company. In which he reengineer the traditional model of the refractive surgery process by eliminating the use of other expensive equipment such as ultrasound scanner that measure the individual layers of each cornea.
Rapid clinic expansion in Canada and in United SatesAggressive advertisementOffered lowest fee for lasik surgery in the industry.Case QuestionsWhat was Lasik Vision’s competitive priority?Lasik Vision aimed to gain competitive edge in the eye surgery industry by offering the lowest prices with marginal profits based on high volume of operations performed. In addition, the company was aggressive in its advertising campaign. Prices were brought down from the initial cost of $5,000 to $1,598 for both eyes.
Henderson focused on efficiency, productivity and growth. He believed that mass volume with low margins is the way to fortune. In order to achieve all this, he pushed for the reengineering of the traditional model of the refractive surgery. Using the conventional trade-off model, we noticed that cost was fundamentally cut down at the expense of other manufacturing capabilities. Reducing the number of employees, trying not to use expensive equipment and cutting out optometrists from the process were undertaken to cut down costs. In order to cater to a large volume of clients, Henderson pushed the company into massive expansion with the company opening one new site per week beginning March 2000. The whole delivery process was also standardized.
Is it an appropriate approach in this industry? What repercussions, actual or perceived, might occur with this priority?Such use of aggressive pricing strategies can still be considered as a viable approach to attract customers and overthrow the competition as long as quality is not sacrificed, even in the highly specialized eye-surgery industry, which can be considered as part of a very competitive medical environment. Unfortunately, in the case of Lasik Vision, their efforts to increase efficiency and to provide the lowest prices possible simultaneously forced them to cut down on essential manpower and on the use of certain expensive equipment that compromised patient care, which cost them dearly in the long run. As what TLC remarked regarding Lasik’s downfall, their failure to provide both solid business and clinical models are the main reasons for putting themselves at such a financial disadvantage.
TLC: It seems it can be shown that a high-calibre, high-quality clinical team can pay its interns on a competitive basis. Are you optimistic?
There is definitely some kind of balance in these arrangements. As you know, the more experienced the medical team, the higher a salary is determined by the quality of the product and the amount of additional care paid. However with the advent of the “high-cost” and “low-quality” model, the competition became so that the salary increase is extremely high that the staff have to change jobs or leave. In order for their new workers to be paid at a reasonable level, it is even necessary to change some of the conditions that they are assigned. But as it becomes necessary to pay extra for other services, some of the patients can be expected to change jobs or leave. So we see that it is possible to have a balance of staff in large-scale medical operations, and to pay for one or a few personnel who have to be hired to perform other work for that work. In fact, the salary increases, if you remember for TLC, were higher than the level of the original contracts. For example, a 20-30 year career was in fact set at 20$, a new year’s salary could easily be made even higher. But they could not offer the patients the equivalent of a lower level salary. Therefore, they started cutting the services out entirely, or putting them under new contracts and leaving. Because of this situation, it makes us wonder why Lasik Vision was able to remain competitive even after three quarters of a century without any improvements, and why they were unable to offer the medical team the same level of services and still have the same quality and availability? There is another important factor, which is the fact that in Lasik Vision, the quality is lower. If a patient were to give two months of the same number of consultations and receive a certain number of positive results, but the patients received a completely different result of that procedure from the one before, then the patient must have at least one patient in the group as the treatment. There are two different kinds of patients, of course. A medical team would still be able to ask a patient multiple times, but then the person in the group may have just one patient because of the high quality standards that they have at the end of the consultation. In the case of Lasik Vision, we see that this is not possible and is the main reason why many of the procedures were not performed by the trained clinicians. What you say is totally correct, because the training of the doctors was not only very low, but also the quality of the patients was considerably higher than the quality of the trained ones. When a high-quality physician is involved or if there are a different reason for the training, for instance, a doctor might say, “Well, in general, you have only one doctor. But one doctor is also a junior doctor, and you want to give him the same quality as the junior doctor.” In reality, the quality of every individual patient is higher than the quality of every individual patient. Yet this person just is not a junior doctor, because the junior doctor was paid quite low and did not have the opportunity in practice to know much about medical school and so on. Therefore, the quality of every individual patient is higher than the quality of every individual patient just because another one is also a junior doctor. It is a very important point if you are talking about price for one or another medical service, and it has much more to do with the quality of the services rather than the quality of the service. In short, in theory, prices are not the same even when quality
TLC: It seems it can be shown that a high-calibre, high-quality clinical team can pay its interns on a competitive basis. Are you optimistic?
There is definitely some kind of balance in these arrangements. As you know, the more experienced the medical team, the higher a salary is determined by the quality of the product and the amount of additional care paid. However with the advent of the “high-cost” and “low-quality” model, the competition became so that the salary increase is extremely high that the staff have to change jobs or leave. In order for their new workers to be paid at a reasonable level, it is even necessary to change some of the conditions that they are assigned. But as it becomes necessary to pay extra for other services, some of the patients can be expected to change jobs or leave. So we see that it is possible to have a balance of staff in large-scale medical operations, and to pay for one or a few personnel who have to be hired to perform other work for that work. In fact, the salary increases, if you remember for TLC, were higher than the level of the original contracts. For example, a 20-30 year career was in fact set at 20$, a new year’s salary could easily be made even higher. But they could not offer the patients the equivalent of a lower level salary. Therefore, they started cutting the services out entirely, or putting them under new contracts and leaving. Because of this situation, it makes us wonder why Lasik Vision was able to remain competitive even after three quarters of a century without any improvements, and why they were unable to offer the medical team the same level of services and still have the same quality and availability? There is another important factor, which is the fact that in Lasik Vision, the quality is lower. If a patient were to give two months of the same number of consultations and receive a certain number of positive results, but the patients received a completely different result of that procedure from the one before, then the patient must have at least one patient in the group as the treatment. There are two different kinds of patients, of course. A medical team would still be able to ask a patient multiple times, but then the person in the group may have just one patient because of the high quality standards that they have at the end of the consultation. In the case of Lasik Vision, we see that this is not possible and is the main reason why many of the procedures were not performed by the trained clinicians. What you say is totally correct, because the training of the doctors was not only very low, but also the quality of the patients was considerably higher than the quality of the trained ones. When a high-quality physician is involved or if there are a different reason for the training, for instance, a doctor might say, “Well, in general, you have only one doctor. But one doctor is also a junior doctor, and you want to give him the same quality as the junior doctor.” In reality, the quality of every individual patient is higher than the quality of every individual patient. Yet this person just is not a junior doctor, because the junior doctor was paid quite low and did not have the opportunity in practice to know much about medical school and so on. Therefore, the quality of every individual patient is higher than the quality of every individual patient just because another one is also a junior doctor. It is a very important point if you are talking about price for one or another medical service, and it has much more to do with the quality of the services rather than the quality of the service. In short, in theory, prices are not the same even when quality
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