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Healthcare Blockchain Consortia Initiatives

Healthcare Companies are Ramping Up Involvement in Blockchain / DLT Projects in 2019

Part 1: Introduction to Healthcare Blockchain Consortia

This is the first newsletter in a series where we will explore the accelerating pace of enterprise blockchain consortia announcements in healthcare. The emergence of these consortia is forecasting what we can expect in the future and has a lot to say about blockchain’s evolution in the enterprise space.

There are many startups and large healthcare companies who have announced innovative product initiatives and innovative business models over the last few years. But the viability of any product in the blockchain space is in question without a network of enthusiastic users who bring it to life.

This series of newsletters will focus on the seven networks who have a known group of reputable healthcare companies who have publicly announced their involvement. I will talk about the remarkable technology and business models coming to life. Beyond that, I’ll also discuss the remarkable fact that these companies, who are often competitors, are coming together in new ways to address conditions that are beyond the control of any one company. 

In this first post, we will look at the history of consortia in the healthcare blockchain and summarize the parade of consortia announcements over the last year.

In future posts, we will discuss the participating companies, the design patterns we are seeing, the use cases being announced, and the protocol decisions made by these pioneering networks. We will also consider what all of this means for the future.

(I’d like to express my thanks to Stephen Allen, Hashed Health computer science team member / intern all-star for his help researching this series.)

Healthcare Blockchain Consortia Announcements of 2018 and 2019

consortium

noun

con·sor·tium | \ kən-ˈsȯr-sh(ē-)əm

plural consortia \ kən-ˈsȯr-sh(ē-)ə

1: an agreement, combination, or group (as of companies) formed to undertake an enterprise beyond the resources of any one member

Each of healthcare’s value chains suffer from challenges of trust, transparency and incentive alignment. The revenue cycle, the supply chain, clinical trials, physician identity, and medical records all suffer from inefficiencies and a lack of innovation because of failures in trust and interoperability.

So, it is no surprise that blockchain is of significant interest to enterprises across the health and life science spectrum who recognize the opportunities and threats that arise from a foundational new technology that allows us to re-think the structure of a market.

It also is no surprise that enterprises often struggle to find near-term value, and it’s no surprise that the technology seems like a hammer looking for a nail. This is especially true for companies who have taken a technology-first approach, often having been misled by inexperienced or biased advisors who are married to a protocol or a dreamy agenda that may not be appropriate in the near or long term.

As I have explained previously in articles, posts, podcasts, and in the Blockchain in Healthcare book, finding a good use case in today’s world is quite challenging. It requires solving for a complex, interconnected set of technical and non-technical problems. Why are you using a blockchain / DLT? What new business model(s) are unlocked through the use of blockchain / digital asset? Does the solution create enough of a collective impact significant to entice a connected group of companies to form a network of businesses who are excited and able to use the solution?

Image 1: The interconnected technical & non-technical challenges of blockchain innovation.

Many of us in the healthcare space have been contemplating these questions for quite a while. Through research, trial and error, we have become more aware of what is possible in the near term and which use cases will take time to mature. Since 2016, Hashed and dozens of large U.S. and European enterprises have been grappling with the technical and non-technical obstacles that stand between the current world and a decentralized future. Enterprises have been conducting meaningful exploration using a variety of jointly operated solutions on a variety of protocols.

Image 2: Hashed Health’s model for iterative innovation

This active and iterative exploration in technical models, business models and network governance structures has taught us at Hashed Health a lot about which use cases are available in the near term, and which are further away.

Blockchain inherently requires working with others to collectively solve problems that each independent organization can’t solve alone. So, one of our biggest limiting factors has been establishing the networks around use cases that have the potential to solve an old problem in a new way.

© Cgm22 | Stock Free Images

In the last year, networks of healthcare’s largest companies began converging around the initial use cases seen as viable and valuable. It started in 2018 with large insurance companies. The insurance companies were followed by big pharma. More recently we’ve seen announcements from GPOs, health systems, and physician groups who have decided to join the line-up. This acceleration signals the recognition by large organizations that it’s time to get in position. There’s a swell coming.

