Blockbuster Case Study Graphic

Ambulatory solutions represent a new channel for health systems seeking to deliver optimal patient care while driving value for all players involved, yet some systems are moving toward robust ambulatory strategies faster than others. Providing input from another industry completely, a new white paper from Regent Surgical Health offers six key lessons from the case study of the demise of Blockbuster and the rise of Netflix that have relevance to today’s health systems.

The first three lessons outlined in the white paper, titled “The Case for Continual Innovation in Ambulatory Strategy: A cautionary tale based on the true story of Blockbuster and Netflix,” deal with external strategies. Three more, to be summarized in a future blog, deal with learning that is internally-focused.

According to Regent Surgical Health CEO Chris Bishop, these lessons are particularly compelling today for health systems developing ambulatory strategies to support value-based care. Following are the first three:

1. Stay focused on your primary purpose

Both Blockbuster and Netflix were driven by the mission of delivering entertainment to people’s homes. But rather than relying on the tried-and-true retail channel for home video rental, Netflix found increasingly more effective ways of “delivering.” With most healthcare companies focused on the triple aim – improving the quality of the patient experience, improving population health, and reducing the per capita cost of healthcare – the paper suggests that a similarly relentless pursuit of innovation is critical.

2. Know your customers, know what they want and don’t want; ensure alignment as needs change

The mis-step most analysts point to when discussing reasons for Blockbuster’s demise is the company’s failure to eliminate a practice their customers abhorred: late fees. For hospitals, the parallel opportunity is to “bite the bullet” and shift appropriate procedures to an alternate site of care. If, for any given patient, an ambulatory option like an ASC is both more convenient and more affordable, and can provide higher quality health outcomes, why continue to conduct that procedure in the hospital?

3. Be on the lookout for game-changing innovation; brand/business strength is not a defense

While the idea of mailing movies to people’s homes instead of having them shop at a store may not have seemed like a game-changer at the time, it gave Netflix first mover advantage and they never stopped innovating. Overly confident in the strength of its brand and strong profitability, Blockbuster hesitated… and consumer demand shifted away. In healthcare, an even more dramatic change is taking place in the way payers, providers and patients interact. While some health systems feel the shift to value-based care delivery methods will cannibalize existing business, many industry leaders are realizing if they don’t embrace it, they’ll lose out to those who do.

If history has anything to tell us, it suggests that success is not about evolving the old without leaving your comfort zone, because that zone slowly evaporates. Success is about knowing when the time is right to break the mold and revolutionize or cannibalize your own operating model.

To learn more about how hospital systems can innovate with ambulatory strategy, download the white paper here.