Today there is a major mismatch between value, incentives, and outcomes within our existing health systems and a growing demand for a system that really aligns value with incentives with outcomes. Health is a resource that enables us to function, it has value, both for the individual and for the whole of a society. In a centralized model, we understand this value in terms of the cost for formal centralized institutions to provide healthcare services to the population; in our existing push-based model it has been largely about trying to incentivize providers and reduce the cost of service delivery.
The value equation to date has focused very much on the cost of providing care to people but as we move towards a system that is focused more on maintaining health we have to fundamentally shift that equation so that the tracking of value within the system is more focused on the maintenance of health rather than the cost of providing for ill patients. So far we have been working on incentivizing providers but given the shift to a user-centric, user-generated healthcare model we now have to build systems that work to directly incentivize the end-user.
The aim of any health system is to maintain and develop the health of its members, however, this can be done in a centralized fashion or a decentralized fashion. In the centralized approach, we have professionals that we pay to manage the health of people primarily via bureaucratic organizations. In a distributed model we push all of the responsibility and resources out to the end user we then create the connectivity for them to manage their own health and exchange services peer-to-peer; the resulting model is one of a distributed market.
Distributed Ledger Technology
This approach is now made possible by blockchain technology and the token economies that can be built on top of it. Blockchain networks enable distributed ledger technology(DLT) that can be used to store records of value in a decentralized fashion. In this case, the value that we are trying to track and manage is that of health. Thus the ledger can be used as a record to track any activities that affect people’s health. This can be factors or activities that add value – eating healthy food, getting exercise etc – or it may be one that depletes from the health resource – air pollution, traffic congestion etc. A DLT can be used as a trusted database for recording the increase or decrease of this value.
To make health services exchangeable a token can be defined that represents a quantified unit of this underlying value. A token is a unit of value recorded on the blockchain ledger that is used to exchange value within that ecosystem – in this case, the token would be a health token as it is recording a unit of health value. In essence, by using blockchain technology we can create a distributed management system for health, by firstly identifying the underlying resource, what adds or subtracts from that and then creating an economy around that resource with tokens that are used for exchange and to incentivize people to grow that underline resource.
By doing this we are creating a distributed incentive system for health, that means that the system is designed towards incentivizing people to maintain their health or to do things that will improve the health of others; which is in contrast to the system that we have today that does not incentivize users but primarily works to incentivize those professionals who deal with illness.
Health Value Equation
As a function of the push model that we have developed to health systems we are currently only looking at one side of the health equation; it is all about the cost of service provisioning and trying to increase the internal efficiency of the system so as to reduce that cost. To get major breakthroughs we need to be looking at both sides of the equation. We are currently putting people in unhealthy environments and then paying to deal with the lack of health. Maintaining health is just a valuable as curing someone if not better, it is really much better to incentivize them directly towards maintaining their own health and safety in the first place.
What we need to do is build incentive structures that deal with both sides of the equation. It cost something to provide healthcare services, but we can also simply switch that equation around and say maintaining health has value, we can then try to move the economic model from service provision to health maintenance. Rather than simply paying to deal with sickness, a society or individual instead places a value on their health and then earns as it takes actions that contribute to that health resource.
Every year nations pay multi-billions or even trillions to maintain the health of their people, they largely give that to the formal institutions of the health system to provide health services. Imagine that money being put into a token economy for maintaining health. Billions of tokens would be issued that represent the nation’s health – everyone is given a limited number – for every activity that adds to your health you earn tokens with that token coming from those who pay in order to do activities that deplete from their health or the health of others.
In this system, anyone can earn health tokens by providing any health service, whether that be for the maintenance of health – such as eating healthy food, building cycle lanes etc – or for illness and crisis – ambulance service, medical procedures, medicines etc – all is integrated into the same health economy organized around a health token that incentivizes people to both provide health services to others but also to maintain their own health; thus working to integrate across the formal and informal dimensions of the health system.
Health Token Networks
The distributed model is base on very simple foundational economic principles that work to align the incentives of the individuals towards creating an optimal overall outcome. Similar to an insurance scheme or peer-to-peer insurance, people pool their resources and create a health token which is a reflection of how much they value their health, members can then earn tokens for anything that reduces the demand on the health service network by maintaining their health or reduce activities that lead to ill health and medication. This means they will not demand as many resources from the health network, which means the funds used to pay for the network can go directly to the end-user in the form of the token instead of to the formal health system for providing the service to restore their health.
Much of how health networks work today is a function of how finance flows through them, as that creates the incentives for behavior. Organizations have become the focus of healthcare as a function of the way the business model was set up, as long as the financial incentive structure is set up in this fashion the system will continue to be based around the formal institutions and not the end-user. Through the creation of token systems, we can really restructure the way finance flows through health networks, redirecting it from centralized institutions towards individuals. By incentivizing individuals directly within peer networks the locus of the system would shift towards the individual, likewise, it would shift from illness to health maintenance, it would place responsibility for health where it should really be, on the shoulders of the individuals who are taking the actions that determine the health outcomes.
Of course, all of this is easier said than done, a distributed, networked, value-based model to health is certainly a much more complex model, but that complexity in the system is now required to meet the new challenges of the changing health context identified in previous sections.