Top 5 blockchain and healthcare trends in 2020

On business networks, the effect of COVID, and the direction of the market

Hi everyone,

As the new year begins I wanted to review blockchain and healthcare in 2020. My intention wasn’t to be comprehensive in this post, but instead to highlight the year’s top trends. In case you’re interested I also just published a list of the books I read in 2020 here.

First, the most viewed posts of my newsletter this the year, in order, were:

Now, these were the top trends of the year, in no particular order:

  1. Business networks in pharma were created, payer and provider business networks were deepened.

  2. Use case first business networks are progressing faster than platform first

  3. There are now competing business networks

  4. COVID use cases did not take hold, but they might

  5. The blockchain and healthcare market is primarily driven by enterprises, not startups

Let’s get into it.

Business networks in pharma were created, payer and provider business networks were deepened

Last year in my 2019 review I wrote:

Blockchain technology is already changing healthcare by enabling competitors to collaborate to solve common problems. This alone is remarkable.

Following this up in my piece “Blockchain business networks in healthcare” I elaborated on these business networks and how blockchain enables them:

In the rest of healthcare you will seldom see fierce competitors working together, but it is commonplace with blockchain technology. Over the past three years we’ve seen the gradual rise of groups of businesses in healthcare, what I am calling business networks, coming together and using blockchain technology to solve their common problems. For example, the Synaptic Health Alliance is a group of 11 payers, providers, and technology partners collaborating to tackle the challenge of providing accurate and efficient provider data.

Don’t mistake this for blind optimism, the members of the Synaptic Health Alliance, and those of any business network, still compete vigorously with each other. But the shared infrastructure of business networks, blockchain technology, give competitors a way to solve common problems without overly advantaging any one party. It is because of blockchain technology’s very unique property of neutrality that these businesses can come together in this way.

In 2020 the Pharmaceutical Utility Network, PharmaLedger and several networks focused on DSCSA compliance were launched. In contrast there were no new provider or payer focused networks (caveat: a credentials network for quickly onboarding PPE suppliers was started and shut down). Instead, the bets payers and providers made in past years matured in 2020: the Synaptic Health Alliance added new members, ProCredEx raised capital and expanded, and the Coalesce Health Alliance added new members and moved to the next phase of their project.

Use case first business networks are progressing faster than platform first

The events of 2020 further highlighted the different approaches of business networks. PharmaLedger’s many use cases is a paradigmatic example of a platform first in contrast to a use case first approach. Commenting on PharmaLedger’s launch in February, I said that past platform first approaches have struggled to “form consensus between their members as to what use cases to tackle.” A few months later, it was revealed that PharmaLedger was no exception. 12 pharmaceutical companies came together, and after a prioritization process ended up with 9 (!) use cases.

Meanwhile, after two years MediLedger - a use case first network - looks to be the first network that will have multiple live use cases. If I had to bet, I would expect either ProCredEx or Synaptic, two other use case first networks, to be the second. As I wrote in July, “All business networks want to be platforms, but it might be those that start with a use case first approach achieve this first.

Still, I wouldn’t count out platform first networks altogether. If I had to design a network myself I wouldn’t take that approach, but I suspect some network will make it work. The dark horse to watch in 2021 will be the Health Utility Network, a network launched by big names with big ambitions nearly 2 years ago now but which has been almost completely quiet since launch. Despite this fact, several people who were involved with that network are still active in the blockchain community, and a close observer will note people who are/have been involved over the years have left traces of activity on their social media accounts.

There are now competing business networks

2020 brought an important new dimension to business networks this year: competition. There are now multiple networks tackling the same use case in pharma, and likely will be outside of pharma soon. Similar to platforms generally, I expect that business networks will primarily compete through product offerings and network effects. There is a serious risk that competing networks do not end up interoperating and an industry founded on a fundamentally network based technology ultimately creates new siloes. In turn this fragmentation would diminish the value of any given network.

Fragmentation would be nothing new for healthcare, which is an industry riddled with misaligned incentives and notoriously closed ecosystems. What is needed are truly neutral platforms which would provide common infrastructure and strong assurances that the rules of this infrastructure won’t be suddenly changed.

COVID use cases did not take hold, but they might in the next year

The pandemic rapidly reshifted the priorities for organizations involved in the delivery of care, and as a second order effect left a mark on the blockchain and healthcare industry. PPE supply, the care of COVID patients, telemedicine, remote care, and so forth were top of mind, and everything else became a footnote. The blockchain and healthcare industry did not have solutions ready to go for these top of the line priorities, and as such 2020 became a relatively mute year for payers and providers compared to last year. On the other hand 2020 was full of new developments within the pharma space, though these were mostly tangential from the pandemic.

One place where blockchain may offer a solution during the pandemic is vaccination passports, where a blockchain would be used to verify that someone has been vaccinated. That would likely be using a verifiable credential, so no actual health data is stored on chain. There was a fair amount of discussion and development on this use case this year. With vaccination underway and the world cautiously eyeing a reopening, I expect it to receive renewed interest. However, if this use case is to succeed it will need buy-in from a wide array of stakeholders, and in particular I will be looking for some kind of buy-in from government bodies (at all levels of the government).

The blockchain and healthcare market is primarily driven by enterprises, not startups

In 2020 if you were a startup whose business model relied on partnering with enterprises - and that describes almost all blockchain and healthcare startups - you had to deal with the pandemic, doing business remotely, and the shifting priorities of your customers. Furthermore, startups whose offering did not directly address the pandemic struggled to get attention. As a result, there were fewer startups that raised money, made deals, and drove the news this year compared to 2019.

Looking forward, I expect the market to continue to be enterprise driven. By this I do not mean that startups are not important (after all I work for a startup!) but rather that most of the action and development of the space will be a result of the decisions of enterprises. In particular the key thing to watch will be decisions of enterprises to join, form, or participate in business networks, and how existing business networks evolve (new members, new use cases) over time.

Thank you to Chris Moose, Chris Wirrig, Phil Mohun, Thomas Cox, Alex Cahana, and Vince Kuraitis for reviewing an early draft of this post and offering their thoughts.

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