The healthcare industry is a prime candidate for data disruption fueled by margin compression, payment reform, the incentivizing of quality and value of healthcare and the persistence of antiquated manual processes that produce marginal results. One solution 20% to 50% of healthcare executives are exploring is blockchain technology.1

Historically, the industry has lacked timely, comprehensive information to make financial and clinical decisions. When data does exist, it resides in siloed systems, requiring highly secure exchanges for data sharing and access to information. Sharing and reacting to information in real time is often cumbersome.  Blockchain has the potential to provide the infrastructure that is needed to create a common database of health information that payers, hospitals and physicians can access no matter what electronic medical system they use.

In theory, the technology can provide improved security and privacy, shorten the turnaround time to obtain information from third parties and may significantly reduce costs.  In fact, the Department of Health and Human Services is looking into ways blockchain can improve health records.2 It has the potential to facilitate payer-provider information sharing for financial and clinical needs and may even be utilized to improve the collection and sharing of research results in real-time.3

How Blockchain Originated

Blockchain gained notoriety in the financial sector as the engine that operates bitcoin. Blockchains are distributed databases that log transaction records on linked ledgers or “blocks” and store them on an encrypted digital ledger. Due to the way the databases are replicated and distributed, the technology has the potential to provide increased security because data is spread across a network of replicated databases that are always in sync.4 Blockchain does not have a single “owner of data. Only certain blocks of data are available to any given user to be accessed or shared. Firewalls and encryption can add layers of protection.5 As transactions are committed to the blockchain they are simultaneously replicated across the network. Through the use of cryptographic hashes the blockchain creates an immutable record providing for provenance of transactions.

A recent survey conducted by IBM6 found that 16% of healthcare executives had solid plans to implement a commercial blockchain solution in 2017 while 56% expected to by 2020.


Poised for Disruption


How Blockchain Can Benefit Healthcare

Blockchains can significantly improve financial and clinical operations in healthcare.7 As blockchain technology evolves, some of the greatest areas of opportunity in the healthcare continuum include:

Health information distribution and management – In the past, healthcare lacked adequate data. Now it’s inundated with data. With so much data and so many disconnected systems, the ability to process data and generate meaning is difficult.

Blockchain can provide a new kind of platform for electronic healthcare records, potentially enabling patients and providers to access them in real-time regardless of where the patient was seen and the medical records platform where they originated.

Supply chain – Blockchain can help improve providers’ ability to track inventories, costs and utilization of supplies and pharmaceuticals in real-time. Connectivity can help manufacturers, wholesalers, pharmacies and clinicians to share information and can help better manage physician preferences and outcomes relative to costs to identify the lowest cost option that provides the best possible outcome.

Financial transactions – Administrative overhead, manual processes and the inability to obtain accurate and timely authorizations and benefit verification information add unnecessary costs and time to healthcare financial transactions.

Although blockchains have proven themselves in the financial sector, they have yet to be applied to healthcare but they have the potential to speed transactions, improve data security, accelerate cash flow and significantly remove costs through improved automation. In addition, blockchains have the potential to reduce fraud by eliminating intermediaries via automated processes and more efficient processing. In the future, perhaps real time payment adjudication can be achieved with distributive ledger technology.8

Payment models – As a result of the push for value, providers are making greater investments in technology to improve coordination across the continuum and deliver better outcomes. It is estimated that 20% of managed care contracts will include a risk-based payment mechanism. Theoretically, blockchain-supported solutions will be able to monitor outcomes, track performance and administer payments and information to a multitude of providers along the continuum. These potential benefits may be realized as healthcare-specific solutions are developed.

The technology can be used to help improve risk management, especially with new complex payment models that can track receipt, disbursement and compliance within bundled payments when different business associates utilize disparate technology platforms.

Increased data security measures – Healthcare providers, payers and consumers are concerned that, as innovative solutions are adopted, today’s aging security infrastructure will need to be updated as well. Every point of access both within the hospital and outside represents a potential security breach. For example, physicians are tapping into patient monitoring and wearable devices to track such markers as heart rates, glucose level and exercise. These can be vulnerable today. Blockchain solutions have the potential to keep patient information private and secure while realizing the benefits of new innovations and technology.9

Additional Applications for Blockchain in Healthcare

What else is on the horizon for blockchain and healthcare?

  • Drug traceability: Each transaction among drug manufacturers, wholesalers, pharmacists and patients can be tracked to verify and secure drug product information important for tackling issues such as counterfeits, overprescribing and abuse.
  • Improvement and authentication of health records and protocols on record sharing is possible.
  • Smart contracts: Rule-based methods are created for patient data access and permissions granted to selected health organizations.
  • Precision medicine: Patients, researchers and providers can collaborate to develop individualized care.
  • Genomics research via access to genetic data secured on blockchain.

Blockchain can help enhance three major features of electronic health record systems:

  • Immutability: Each event on the blockchain can be given a unique hash corresponding to the contents of the record. Users can immediately verify if the contents of the record have been changed.
  • Cybersecurity: Each hash may contain particular user permissions for doctors, patients, nurses, etc.so that only authorized personnel can access record information.
  • Interoperability via Collaborative Version Control: Each party has a record linked to an original record that is registered to the blockchain. This way, everyone who has the appropriate role and responsibility can append information to the record while avoiding issues such as inconsistent or duplicate records.