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Direct to Consumer Healthcare - Why its going to kill your super normal profits

It was not the lack of a streaming solution that marked the end for Blockbuster, it was the addiction to high margin late fees. Netflix did not hesitate to innovate and drive forward with streaming (Blockbuster had also developed a streaming solution) but Blockbuster held onto it's traditional sales network model for far too long relying on those high ,margin but short lived late fees to bolster it's short term performance and mask a model in imminent decline.

This was not unique to entertainment, Kodak was one of the first to innovate in digital photography but again hung onto their model of traditional film production in the belief they could introduce digital solutions later into their model however with the benefit of hindsight we can see that all they did was allow smaller more agile firms to become market leaders in digital photography and in essence reduced the Kodak brand to being a cautionary tale in MBA case studies.

The healthcare industry is awash with Blockbuster and Kodak clones who are making the same mistakes today. Traditional network models where the reliance is on clinicians to promote your brand to their clients is changing and brand loyalty amongst clinicians is fading quickly and at a more accelerated rate since the advent of COVID 19 as clinics struggle with attendance and months of closure and are choosing lower cost solutions to maintain margin levels.

Brands such as Smile Direct Club have taken the market on a 360 degree journey. Initially they both focused on owning the direct client relationship and selling a 3rd party product directly to the client to moving to their own aligner production to satisfy direct to consumer demand to an even wider stance of taking over the dentist relationship and offering their product into a traditional network model instead of brands like Invisalign and Clearcorrect by offering a lead generation model of complex clients, remote treatment and better commercial terms. This is a crystal ball for all traditional medial device manufacturers without a Direct to consumer strategy.

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