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Healthy Thoughts

Mark Wechsler, Cross Healthcare Industry Director, shares his expertise on a variety of healthcare industry concerns and hot topics.

Look for new blog entries every Thursday afternoon.

Taking a Lesson from Borders and Blockbusters

October 6, 2011

What could Blockbuster Video and Borders Books possibly have to do with healthcare?  I’ll get to that after a quick review of their current situations.

Borders began liquidating their remaining 399 nationwide stores in July of this year. At their peak Borders operated 1249 store fronts. The liquidation is on target to be completed this fall.  About 10,700 people will have lost their jobs, IT outsourcing service companies (e.g. IMAC and repair) such as Compucom will have lost one of their largest customers and likely be forced to layoff many of their field technicians. Thousands of square feet of empty retail store front will put even more pressure on consumer shopping centers.     

Similarly, Blockbuster filed for Chapter 11 in September of last year.  After being the largest video rental company in the country in the 1990’s, they too faced retail closures in virtually every metropolitan marketplace.  DISH Network Corporation now owns Blockbuster and its remaining assets.

The singular challenge faced by both companies was their inability to adapt to the age of digital media.  Borders failed to compete with Amazon and Barnes & Noble.  They opened their first eBook store in July of 2010, giving Amazon a 3 ½ year head start and Barnes & Noble a 9 month lead.  Blockbuster talked-the-talk about kiosks, online rentals, digital media, and streaming but did not keep pace with competition from Netflix, Red Box, cable, and satellite carriers.  While technology was the enabler, the downfall of both companies was their inability to provide new services for the consumer with the convenience and flexibility they demanded.

The need for new (digital) information access and communication services is not relegated to the consumer space.  Consumers are demanding to communicate with health insurers and physicians on their own terms, which means via social media tools and mobile devices. It's no wonder that Juniper Research is forecasting a 22% increase in the mobile (mHealth) market over the next 3 years and IT organizations will spend an estimated $40B.

Some participants in the health care delivery supply chain are gaining experience with new digital media and communication services in an attempt to stay abreast of the consumers who desire to communicate "their way".  With 90% of consumers already owning a mobile device and having access to Simple Messaging Services or Multi-Media Services, it is surprising to find that many payers and providers are continuing to take a wait and see approach. 

While it is highly unlikely that the (lack of) adoption of social networking, multi-media, and effective mobile applications will spell the demise of a given insurer or provider, it certainly can play a role in contributing to the payer/provider's position in the market place.  Competition is only increasing in every segment of the market.  It is reasonable to think that healthcare businesses will be forced to utilize these new forms of communication as mainstream, or lose their competitive advantage to those who are readily adopting them.  Like Blockbuster and Borders, those providers and payers that fail to aggressively adapt to the age of advanced digital communication services may find themselves further challenged by declining market share and revenue.

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