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July 28th, 2017

Blockchain for Healthcare – Hype or Reality?

Over the course of the past couple of months, the topic of blockchain has surfaced multiple times in my conversations with several Healthcare CxOs. Frankly, I was surprised for two main reasons. First, blockchain is a relatively new technology that has only been around since 2008 and its most well-known use case is Bitcoin, which is a cryptocurrency and digital payment system that continues to make global headlines. Second, based on my experience, the healthcare industry has never been at the forefront of adopting new technologies, historically it has taken a “wait-and-see” mindset letting other industries take the lead then vetting out the options.

There are folks out there touting that blockchain is the next Internet, expected to revolutionize multiple industries just as the Internet did. It’s certainly possible that this day may indeed come soon, but I am certainly not jumping on that bandwagon yet. Blockchain is an undeniably ingenious invention – the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. But since then, it has evolved into something greater and the main question everyone is asking is: What is Blockchain? And more importantly, from my perspective, is this a viable technology for the healthcare industry?

What is Blockchain?
Blockchain technology is, at its simplest, a distributed and immutable (write once and read only) record of digital events that is shared peer-to-peer between different parties.


Source: Blockgeeks

In essence, the fundamental strengths of a blockchain system lie in its data integrity and networked immutability. One can break it down along four key sub-categories:

  • Decentralized database i.e. distributed ledgers as shown in the above figure (frankly nothing new as this has been around since the 70’s)
  • Cryptographic security (built on public-key infrastructure; reduce damage caused by data breach)
  • Process Automation (e.g. smart contracts)
  • Value transfer (can transfer digital values)

HOW and WHERE can blockchain technology be used in the healthcare space?
The concept of blockchain technology and systems is undoubtedly disruptive, but it will not act as a magic bullet to solve emerging business problems in the fast-changing and highly interconnected digital health ecosystem. Rather, it will be an evolutionary journey for blockchain-based healthcare systems or applications, where trust and governance within a blockchain network or consortium will be critical success factors for implementation. For blockchain to make a meaningful impact in the healthcare industry, there would need to be an industry-wide adoption or push by independent bodies such as The Hyperledger Foundation. Additionally, blockchain would not only need to solve viable business problems, but also do so with sizeable ROI for the organization. This leads me to the second part of the question – Where can we use this technology in the healthcare sector?

Source: The Blockchain.com

The following healthcare use cases stand out:

  • Claims Adjudication and Billing Management in the Healthcare Insurance industry: This seems to be an easy use case given the amount of fraudulent activities around improper medical billing and reimbursements across the payer industry. The federal health officials recently announced that they made more than $16 billion in improper payments to private Medicare Advantage health plans last year and need to crack down on billing errors by the insurers. Blockchain-based systems can provide realistic solutions for minimizing medical billing-related fraud. For example, in a situation where a health plan and patient are dealing with a contract, the blockchain can automatically verify and authorize information as well as the contractual processes. No back-and-forth between multiple parties resulting in transparency and automation, creating greater efficiencies, which in turn will lead to lower administration costs, quicker claims, and less money lost. Recently, Gem Health, a provider of blockchain application platforms for enterprises, showcased the first blockchain application for health claims.
  • Interoperability and Clinical Health Data Exchange: Blockchain could enable data exchange systems that are cryptographically secured and irrevocable. This would enable seamless access to historic and real-time patient data, while eliminating the burden and cost of data reconciliation. But, as it’s widely known across the healthcare industry, this is much easier said than done. Folks have been trying to solve HIE (Health Interoperability Exchange) issues for years now, given the nature of the structured and unstructured data from multiple sources in the healthcare industry, there is no easy solution.
  • Clinical Trials: It is estimated that about 40% of clinical trials go unreported and investigators often fail to share their study results. In fact, a majority of pharma research related to clinical trials is done in silos, thereby making it impossible for any sort of collaboration across an organizations internal team. This creates crucial safety issues for patients and knowledge gaps for healthcare stakeholders and policymakers. Blockchain-based systems could help drive unprecedented collaboration between participants and researchers around innovation within medical research in fields such as precision medicine or personalized medicine.
  • Population Health Management: Instead of relying on HIE based systems, organizations can eliminate intermediaries and access patient databases on a large scale. Blockchain can potentially leapfrog population health by providing trust where none exists, including continuous access to patient records and directly linking information to clinical and financial outcomes.
  • Drug Supply Chain Integrity: Based on industry estimates, pharmaceutical companies incur an estimated annual loss of $200 billion due to globally counterfeit drugs. About 30% of drugs sold in developing countries are considered to be counterfeits. A blockchain-based system could ensure a chain-of-custody log, tracking each step of the supply chain at the individual drug/product level. The BlockRx project initiative has been set-up to address the drug supply chain problem, leveraging blockchain to support and manage the drug development lifecycle. Furthermore, add-on functionalities such as private keys and smart contracts could be leveraged as part of this process for seamless supply chain integrity. Recently two California based companies have launched a serialized “track and trace” pilot for the pharmaceutical industry, which is projected to grow to a $1.12 trillion industry by 2022. The underlying technology for this effort is blockchain.
  • Cybersecurity: According to the HIPAA journal, there were a total of 329 reported breaches that occurred in 2016, affecting about 17 million patients. About 40% of these breaches were insider-caused and 35% were a result of hacking and ransomware. In fact,  The Ponemon 2016 Cost of Data Breach report found that in the healthcare industry the average cost per stolen record was $355, which is over twice the average global cost of a stolen record at $158. With the move towards data digitization in the healthcare space moving full speed ahead, cybersecurity challenges are going to continue. Blockchain-enabled solutions have the potential to bridge the gaps of device data interoperability while ensuring security, privacy and reliability around cybersecurity.
  • Machine Learning and Healthcare IoT: The convergence of big data analytics and access methodologies will accelerate the growing trend of data democratization and consumer access to personal health information. This will allow for all members of a patient’s care team to stay securely informed, involved and interoperable with one another. As more sensitive data starts to move more rapidly between a larger number of devices, organizations, platforms and machine learning applications, blockchain may be able to offer an easier and more comprehensive strategy for ensuring trust, data integrity and better control over how information is used.

What’s Next
Clearly blockchain technology has the potential to transform multiple industries (currently for the most part limited to the financial services sector) and healthcare could very well be the prime one. This technology presents numerous opportunities for healthcare; however, it is not fully mature today nor a panacea that can be immediately applied. While there are several promising projects underway in the industry, we need to see more proof points around the tangible benefits of deploying blockchain technology. We at DMI have started working with clients around blockchain and exploring the ways we can evolve this from ideation to incubation, with the ultimate goal of commercialization. Contact us if you have or are thinking about using blockchain technology in your organization.

Tapan Mehta

Tags: AI artificial intelligence Blockchain cybersecurity healthcare internet of things IoT machine learning

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