The health system of the future was invented 200 years ago

Matt Sinderbrand, MPH • December 4, 2017 • 7 minute read

How many times have you purchased something with a piece of plastic? Do you ever wonder how that actually works? What exactly am I giving over with each swipe of my credit card? Isn’t it just data?

Why yes, it is! At a high level, ever since we moved away from the gold standard, data (i.e. information recorded in a ledger) has determined the value of traditional currency: I, personally, have never purchased anything with gold - although, I do often romanticize the concept (thanks a lot, Westworld). However, I use a piece of plastic nearly every day to transmit data that removes value from my bank account and sends it to another. Why does this matter?

In our “information economy”, data is the favored method to pay for products and services. Although the current model still depends on the assignment of value based on traditional assets (money in a bank), the rise of cryptocurrency as a way to assign value based on digital assets (tokens on a blockchain) is ushering in a wild frontier of untethered financial exchange. The possibilities are endless, and trying to put a limit on how things might evolve - or devolve - would be silly at this point. Widespread adoption is still quite some time away.

A big barrier to adoption of cryptocurrencies is trust. Although the blockchain is a more secure environment than traditional servers, convincing a typical person to entrust their hard-earned money to a “virtual bank” (i.e. no brick-and-mortar) is a difficult sell. This is because our perception of security is a lot more important than the technical security itself - I trust a bank to hold my money because I’ve walked into that bank and seen a person. And remember, I’m a millennial.

Consider the fact that 70% of the disposable income in this country is controlled by Boomers - this population is inherently less trustworthy of technology, yet happens to have the most value to distribute (i.e. real assets that have already become irreversibly tethered to data). I’d argue that in order for blockchain to be adopted as a secure financial intermediary, trust must come first. But how did we come to trust financial intermediaries in the first place? Where did banks come from?

Instead of where, let’s look at an incredibly simplified explanation of why: In the agrarian towns of early 19th century America, farmers needed a way to support one another through the tough times, and came together as small communities to figure out how.

They established local community banks to make it easier for successful farmers and merchants to pool and distribute their wealth to other hard-working, but less fortunate, farmers. Recognizing that a chain is only as strong as its weakest link, banks became the intermediary entrusted to redistribute value on behalf of individuals, ensuring the community continued to thrive and grow.

My point here is that the very concept of banking arose out of an established need at the community level.

In other words, the community is the defining factor influencing the creation of an intermediary designed to manage and redistribute “value”. We trust traditional banks as our intermediary because we created them to serve that specific function.

Let’s go back a step and recap:

  • Data has replaced traditional currency as our favored method to exchange value

  • Equating data to value means our collective data is more valuable than any individual’s

  • Pooling our collective data to strengthen the broader community is a sensible practice, but trust remains the biggest barrier

  • Engendering trust in an intermediary to manage and redistribute this pool of value first occurs at the community level

My question is this: If we can pool our value together to help each other financially through an intermediary, why can’t we pool our value together to help each other medically through something similar? Yes, we already have institutions in place that are supposedly doing this for us (health systems, insurance companies, etc.), but their incentives to do so are shrouded in so much bureaucratic noise that efforts to this point have been largely inconsequential (see: Health Information Exchanges).

What we know:

  • We know our health data holds immense value because thousands of organizations pay billions of dollars for access to it.

  • We know that the value and completeness of health data are inherently linked, meaning a pool of complete data is more valuable than a pool of incomplete data.

  • We know that the only way to access “complete” information is through the individual owner of that information.

  • We know that in the context of the health system, the individual owner is the patient or their representative.

The main issue, as argued above, is trust; as we learned from our quick history lesson on banks, addressing the trust issue starts at the community level. In the context of healthcare, an institution designed to explicitly manage and redistribute value for the mutual benefit of the community does not yet exist, and this is the main reason for lack of progress toward a national infrastructure designed to do the same. We must start at the community level, just as we did for our finances, in order to engender the trust necessary to proceed. BUT, motivating individual community members (consumers) to change their behavior requires an immediate and tangible benefit that makes the upside of adoption remarkably clear. So what does that look like?

By the consumer, for the consumer

Our health system’s inability to effectively exchange information causes pain at every level: from the individual and their family who experience widespread frustration in trying to coordinate care, to the local employer who struggles to keep his employees healthy and productive, to the primary care physician who doesn’t know enough about her patients to keep them in good health. Every one of these stakeholders can be viewed as a consumer of healthcare in some sense, and only due to lack of available options do they continue to Our trust in the system - one that we believed had our best interest in mind - is completely eroded, but we’ve got to start somewhere. The first step is building an intermediary entrusted to manage data (i.e. value) on everyone’s behalf.

The Consumer-Directed eXchange (CDX) - An old approach to a new problem

  • Similar to financial data, a complete pool of health data creates the opportunity to repackage and redistribute the data through different vehicles of value (see: finance industry in the 1980s and 90s).

  • We as the “data owners” contribute our health data to a CDX in return for a share of the profits that CDX generates based on the value generated through commercial sale of our data.

  • CDX is organized as a Co-Op, providing tangible financial benefit to the consumer and asking for little in return (aside from trust, of course).

  • As the pool of value continues to grow, CDX becomes the foundation for a micro “data economy” by repackaging the data and capturing revenues from the pharmas and biotechs already paying billions for it.

At this point, it might be good to touch on the technical feasibility of this approach. Over the past few months we’ve written a whitepaper that defines exactly what this approach would look like once blockchain matures a bit. For now, traditional cloud-based infrastructure would suffice for proving the viability of the CDX approach.

The problems with the CDX approach are operational: Information silos, archaic governance practices, and an all-around industry resistance to comply with the information owner’s (you, the patient) right to access, are preventing progress at every turn. In the absence of financial incentives, it will take years of education to initiate this shift away from the typical feeling of helplessness that’s become the norm for healthcare consumers like you and me - but we’ve got to start somewhere, right?

To wrap up: Relying on entrenched institutions to be the vanguards of change is no longer an option - the magic bullet isn’t coming any time soon. It’s up to us as individuals to come together, just as we did 200 years ago, and invent a new institution that actually works.