DAOs May Rescue Healthcare

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By KIM BELLARD

You may have seen the news that Kaiser Permanente has signed on to be an organizing member of Graphite Health, joining SSM Health, Presbyterian Healthcare Services, and Intermountain Healthcare.  Graphite Health, in case you missed its October launch announcement, is “a member-led company intent on transforming digital health care to improve patient outcomes and lower costs,” focusing on health care interoperability.  

That’s all very encouraging, but I’m wondering why it isn’t a DAO.  In fact, I’m wondering why there aren’t more DAOs in healthcare generally.

For those of you not yet on the Web3/crypto bandwagon, a DAO is a “decentralized autonomous organization.”  Cointelegraph defines DAOs as “internet-native organizations collectively owned and managed by their members…Decisions are made via proposals the group votes on during a specified period.”  There is no hierarchy – decisions get made “bottom-up” — and they are intended to operate via blockchain-powered smart contracts.  

Cointelegraph goes on to explain:

One significant advantage of DAOs is the lack of trust needed between two parties. While a traditional organization requires a lot of trust in the people behind it — especially on behalf of investors — with DAOs, only the code needs to be trusted.

Trusting that code is easier to do as it’s publicly available and can be extensively tested before launch. Every action a DAO takes after being launched has to be approved by the community and is completely transparent and verifiable.

I touched upon DAOs in a previous article on Web3.  

Graphite Health seeks to create “a standardized, interoperable data platform that enables a secure and open marketplace to streamline the distribution of digital health solutions for both health systems and entrepreneurs.”  CEO Dr. Ries Robinson said” “Right now, when a hospital wants to adopt new innovative solutions, it is hampered by overly cumbersome processes that can require years to implement.”

Dan Liljenquist, a Graphite Health board member and SVP/Chief Strategy Officer at Intermountain, added:

Graphite Health is more than a new start-up, it represents a new approach to solving one of our long-standing national problems: health care is too expensive and inconvenient.  By embracing the collective membership approach, and committing to our Digital Hippocratic Oath, we will ensure patients are treated as people rather than products.

The Kaiser announcement specifically praised Graphite Health’s “focus on trust and transparency.”

Let’s see: it wants to streamline innovative digital solutions, represent a new approach to solving problems, focus on trust and transparency, and embrace the collective membership approach.  If that doesn’t sound like a job for a DAO, I’ve misunderstood their purpose. 

Graphite Health has certainly hit on a big problem in healthcare – the lack of interoperability for health records – but instead of ensuring that ownership of, and control over, patient records belong to, you know, the patients, they’ve set up a new organization overseen by four very large healthcare organizations.  I don’t question the motives of the various executives involved and credit them for trying something different, but the approach doesn’t take away the kind of hierarchy we’ve seen in healthcare for decades.  

Graphite Health credits Civica Rx as an inspiration, as it used a health care utility model to try to improve the supply and cost of prescription drugs.  That model had four tenets:

Nobody would own the company.Everyone would be charged the same price and there would be no special deals.The company decided to go big and go long.The purchasers of the products would become the funders of the company.

Again, that’s all very noble, but when compared to a DAO, with its decentralized decision-making and inclusion of all stakeholders, it doesn’t seem as innovative as it could be. It’s still the corporate owners running the show.

When Cointelegraph says that, in DAOs, “decisions get made from the bottom-up; a collective of members owns the organization,” when it comes to healthcare data and data standards, I’d hope that those members aren’t big healthcare organizations.  Isn’t that how we got to where we are?

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This should be a time for trying something truly different.  Joan Westenberg, writing in The Next Web, discusses how Web3/DAOs could be a “blessing” for the music industry.  Over the last 20+ years, peer-to-peer file transfers and streaming have wreaked havoc on revenues in that industry, especially those received by musicians, but “the founders and CEOs of the world’s music companies make more money than any of the top musicians.”  

She believes: “For the music industry to thrive in the future, it needs to find a way to distribute revenue that properly incentivizes all participants in the ecosystem, from artists and fans to technologists and investors.”

Ms. Westenberg believes that way could be DAOs:

DAOs would allow artists, consumers, and other stakeholders to interact directly with one another without the need for third-party intermediaries.

DAOs could help to rectify music industry imbalances by giving artists a direct say in how their work is distributed and consumed, giving audiences a direct connection to the musicians they support, and giving infrastructure layers such as management and record companies a chance to collaborate with their core demographics and get closer to the music itself than ever before.

DAOs could be used to distribute profits more fairly within the music industry.

Whether it’s the music industry or healthcare, when you’ve got the wrong people – CEOs and other executives — making the most money, consumers feeling they are paying too much and having too little input/control, the people doing the actual work feeling undervalued, no one quite trusting each other and everything taking way too long, it’s time to be looking for radically different solutions.  

Like DAOs.

Dave Chase, for example, believes his Health Rosetta project will be a “DAO of DAOs, including community-owned health plans, calling for “#DeHealth (i.e., decentralized health)”

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There aren’t, to my knowledge, any DAOs in healthcare yet.  It’s not entirely clear to me how many successful DAOs there are in the world generally.  We certainly haven’t worked out all the kinks in blockchain yet, nor proven the efficacy of smart contracts on a large-scale basis.  I admit all that.

But one thing is clear to me: we are not going to solve healthcare’s problems by using the approaches we’ve been using, run by the entities who have been running healthcare.  So, yeah: if we want innovative approaches in healthcare, we should give DAOs a try.

Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor