Why are so many Companies Exiting the Healthcare Blockchain Market?

Gem OS was the first blockchain company to announce its intentions to solve healthcare with a new distributed ledger, trust, and consensus technology created by Satoshi Nakamoto. Back in January 2016, Gem landed $7.1M in funding, not by an ICO, but the old-fashioned way, with Venture Capital. Gem partnered with the European Medical Equipment/Imaging Company, Philips to further efforts at creating a new blockchain enabled OS for healthcare.

Gem made a lot of noise in its quest to conquer healthcare with the new blockchain technology.

Gem OS Use Case for Radiology Order

One significant problem with the use case proposed by Gem in the automation of orders with a blockchain based back end was the lack of incentives to actually get the work done. Replacing legacy EMR’s from Epic, Cerner, Meditech, Allscripts, and others wasn’t going to happen anytime soon and I cautioned about Gem in a submission to the September 2016 ONC Blockchain Challenge “Implementing Clinical Blockchain Interoperability to Address Specific Use Cases in Patient Care, Public Health, and Pharmaceutical Research,” and specifically referenced the August 3, 2016 Health Data Management article that featured the Gem OS diagram above.

“It is critical to the future of interoperability in healthcare that we look thoughtfully at the opportunities presented by Blockchain. We must avoid the oversimplification of any implementation in healthcare as shown an August 3, 2016 article published in Health Data Management.”

Gem OS, CEO, Micah Winkelspecht outlined his company’s plans to connect multiple providers utilizing disparate systems with a blockchain enabled platform. The company also announced a partnership with Capital One to bring blockchain to healthcare, specifically addressing payment inefficiencies to providers.

“But we are exploring the ways we can provide real-time access to data across multiple providers and caregivers. We are looking at how we move medical-related data on a blockchain.” (Micah Winkelspecht, CEO, Gem OS)

After it’s failed foray into providing solutions utilizing a blockchain focused on healthcare, Gem OS is shifting focus and going back to it’s roots in financial technology and cryptocurrency. The traditional healthcare market is an incredibly hard market for any newcomers, and its especially tough for a newcomer with new technology like blockchain.

The horizontal nature of the disruption that blockchain technology will unleash provides a mechanism that allows companies to move into healthcare and then jump to other verticals. The fact that healthcare is so hard, may actually toughen up new companies as they migrate from the healthcare market to fintech or other verticals. Richie Etwaru discussed blockchains horizontal innovation features at his iconic NY Academy of Sciences Speech in June 2016.

The knowledge companies gain by trying to tackle tough use cases in healthcare should certainly help them in any future endeavors.

Linnia is a blockchain for social impact company founded by Diego Espinosa. The company is a part of Consensys and represented one of it’s focuses, in what is know as “spokes.”

“Thanks for reaching out, and I’m glad you and Joe were able to connect. As he may have told you, Joe (Lubin) launched ConsenSys after co-founding Ethereum. The firm’s mission is to build protocols and applications that leverage the emerging blockchain infrastructure. Two years after its launch, ConsenSys now numbers 450 people and over thirty incubated “spokes”, or blockchain ventures. Linnia is the healthcare spoke.”
Linnia is a Consensys Company that recently changed it’s focus out of healthcare.

I did not see a lot of press about Linnia partnerships or other activities in healthcare. On January 30, 2018 I participated as a panelist at the Princeton Tech Meetup where I met a couple of Consensys folks, Evin McMullin and Michael Sena. During the presentation, Evin McMullin discussed Linnia doing work on a diabetes study in Saudi Arabia. I am not sure of the current status of any of these efforts.

Excellent Minds at the Princeton Tech Meetup

The current focus of Linnia is to utilize blockchain to connect the identity silo’s of information. This is certainly an intriguing market and could play off of the experience of uPort, another Consensys company. Any knowledge acquired from their work in the healthcare space will certainly be needed, since the identity space (centralized and de-centralized) is a daunting market as well, according to One World Identity.

While the horizontal nature of Blockchain technology presents an incredible opportunity for healthcare and life sciences innovation, it also presents a cautionary tale of what might happen if investors, firms, and venture capitalists do not take the long view, which is what is necessary in the healthcare space. In August 2016, a Fintech company called BronTech announced it’s entry into the healthcare arena with a Blockchain offering.

In August 2016, Brontech entered the healthcare market

After about 6 months in healthcare, Brontech is no longer in healthcare, and any references to its prior entry into the market are deleted from the website. Today the Brontech website returns a server error for any references to healthcare.

After about 6 Months, Brontech exited the Healthcare space, and re-entered the Fintech market

Brontech has now used that “horizontal” nature of Blockchain innovation to exit healhcare and to slide back into the Fintech market, and launch a new coin called “The Bron.” (nothing to do with LeBron James)

Patientory represents another company that is trying to make it’s mark in the healthcare blockchain space. Patientory was the first health technology focused ICO, and raised $7.2M in 3 days. The company’s market cap was valued as high as $60M and know sits around $20M. Since it’s May 2017 ICO there has been significant criticism of the company from multiple corners including blockchain experts, and recognized healthcare visionaries. There will always be haters in this world, and the attacks on Patientory early on, may or may not have any merit.

Patientory Attacked on Reddit

Regardless of the “red flags” raised by groups across the globe, it appears that the company continues to make headway in healthcare. Certainly the company MUST change its founding principles regarding the payment mechanism for tokens, specifically, “don’t ever try and charge patient’s for storage space for their own medical records!” This lack of understanding about the dynamics in healthcare demonstrates an incredible amount of ignorance about some of the fundamental underpinnings of patient engagement and patient experience.

Patients will NEVER purchase this Token, and should never be expected too.

The success of the Patientory ICO surprised a number of people with significant experience in healthcare information technology and caused numerous discussions, DM’s and other interactions around the validity of Patientory’s assertions and assumptions in its white paper

The Patientory ICO Generated Many More Questions than Answers

At a recent presentation, I met with folks that knew a little bit about Patientory’s recent activities in healthcare, and it seems that they are changing direction. Hopefully, this is true, because tackling healthcare with a blockchain solution is gonna take all the help and innovation that people can muster and we can’t afford to lose anymore companies back to horizontally move to “easier” markets.

Edward Bukstel

CEO

Clinical Blockchain

March 28, 2018