Health Systems Blockbuster Case Study Graphic

Remember Blockbuster? An early leader in home entertainment, the video rental superstar boasted more than 9,000 stores across the nation in the early 2000s. But now the chain is gone, and Netflix, which was an unknown starlet in Blockbuster’s heyday, now has a market cap of $165+ billion. A new white paper from Regent Surgical Health draws insights from the story of these competitors to offer six key “lessons learned” with relevance to today’s health systems.

In a time of rapid change, health systems are looking internally to leverage new technology, data, and care delivery models to lead healthcare into its next evolution. The white paper titled “The Case for Continual Innovation in Ambulatory Strategy: A cautionary tale based on the true story of Blockbuster and Netflix,” addresses these goals. Three of the six lessons it outlines focus on operational issues, including:


  1. Understand the potential of emerging technology to disrupt the tried-and-trueAs the first-mover in online video rentals, Netflix gained a sustainable technological advantage over Blockbuster. Similarly, in healthcare, when it comes to surgical procedures, for example, robotics may be the game-changing technology on the horizon.


  1. Pay attention to price: continual improvement = lowering costs/price, increasing valueBlockbuster became profitable by penalizing customers with late fees and it was difficult for them to let go of that profitability. That fact gave Netflix a distinct advantage: they could differentiate on value by allowing an unlimited rental timeframe. By adopting a robust ambulatory strategy, health systems can enjoy the same opportunity: ambulatory services cost less and deliver greater value.


  1. Be open to new partnersIn the year 2000, Netflix offered to merge with Blockbuster, but as the clear industry leader, Blockbuster didn’t recognize a need for the new perspective Netflix offered. If they had been more open, the story of the two may have ended very differently. In healthcare today, consolidation is changing the industry dynamic as lines begin to blur regarding who provides healthcare. Insurance companies are buying hospitals and investing in outpatient surgery centers, and medical device companies and pharmacies are also offering provider services. Health systems who are open to new perspectives will thrive, and those who are not may find themselves left behind. Says Regent CEO Chris Bishop: “We need to embrace alternative healthcare providers to continue driving innovation.”


The successful Netflix model didn’t happen all at once. The company started with mail delivery, evolved to direct downloads, and continued innovating from there.

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