A new cryptocurrency coordinating artificial intelligence and health

Health.ai and Healthaire

…a data science fantasy…

[How can we incentivize collaboration in the US healthcare system? Maybe Numerai just showed us one novel way with their intriguing step to introduce a new cryptocurrency — Numeraire — described in their recent post here. With apologies to them for this blatant copy/paste/edit….and there’s a lot wrong in this quick re-write….but it is one way of getting a conversation started about the use of parallel currencies in healthcare. Thanks, Numerai for a thought-provoking suggestion!!]

One hour ago, 10,000 physicians and population health data scientists were issued 1 million crypto-tokens to incentivize the construction of an artificial intelligence-driven healthcare system. Here’s why.

Benevolence of the broker

Markets work not because anyone is trying to make them work. Few working in the US healthcare market are doing so with the goal of making the US healthcare market efficient. Any efficiency is merely a byproduct of the healthcare market participants believing in the value of the money abstraction, and then selfishly trying to get more of it.

In healthcare, a provider would prefer a world of unlimited fee-for-service medicine so s/he can make money from volume. An insurer or other payer would prefer permanent information asymmetry where it can limit payments based on rules and data that no one else has. In the US healthcare market, no one, not even the US federal government as the largest single payer, behaves as though they want the market to be efficient.

The problem here is that self-interested providers and payers working with all their might to earn more money are not in alignment over the important goal — namely the health of individuals and populations. Providers and payers are adversaries. They usually have no incentive to work together, to share knowledge, to share data or share code to improve the health of populations. Our healthcare system is anti-collaborative in many ways, and that hinders progress, efficiency and, most importantly, it harms individual health and population health outcomes.

You may think that the problem lies with the self-interest of healthcare market participants regardless of whether they operate as for-profit or non-profit. One might think that a solution would be to try to curb and regulate self-interest. But regulating self-interest has been tried for years in our healthcare system and its failings are self-evident, and getting worse. The problem isn’t with self-interest. The problem is with money itself.

Specie and statecraft on the blockchain

Money was invented to solve the “coincidence of wants” problem and facilitate transactions. But as fiat currencies continue to lose relevance into the 21st century, cryptocurrency presents solutions far beyond money transfer. Cryptocurrency can now be used to incentivize cooperation in groups.

With cryptocurrency, money can now be software. There can be programmed rules for how money behaves. The ability to program money seems subtle, but small changes to the rules of money can have large effects on the behavior of the holders of that money. For an historical example of primitive money software influencing a population, see The Wörgl Experiment of 1932. For a modern example, consider how bitcoin incentivized thousands of people around the world to mine it.

The healthcare system presents a situation similar to the prisoner’s dilemma. The system (and patients) would be better off if all participants collaborated, but rationally they don’t. Regular money simply does not incentivize them correctly. Regular money is too low-tech.

Imagine the prisoner’s dilemma in a world that exists entirely on a blockchain. Now suppose the prisoners are issued a cryptocurrency similar to normal money except for one small change: it is programmed to self-destruct whenever anyone goes to prison. By defining the money in this way, the prisoners’ fates are now financially bound. Prisoners in this scenario realize that if they don’t keep the other prisoner out of jail, they will lose all of their money with certainty.

This new cryptocurrency results in a world where citizens have a financial incentive to collaborate to keep each other out of jail. The prisoners are still motivated by self-interest but they now live in a universe where the money nudges them to collaborate in pursuit of that self-interest.

Now imagine that jail is a hospital, or a chronic illness, or a preventable disease.

This new cryptocurrency results in a world where providers and payers have a financial incentive to collaborate to keep patients out of the hospital and healthy.

Introducing Healthaire

Healthai proposes a new kind of healthcare system which allows any population health data scientist to build machine learning models on our health outcomes, claims and EMR data, and submit predictions to determine the prevention and treatment guidelines in our healthcare system.

Today, we are releasing a new money abstraction for Healthai. It begins a new commercial relationship between payers and our population health data scientists based on long term alignment not possible with regular money.

It is a new cryptocurrency called Healthaire, and it makes collaboration compatible with self-interest.

Proof of intelligence

Population health data scientists collaborate on Healthai already. They share code. They share ideas on Slack. They write blog posts and tutorials. Healthai already has the spirit of a collaborative open software project. But the system design isn’t perfect.

It isn’t economically rational to tell your friends to join Healthai because it isn’t rational to help anyone beat you. There is a finite amount of bitcoin given away each week so the game is zero-sum.

So Healthai, like the current healthcare market, has negative network effects — and that’s bad. Bitcoin facilitates the trade of dollars for machine intelligence on Healthai but this transaction clears the relationship and connection between Healthai and the population health data scientist because bitcoin and US dollars have little to do with Healthai. A Healthai population health data scientist has no economic incentive to tell his population health data scientist friends about Healthai. He would only be bringing in competition and making it harder for himself to earn bitcoin. But if every population health data scientist could benefit from the overall network improving, then collaboration would become rational and the game would shift to positive-sum.

Today, Healthai issued 1,000,000 Healthaire crypto-tokens to our existing 12,000 population health data scientists based on their past performance in Healthai tournaments. There will be no crowd sale. Healthaire can be earned right now by competing in Healthai’s population health data science tournaments. In a sense, Healthaire is mined by data mining Healthai’s outcomes, claims, and EMR data, and submitting predictions is the proof of work.

With 1,000,000 Healthaire now issued, the population health data scientists on Healthai will all prefer those tokens to be worth more rather than less money. They are all incentivized to make them worth more. But a cryptocurrency without a compelling use case is merely a souvenir with no economic value. Healthaire’s economic value comes from its use inside Healthai.

Staking Healthaire

On Healthai, population health data scientists can never lose money, they can only win bitcoin. But starting today, there is something to lose in order for there to be more to gain.

When a population health data scientist submits predictions to Healthai, those predictions are validated against historical health data, and Healthai makes payouts based on how well the models performed on historical data. But Healthai cares much more about live performance in our healthcare system than backtest performance. Staking Healthaire is a way to incentivize live performance and completely disincentivize overfitting. The staking mechanism solves the biggest problem in population health analytics; it is an economic forcing function to make backtest performance identical to live performance.

When a population health data scientist submits predictions for a disease-specific area, they will be able to stake Healthaire on those predictions. This involves sending Healthaire to Healthai’s smart contract on the Ethereum blockchain. After a period of time, the predictions for that particular disease area are analyzed. If the predictions are accurate, the population health data scientist who staked Healthaire on them will earn money. If the predictions are poor, their Healthaire is permanently destroyed.

With Healthaire, there is now a way for population health data scientists to express confidence in their predictions the same way that traders do: by deciding how much to stake. Through our proposed staking mechanism, Healthai population health data scientists stand to gain by building models that perform well on live data, and stand to lose on models that overfit the past. Recognizing that our understanding of prevention and treatment vary by disease and that such understanding improves over time, models compete within disease boundaries. A loose analogy would be the leagues and divisions within professional sports — there’s a ‘heart failure division’, a ‘lung cancer division’, etc. Model entries must specify which division they are competing in. For now, Superbowls and World Series break the analogy.

The value of Healthaire is connected to the stake payouts which will increase over time. Since Healthaire allows population health data scientists to earn more money by staking it, it is sensible to reason about its economic value. For example, the value of all Healthaire to a data scientist with a perfect model is the net present value of all the future stake payouts by Healthai.

Beyond Healthai 1.0

There’s no reason to limit participants in Healthai to provider-side data scientists. Health insurance companies employ data scientists usually known as actuaries. Patient advocacy or patient-centered data science teams would bring valuable diversity to the model building. All should be welcome as the incentives for collaboration in Healthai become established.

Network effects in capital allocation

Nearly all of the most valuable companies throughout history were valuable through their strong network effects. If there is one motif in American economic history it is network effects. Every railroad made the railroad network more valuable, every telephone made the telephone network more valuable, and every Internet user made the Internet network more valuable.

But no healthcare system has ever harnessed network effects. Negative network effects are too pervasive in healthcare, and they are the reason that there is no one healthcare system monopoly managing all the health in the world. For perspective, Kaiser Permanente, one of the biggest health systems in the country, provides care for ~3% of the US population. Facebook, on the other hand, with its powerful network effects, has a 70% market share in social networking.

The most valuable healthcare system in the 21st century will be the first healthcare system to bring network effects to healthcare. And, Numerai might have just shown us one way to accomplish that. Thanks, Numerai!