In its heyday—which wasn’t so long ago—Blockbuster had 60,000 employees and 9,000 locations. For most Americans, for a minute anyway, it was the place to rent a movie. Then along came Netflix. And Redbox, which operates most of the movie-rental kiosks in convenience and grocery stores.
Before you knew it, Blockbuster was no longer a necessity. All of a sudden, it seemed, we could get the video entertainment we wanted faster and cheaper and, at least with Netflix, without having to leave the comfort of our homes. In 2010, Blockbuster filed for bankruptcy, just 25 years after it was founded. By last year, the last of those 9,000 stores had closed.
What will be the next Blockbuster? It very well might be your health insurance company, says Steven Brill, the entrepreneur and journalist whose 26,000-word Time magazine cover story about the absurdly high costs of American health care captured the nation’s attention two years ago.
“I see insurance companies as the weak players” in the U.S. health care system, Brill told me in a recent interview. By that he meant that insurers have become increasingly impotent middlemen in the battle to rein in health care costs.
“Aetna is Blockbuster,” Brill wrote in his latest book, America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System.
He was quoting Ezekiel (Zeke) Emanuel, former health policy advisor in the Obama administration who is now a vice provost at the University of Pennsylvania.
Brill explained that what Emanuel meant “was that just as the video rental giant got overtaken by upheavals in how media is delivered, large insurers such as Aetna are going to be overtaken by changes in the structure and delivery of health care.”
As Brill notes, many of those changes were set in motion by the Affordable Care Act, which is making it necessary for doctors, hospitals and other health care providers to work together more collaboratively. Increasingly, Medicare and other payers are reimbursing health care providers based on how well they care for us rather than on how many separate, billable things they do to us.
As a consequence, hospitals are having to operate more efficiently, which is leading to a consolidation in the industry. There were 95 mergers just last year alone. That’s 44 percent more than in 2010, the year Congress passed health care reform.