In 2018 there were two significant consortia announced. Synaptic Alliance was announced in Q2 2018, and then the Professional Credentials Exchange was announced in Q4. As of June 2019, there have been five major announcements: Health Utility Network, MediLedger, Remedichain, Melloddy and Coalesce.

Table 1: The seven major healthcare consortia as of July 2019

Key Trends & Take-Aways

There are several notable trends seen in these announcements that provide clues about how blockchain in healthcare is coming to life. These include:

  • A focus on B2B networks and less-than-sexy use cases (physician credentialing, physician directory, supply chain, etc.).
  • Payers and pharmaceutical companies were the early adopters. Almost all major healthcare insurance companies and all major healthcare pharma companies are actively involved. More recent announcements include banks, GPOs, health systems, and non-traditional enterprises like Walmart.
  • Competitors are collaborating in an attempt to solve common issues that are difficult to solve individually.
  • The use cases for these groups indicate that they are beginning with certain families of use cases. The use cases Hashed Health is tracking fall in to a few design patterns including data synchronization, asset exchanges, and shared business process automation.
  • An exciting trend is the introduction of new business models for problems where, in the past, data ownership & control has been a limiting factor.  The concept of at-home data enablement seems to be a common theme of the best use cases.
  • Protocol choices are a mix of DLT and various forks of Ethereum.
  • None of these consortia are taking on the medical records challenge yet. Those that are moving fastest are largely avoiding protected health information for now.

History of Consortia in Healthcare

The early attempts at consortia in healthcare were introduced in 2016. In the fall of that year at the first Distributed:Health Conference in Nashville, Hyperledger, Hashed Health, Gem, and others came together to form the Hyperledger Healthcare Working Group. Other groups included Pokitdok’s Alliance were also forming at that time.

These and similar efforts represent the early efforts to organize minimally viable networks around notional use cases. They were primarily market development exercises that ultimately focused on educational information exchange and high-level use case ideation.

While these early consortia were successful at building community and thought leadership, they did not result in meaningful solutions or proof of value. The meetings primarily focused on education, high level use case brainstorming and immature efforts at collaboration.

In 2017, enterprise blockchain initiatives took a back seat to the ICO wave. It did not take long to realize that the concept of an ICO introduced risk to a healthcare community who is risk-averse. Those projects that decided to move forward with an ICO did so at the expense of any legitimate enterprise healthcare customers, especially in the US.  ICO’s were disconnected from the reality of bringing together enterprises or generating any kind of meaningful network effects.

Out of the ashes of the ICO tire-fire of early 2018, a more rational enterprise business-to-business environment emerged in the US. Not long after the crash, the first consortium focused on collaboratively solving a real problem was announced. It was followed a few months later by a second initiative.

Now, in 2019, we have seen five new healthcare consortia announce their members. We know there are more in the works.

Today’s Networks

The Synaptic Alliance was the first major consortium announced in 2018. Synaptic is a network made up of mostly large payers with the addition of Quest Diagnostics and Ascension. Synaptic was spearheaded by Humana’s Kyle Culver and Optum’s Mike Jacobs. Jacobs and Culver were both early (2016) pioneers in the blockchain space. Being the first, Jacobs and Culver smartly decided to begin with a simple, high value use case. Their model assumes that collectively payers can do a better job of maintaining an accurate, complete physician directory than any individual payer can on their own.

Provider directories are an excellent example of a use case where, historically, individual payers have struggled to maintain accurate, complete databases. It makes sense that they may do better if they were to work together, even though many of these organizations are competitive with each other.  Their model assumes that the blockchain can be used to create an industry utility that synchronizes data across the members. It is up to each member to contribute data. Doing so allows them to understand how their data is different from others. Correcting inaccuracies is up to each member. It’s a fairly simple multi-party data synchronization effort.

Later that same year, Hashed Health announced the formation of a consortium of companies around the Professional Credentials Exchange (“ProCredEx” or “PCX”), which focuses on solving the credentialing problem through a new asset-exchange business model. The goal of PCX is to connect disparate sources of verified credentials information across the industry and reduce the resources required to obtain verified credentials data.

