Hole in the head (HITH) also known as lateral line erosion is a disease that is most commonly associated with cichlids, but can affect all kinds of fish. It effects the head area and along the lateral line causing erosion to the surface which can deteriorate and have horrific results, usually affecting around the eye area.
The Oscar pictured to the right has a medium case of HITH.
There are commonly thought to be four ways that a fish can contract HITH:
The environment of a fish is very important for the health of the fish, this can be either the water quality, or in fact the stress caused by conditions (tank size, tank mates, decor, etc...) if the quality of water is not good then the fish are likely to get any number of diseases, HITH is commonly associated with long periods of poor water quality, it could also be caused by stress.
It is important to give your fishes a good diet filled with nutrients, just like it is important for people, without a good balanced diet fish can become seriously ill. HITH is commonly associated with a lack of calcium, phosphorous, and vitamins C & D, fortunately many good quality fish foods are jam packed with extra vitamins.
The carbon theory
It has never been proven, but there is much evidence supporting this idea - it is thought that carbon can be a cause of HITH, there are reports of people adding carbon to a tank and the the HITH disease developing, and then when the carbon is removed the HITH heals up.
Heximita is an intestinal parasite which seems to reduce the amount of nutrients the intestines can absorb, it has been thought of as a main cause of HITH, but now it seems it might just be an extra problem for these fishes.
To cure HITH you need to take good care of the infected fish, you want to start by ensuring the water quality is as perfect as can be, I would suggest doing 20% water changes every 1-2 days to help, you also should add some aquarium salt (1 tablespoon per 5 gallons), a good diet is essential, so ensure that the food you give is high quality.
Remove all carbon - this only makes sense if you think it could be the carbon causing the problems, also raise the temp to around 82-86 this might help kill off the disease, and increase the speed of recovery.
There are also medicines that may help the treatment of HITH, but you may need a vets prescription. Dimetridazole and Metronidazole are said to be effective as is Waterlife "Octozin".