Pacific cataract and laser institute case study

CASE Pacific Cataract 17 and Laser Institute: Competing in the LASIK Eye Surgery Market Dr. Mark Everett, clinic coordinator and optometric physician (OP) of the Pacific Cataract and Laser Institute (PCLI) office in Spokane, Washington, looked at the ad that Vancouver, Canadabased Lexington Laser Vision (LLV) had been running in the Spokane papers and shook his head. This was not the first ad This case was prepared by John J. Lawrence and Linda J. Morris, University of ldaho, for the sole purpose of providing material for class discussion. It is not intended to illustrate either effective or ineffective handling of a managerial situation. The authors thank Dr. Mark Everett for his cooperation and assistance with this project. The authors also thank the anonymous Case Research Journal reviewers and the anonymous North American Case Research Association 2000 annual meeting reviewers for their valuable input and suggestions. Copyright © 2002 by the Case Research Journal and John J. Lawrence and Linda J. Morris. both17.indd 763 11/11/08 12:29:46 PM 764 C A S E 1 7 : PA C I F I C C ATA R A C T A N D L A S E R I N S T I T U T E nor the only clinic advertising low-priced LASIK eye surgeries. Dr. Everett just could not believe that doctors would advertise and sell laser eye surgery based on low price as if it were a stereo or a used car. The fact that they were advertising based on price was bad enough, but the price they were promoting – $900 for both eyes – was ridiculous. PCLI and its cooperating optometric physicians would not even cover their variable cost if they performed the surgery at that price. A typical PCLI customer paid between $1,750 and $2,000 per eye for corrective laser surgery. Although Dr. Everett knew that firms in Canada had several inherent cost advantages, including a favorable exchange rate and regulatory environment, he could not understand how they could undercut PCLI’s price so much without compromising service quality. PCLI was a privately held company that operated a total of 11 clinics throughout the northwestern United States and provided a range of medical and surgical eye treatments including laser vision correction. Responding to the challenge of the Canadian competitors was one of the points that would be discussed when Dr. Everett and the other clinic coordinators and surgeons who ran PCLI met next month to discuss policies and strategy. Dr.