Our Changing Healthcare System: A Story In Three Parts

JP Morgan, The Changing Role of Primary Care, and Optum's Blockchain

Good morning! Today we’re talking about our changing healthcare system through external pressures, systemic upheaval, and technological innovation. A story in three parts.


Welcome to Create The Customer, a weekly newsletter discussing the business of healthcare. I’m Isaac Krasny, a healthcare BD guy and strategist, and I write this because it’s fun. If you find this interesting, consider subscribing. If you already subscribe, consider sharing with your friends, colleagues, and household pets. Find me on twitter or via email.


Jamie Dimon, CEO of JP Morgan, spent some time in his annual letter to shareholders to discuss his company’s joint-venture in healthcare with Amazon and Berkshire Hathaway. His outline of their plan of action was… less than revolutionary. After listing wellness programs, studying ways of dealing with waste and abuse, aligning incentives, among others, Dimon said the JV would attack these problems with “top management, big data, virtual technology, better customer engagement, and the improved creation of customer choice.” 

The healthcare world responded with incredulity. 

Adam W Gaffney@awgaffney

Jamie Dimon has solved the American healthcare crisis: assemble a "bipartisan group of experts." Also, cure chronic disease. No wonder the man is a billionaire -- brilliance rewarded! https://t.co/9NYTQZX6ZV

April 6, 2018

Jeffrey Young@JeffYoung

Here's health care genius Jamie Dimon basically reading aloud from the first paragraph of an undergraduate text book on the American health Care system. https://t.co/cTaR6ontui pic.twitter.com/QuXeIyjc3T

April 5, 2018


But I wouldn’t jump to conclusions just yet. First, Dimon wasn’t wrong in his assessment of the state of healthcare, and where the areas of focus should be. The fact that they’re patently obvious shouldn’t make them any less worthy of attention. Second, Dimon is not a healthcare expert. As we saw in early March, the trio of companies was in the process of finding a visionary leader for their JV - this will be the person who decides exactly how to attack the problems listed. None of the people they teased (Andy Slavitt, Todd Park, etc) to the press were the kind of guys who’d sign on to run an self-insured employer’s wellness initiative.

There is a pervasive hubris in the world of healthcare; a notion that only we healthcare people know how to solve our problems. You’ll notice it on Twitter, but also in conversation with healthcare executives who are working to redesign the system from within. It’s only a matter of time, a limited number of chances we get to fix our system, before those external forces come in and remake it using their accumulating wealth and power.



Reed Abelson and Julie Cresswell of the NY Times published a fantastic story this week called The Disappearing Doctor. It’s a well-formed survey view of the quickly changing role of the primary care doctor in our healthcare system. 

If you were to choose one medical specialty that is most under attack by the forces of systemic change, it would have to be the primary care doctor. Healthcare and retail giants are stealing away their low-end services, while urgent care is gobbling up their market share of more complex and non-emergent care. 

The question that we will come to is one of differential value: is the idea of each patient having a strong relationship with their primary care physician, who then manages their care throughout the healthcare system, actually creating value? Or is that merely a nostalgic and antiquated view, and there’s more long-term value (outcomes / cost) in handing less complex care to nurse practitioners and letting technology ensure continuity of care? It remains to be seen.


Last week Quest Diagnostics, Humana, MultiPlan and the Optum and UnitedHealthcare arms of UnitedHealth Group announced they’d be working together to pilot test an application of the blockchain. This was bad news for people who said things like this:

“At this point, the prospect of the blockchain in healthcare seems more hype than reality.” - Isaac Krasny, February 14, 2018

To be fair to that guy, he (I) evaluated blockchain in the context of electronic health record management, which is the most discussed use-case for the technology in healthcare. And that’s not at all what this group is doing with it. 

Each of these companies is required by CMS to verify, every 90 days, that the provider information in their database is accurate and up-to-date. Considering the vast number of healthcare providers in this country, that’s a serious administrative activity currently accomplished by email, fax, phone calls, etc. 

This blockchain-gang of healthcare companies will be creating a private blockchain where verified provider information will be stored. Thus, when one of them verifies provider information, all of them have access to it. This should reduce administrative burden, and also reduce the number of pleading faxes that providers receive from insurers. 

So now we can say that blockchain is being used in healthcare. But is it living up to the hype? Hardly. 

Blockchain has been, in the world of currency, a disruptive innovation. Turning to the source of disruptive innovation theory: 

“Disruptive technologies bring to market a very different value proposition than had been available previously. Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value.” - Clayton Christensen, The Innovator’s Dilemma

Bitcoin users, while becoming more numerous, are still decidedly fringe. Bitcoin can’t be used at most stores, and is entirely foreign as a concept to most mainstream money users. But for a fringe set its decentralization and lack of government control is a major appeal. Blockchain is a fantastic example of a disruptive innovation in regards to currency creation and trading. 

I’d argue that, applied as Optum et al. are using it, blockchain is a sustaining innovation. Christensen on sustaining technologies: 

“Some sustaining technologies can be discontinuous or radical in character, while others are of an incremental nature. What all sustaining technologies have in common is that they improve the performance of established products, along the dimensions of performance that mainstream customers in major markets have historically valued.” 

This data sharing scheme via blockchain is improving the performance of the data gathering operations of these five companies. At its most successful, it will allow them to reduce the amount of money they spend collecting data. 

It’s the same overall gain that would have occurred if Optum had given the four other companies logins to their provider database. 

I’ll concede that blockchain does bring something new to the table that could have been the enabling step in setting up this five-way partnership: ownership. With a distributed blockchain, effectively all of these companies collectively own the data they gather. If Optum had started handing out logins to their friends and competitors, they could have let them update the database and then deactivated their credentials. With blockchain, there’s no risk of that as no single participant has the ability to close off access. Blockchain creates the opportunity for symmetrical gains, and equal power and control.

But let’s not stop there: once the guys on Mythbusters bust the myth that you can explode a watermelon with a really big subwoofer, they need to find out how many subwoofers you’d actually need to explode a watermelon. 

In what way could you apply blockchain to this problem that would be truly disruptive? 

Blockchain’s greatest power is in decentralization. While this plays into Optum et al. strategy, it’s not truly decentralized by any measure. These companies collectively owned this data separately, and now they collectively own it together. Insurance company number 6 can’t just walk up and get that data without permission from the original group. 

Imagine, if you will, that providers started a blockchain to store and share their information with the agreement that any participating provider would verify or update their information once every 90 days as a condition of access. They’d also allow read-only access to third parties like insurers, provider discovery applications, etc. 

At first this would be of limited appeal. Providers would use it to contact each other for referrals and records requests. The big insurers wouldn’t be too interested because they already have their huge databases and integrating this data would be burdensome on their technical staffs. 

But it would be appealing to an upstart medical insurer who wanted to expand to a new territory. Instead of having to build or buy a provider database, they can just access this blockchain. 

Furthermore, provider discovery tools like Healthgrades and Vitals (and any new startups in this space) could build on this freely available information and focus on their value proposition of providing cost and quality information about doctors. 

So the net effects of a provider-based open blockchain:

  • Improved patient referral and records transfer process (enabling improved patient mobility)

  • Reduced barriers to entry for new health insurers, thereby increasing competition

  • Reduced barriers to entry and administrative load for provider discovery and comparison tools, increasing their ability to attack the real problems of measuring quality and cost

That’d be much more disruptive, and impactful, than what’s being proposed - if you asked me.