Instead of taking 6-8 months to manually curate a registry of physician credentials, health systems and others trade verified credentials in a marketplace business model. This model assumes that it’s better and faster to acquire trusted, verified credentials from another organization who has already done that work, rather than manually doing it yourself.

An important difference of PCX is its incentive model for collaboration and information sharing. It aims to create an asset exchange for these digital artifacts as a way to solve the information sharing problem. In this data market model, enterprises and curators who have this information may offer it to those who need it and receive value in return for their efforts to primary source verify a set of credentials.

There is some overlap in the data fields used for credentialing (ProCredEx) and directories (Synaptic). For example, both datasets include demographic data, education history and practice/affiliation information. But there are a number of unique and complex artifacts (some are enterprise-specific) that are required for credentialing, such as employment history and malpractice history.

Why Credentialing Is an Early Use Case for Blockchain:


Provider Identity (ex. credentialing)

● Technical


    ○ Technical structure is understood

    ○ Reason for blockchain is understood

     ○ Application layer tools exist

     ○ Data is not toxic

     ○ Understood how to “SKU” the digital artifacts

     ○ Understood search & discovery

● Business


     ○ High ROI

     ○ Lots of spend / inefficiencies on both sides of market

●Network


    ○ Large businesses with innovation budgets / resources

    ○ Available supply

    ○ Pent up demand


It is no surprise that these two first consortia (Synaptic and ProCredEx) focused on concepts related to physician identity. The problems of directories and credentialing (which are related but not the same) are a priority for their target market and have a clear ROI for both sides of the marketplace. No one believes that the current, centralized, siloed solutions are adequate. It is very clear after 20+ years of trying that health systems and payers working individually cannot solve this problem. Innovation in this area had stalled while the need for a solution has grown because of telemedicine, disaster response, revenue cycle needs and value-based care. A jointly operated industry utility model represents an exciting, new approach. It helps that the data is largely public and non-sensitive. The introduction of Blockchain and Distributed Ledger Technology (DLT) introduced a new solution to this old problem of trusting a physician’s identity.

Now, in 2019, we have seen five new healthcare consortia announce their members. Two recently announced consortia, MediLedger and RemediChain, are focused on tracking drugs through the supply chain. At a high level, this use case involves registering the “fingerprint” of a pharmaceutical product and tracking the handoffs from source to patient in order to secure the supply chain from fraud and counterfeit. The blockchain provides an excellent audit and compliance solution in this regard.

Another recently announced consortia, Melloddy, focuses on federated learning for drug discovery. Melloddy, which stands for “Machine Learning Ledger Orchestration for Drug Discovery” is a group of pharma, tech and university partners focusing on synchronizing the chemical libraries of the pharma companies to improve the models that predict which compounds are most promising for drug discovery. Melloddy plans to use a collaborative AI platform to allow machine learning algorithm to access the specific databases of each member, without requiring those members to aggregate their data in one single place. It’s an interesting new model for collaboration amongst competitors that uses a private blockchain to manage data security and privacy while still enabling information exchange that hopes to boost predictive performance.

Other consortia are focused on network and governance above use case and, as a result, have not yet disclosed their use case. The Health Utility Network (“HUN”) has an impressive group of participating enterprises (including Anthem, Aetna, HCSC, Cigna, PNC Bank, IBM), but has not disclosed use case specifics. The members of HUN have experienced teams of blockchain experts who are not new to blockchain and now have a network built for collaboration. The formation of HUN represents a step forward in terms of network development, a critical step in doing meaningful work. HUN took a network first, use case second approach that was reminiscent of the 2016 announcements.

Similarly, The Coalesce network is focused primarily on interoperability and data governance within the existing BCBS network but has not been public about any of the details of how that will happen and who amongst the many members of the BCBS network will participate.

These consortia are most likely weighing multiple use case pilots and keeping their options open. They may also be considering competing against one of the already announced programs.

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ProCredEx

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John Bass

Anthony Begando

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Twitter

@HashedHealth

@Signal_Stream

@ProCredEx

@johngbass

@hashed_corey

Hashed Health

901 Woodland Street, Nashville, TN
United States

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