Health Systems Blockbuster Case Study Graphic

A new white paper released today by Regent Surgical Health outlines parallels from the tale of two movie distributors – the case study of the demise of Blockbuster and the rise of Netflix – to offer key lessons for healthcare leaders seeking innovative ambulatory solutions.

The story of these competitors offers six key “lessons learned” that have relevance to today’s health systems looking to leverage new technology, data, customer preference, and care delivery models to lead healthcare into its next evolution.

Regent Surgical Health CEO Chris Bishop says the six lessons are particularly compelling today for health systems developing ambulatory strategies to support value-based care. The white paper, titled “The Case for Continual Innovation in Ambulatory Strategy: A cautionary tale based on the true story of Blockbuster and Netflix,” explores each lesson, offering insights into healthcare’s parallels with the home entertainment business to help health systems avoid Blockbuster’s fate and instead move toward the level of success Netflix has enjoyed as a result of continual innovation.

Past and current practices in healthcare have many parallels to the drama that played out over 25 years between Blockbuster and Netflix.

“Innovation isn’t an event, it is an ongoing process,” says Bishop. “Netflix was visionary enough to recognize going forward where they wanted to be, and they had a better solution than their competitor. But they didn’t stop innovating just because they had a jump on Blockbuster with their mail order service – that was just the first step in the right direction.”

Ambulatory strategy has followed a similar path. Outpatient surgery led the way, with ambulatory surgery centers (ASCs) proving they could deliver a model that was more cost-effective, more convenient, and produced better outcomes. As the industry grew, so did technology, which allowed increasingly higher acuity cases to shift to outpatient settings. With the model proven, urgent care, emergency departments, imaging, and more started to spread into the neighborhoods or retail settings and out of the traditional hospital setting.

The white paper dives into six lessons from the Blockbuster-Netflix case study, applying each to challenges faced by today’s evolving health systems. The six lessons are:

  1. Stay focused on your primary purpose
  2. Know your customers, know what they want and don’t want; ensure alignment as needs change
  3. Be on the lookout for game-changing innovation; brand/business strength is not a defense
  4. Understand the potential of emerging technology to disrupt the tried-and-true
  5. Pay attention to price: continual improvement means lowering costs/price, increasing value
  6. Be open to new partners

Bishop reiterates through the paper that the successful Netflix model didn’t happen all at once. The company’s early innovations helped it beat Blockbuster, but it soon started competing with even bigger rivals such as HBO, television networks, Amazon, Apple, and more.

“As an example, for several years now, Netflix has been generating its own original content,” Bishop says. “If you asked them 15 years ago if they’d be in the content development business they probably would have said no, but as their viewership increased, they recognized an opportunity to create unique content and allow the viewer to binge watch the entire season in a day! I can’t wait to see how else they drive change in how we observe media and entertainment”, Bishop offers. “That’s a good lesson for us in healthcare: how can we think more creatively about ambulatory strategy to achieve the triple aim (improving care quality, improving population health, and reducing healthcare costs)?”

Bishop asserts that the most important lesson to be learned from the story of Blockbuster and Netflix is “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 download your copy of the white paper, click here.