An announcement caught my eye this past week: Epic, who creates electronic health record (EHR) software, is working on an immunity passport. It is not all that surprising the health IT juggernaut is doing this, but it raised important questions in my mind about the future of similar projects. Will any non-Epic projects be allowed deep integrations with Epic’s EHR? Will Epic change the rules to their advantage and everyone else’s disadvantage? Or perhaps even freeze out competing immunity passports entirely?
At this point these are just questions and there has been no allegation of wrongdoing leveled against Epic. But there is always tension between platforms and the applications that build on them, and that tension is the subject of my newsletter today.
The lifecycle and incentives of platforms
Chris Dixon in his seminal “Why Decentralization Matters” outlines the life cycle of platforms:
Centralized platforms follow a predictable life cycle. When they start out, they do everything they can to recruit users and 3rd-party complements like developers, businesses, and media organizations. They do this to make their services more valuable, as platforms (by definition) are systems with multi-sided network effects. As platforms move up the adoption S-curve, their power over users and 3rd parties steadily grows.
When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum. The easiest way to continue growing lies in extracting data from users and competing with complements over audiences and profits.
The incentives for platforms are similar across domains. Although a platform wants to establish a vibrant ecosystem at some point more value can be generated by extracting it from users or competing with those building on their platform. At that stage the platform can change its rules to do so, and application developers are a great example of a group at risk of being marginalized by a mature platform. Chris continues the previous quote with historical examples of this happening, such as Facebook kicking Zynga off its platform, or Twitter shuttering 3rd party clients to force users to use Twitter’s native client.
Epic and platforms
Epic’s EHR is a platform but the story is complex. EHRs have strong network effects derived from adoption and become more valuable with more useful things being built on top of them. Epic, though, has been reluctant to open up their software to others, making it difficult for third parties to integrate with or build applications on their technology. Where others have been able to build apps on Epic’s “app store” they are mostly limited to only reading data and unable to write or change data. While this is good for analytics it stops short of deeper integrations, such as altering workflows, which might compete with Epic’s offerings.
Epic’s closed nature makes their immunity passport foray even more problematic. It raises the prospect that Epic will leverage the powerful position it has created in one domain (the EHR business) to dominant an adjacent market (immunity passports). Indeed, the very fact that reasonable people worry over this prospect demonstrates the tensions that exist between platforms and applications. But there is a way out of this dilemma.
Blockchains as neutral platforms
Blockchains combine cryptography and game theory such that a network of computers reach consensus on a single “state”. In the Bitcoin network this “state” is essentially a record of who has what amount of Bitcoin. Ethereum generalized this concept, and can be thought of as a network of computers which join together to create one virtual computer that has its own database (state) and which autonomously runs programs (smart contracts).
What is unique about blockchains is that they provide strong assurances of trust. You can expect them to execute the rules of the network consistently and objectively, and this is deeply rooted in the verifiable cryptographic and mathematical properties of blockchains. These properties hold true even if individual participants act dishonestly and try to co-opt a blockchain for their own purposes. Furthermore, blockchains are able to achieve this without any trusted parties, which is why we call them decentralized.
In short blockchains provide computing platforms that are neutral and very difficult to change. Developers, businesses, and users can expect that a blockchain network will faithfully carry out its operations and that the rules won’t be changed on them as the network grows and matures. These unique properties of blockchains offer us an alternative to traditional platforms and the problematic incentives they have over their lifecycles.
Neutral platforms in healthcare
Healthcare is riddled with misaligned incentives and notoriously closed ecosystems, and neutral platforms are direly needed. To continue the example of Epic and immunity passports, a neutral platform for health data would give any enterprising person the ability to build an immunity passport without the risk that their access to health data is cut off or crippled wrongly. Ultimately society would benefit from this as a level playing field would foster more innovation and better services. A similar story could be told about telehealth apps, or even the interface and workflow of an EHR itself.
Here’s another recent example: Amazon’s subsidiary PillPack had access to the patient medication data cut off by Surescripts. Surescripts, who has a monopoly on such data, justified the move by citing privacy concerns with the third party that PillPack used to access patient data. On the other hand, Surescripts is owned by competitors to PillPack which perceive Amazon to be an existential threat. I don’t know who is right or wrong here, but the mere appearance of Surescripts improperly using their prescription data platform reinforces the need for a neutral alternative. A neutral platform, by definition, couldn’t be abused by incumbents to quash competition and would have no appearance of impropriety.
I wouldn’t belabor this argument with further examples of the need for neutral platforms, but I do want to highlight those building them:
MediLedger describes their solutions for the pharmaceutical industry as “protocols” and frames these as a continuation of the long history of decentralized and neutral protocols (like SMTP, TCP/IP, etc). They also describe a platform.
IBM recently proposed the adoption of a neutral platform in pharmaceutical supply chain in their FDA DSCSA pilot report. To solve emerging interoperability challenges the team called for adoption of an “egalitarian, inclusive, open-sourced commercial.”
Federated learning can be seen as a neutral platform, where the “platform” is the the federated learning network and the “apps” are different algorithms being trained on that network.
There have been many, many attempts to build a neutral platform for health data.
Send me a message if you are building a neutral platform and I’ve missed it.
Why neutral platforms are important
A neutral platform provides common infrastructure for multiple stakeholders to use coupled with assurances that the rules of this infrastructure won’t be suddenly changed. These unique properties let us escape the perverse incentives and lifecycle of traditional platforms, and are thus ideal to foster innovation. While that is very abstract, I’ve outlined a few concrete places where neutral platforms are needed today in healthcare, such as immunity passports, prescription data, and the pharmaceutical supply chain. Many more examples exist. Neutral platforms ensure true competition which ultimately leads to better services, improved outcomes, and lower costs.
Building neutral platforms that can seriously compete with healthcare’s incumbents, like Epic or Surescripts, will be difficult. The core technical innovation underpinning neutral platforms, blockchain technology, has privacy and scalability limitations today. Overcoming these limitations is non-trivial and a whole new set of infrastructure will need to be built alongside blockchains. Moreover, beyond just technical problems, there are also the social problems of adoption, governance, and keep a platform neutral over time. Nonetheless I earnestly think that they are worth the trouble to build and hope you do too.
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