Blockchain and Coopetition. Show me the Money

Medicalchain

For those unfamiliar with this neologism, Coopetition is a portmanteau of cooperation and competition and represents the idea that competing organisations with partially congruent interests can work together to create value (and competitive advantage) higher than if they worked alone.

Several criteria have been proposed as being necessary for successful coopetitive relationships:

• Each party has something of value to contribute
• There is interdependence and complementarity
• Trust in one another and a willingness to share data
• Formalised relationships to avoid future disputes
• Effective communication systems

I discuss this concept here because I think it is relevant to the new business paradigm that blockchain use represents. In particular, I propose to explore this in the context of healthcare ecosystems — as they currently exist and how they might be improved by using this model.

Without delving too deeply into the intricacies of healthcare business processes, I think it is important to paint a broad picture of some of the complexity the industry faces. Numerous stakeholders are presented below:

• Patients require quality healthcare from the provider of their choice. Payment is discussed below.
• Doctors want to provide best quality care (usually irrespective of cost) for acceptable remuneration. In a fee-for-service model there is potential for abuse.
• Payers demand cost-efficient service delivery and high shareholder returns. For insurers and governments this generally means minimising unnecessary costs and considering the economic benefits along with clinical benefits. Patients want to spend as little as possible on healthcare though they demand the highest quality possible.
• Researchers seek access to data for new discoveries that will benefit patients but also to patent new technologies or gain academic credibility.
• Pharmaceutical firms desire health data in order to design products with health (and importantly financial) benefits.

What I hope this demonstrates is that although there are commonalities in the various stakeholder needs, there are also conflicts that are potentially difficult to resolve. The important asset in this micro-economy is healthcare data and the value derived from it.

If we consider this data as a form of ‘money’ in the broader sense of the word, we begin to see the social relationships it defines. Patients bring data (verbally and via examination/investigations) for transformation/interpretation by those with knowledge in order to derive the value of improved health. In exchange for this benefit, those transforming the data expect fair reward in the form of payment.

In order to fund this, patients either pay directly or via an intermediary (an insurer or via tax payments). But because these payers are responsible to all contributors to the fund who may too require coverage, the obligation on them is to spend in the most cost-efficient way. Whilst taxpayers are charged according to their means, insurers customise policy premiums based on pooled risk. This can lead to adverse selection and tends to discourage healthier individuals from obtaining insurance — putting them at potential financial disadvantage.

Researchers wanting kudos and monetary reward from their findings may be reluctant to share data they obtain. The same applies to pharmaceutical research. By doing so, however, they limit their ability for new discovery — pooled data may offer quicker answers and more insights than limited information. Recipients of research (patients) are also, therefore, denied access to these benefits in spite of (at least some of ) the data being provided by them.

Returning to the concept of coopetition, it starts to become clearer that sharing information may have some benefits. However, as the criteria for best success suggest, there are a few pre-requisites that are difficult to achieve.

The reason collaboration has traditionally been resisted is largely based upon the fact that trust is difficult to establish. Data is in silos and in order to be shared, a number of risks are in play:

• Conditional privacy is not possible with standard databases. Once access is granted, the full record is visible. This limits the willingness of patients to engage with data sharing.
• Doctors using their expertise to transform data into health advice for which they can be rewarded may be reluctant to relinquish the knowledge they have provided.
• Patients applying for health insurance may want to hide certain information in order to pay lower premiums. Fraud is common despite the risk of invalidated claims.
• Accurate doctor remuneration relies on accurate data disclosure. Fee-for-service linked to clinical coding claims presents an opportunity for abuse. This might be in choosing more expensive treatment options where cheaper alternatives have similar outcomes.

Establishing trust requires being confident in data.

Blockchain technology can broker this trust by providing the ability to self-verify data content, authenticity and authorship. Smart contracts can formalise relationships to mitigate against future disputes. Communication effectiveness can be vastly improved through immutability of records, improved interoperability and robust audit mechanisms.

By sharing a common infrastructural platform, ensuring conditional privacy and permitting granular data mining, researchers and patients are able to generate currency in the knowledge economy.

Coopetition criteria are met more easily by the use of this technology. Costs and risks can be shared and information assets potentially used to the benefit of all stakeholder — facilitating collaboration where entities might otherwise compete.

In an era where healthcare inflation is spiralling out of control, I believe this represents an opportunity to restructure the nature of business transactions for the better. Who knows, it might even be good for your health.

As always, please contact me if you have any comments or questions.

Have a great week.

Stewart@medicalchain.com

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