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How blockchain is changing the future of healthcare

8 min read

healthcare blockchain

Right now the healthcare system isn’t as efficient as it could be. Healthcare suffers from inefficient operations, but blockchain and shared ledger technologies can ease the pain and take the industry to a whole new level.

Healthcare is plagued by high administrative costs, repetitive documentation, inefficient use of expensive equipment and staff, costly medication errors and unlucky “patient events” that result in legal liability. Many incorrect treatments and medication errors are caused by patient misidentification or duplication. Other chronic problems include interoperability, legal compliance, patient privacy, and data sharing.

In this article, we’ll dive into how blockchain is changing the future of healthcare for the good.

Quick Summary:

  • Blockchain technologies can help improve efficiency in healthcare, but it’s a slow process
  • Insurers and care providers are now using shared ledger technologies to manage non-patient data
  • If privacy concerns will allow it, the eventual goal is a unique national ID number for each patient
  • Third-party developers can profit by creating specific solutions for real-world problems, even if they’re small

Blockchain technology is now starting to disrupt the healthcare industry in the same ways that they’ve already changed financial services – Speed, security and efficiency. It’s already helping solve these chronic ailments that have made healthcare expensive and inaccessible in the past.

There are exciting projects underway, and they’re already changing access and ownership of healthcare data. These developments also aim to simplify administrative operations, improve supply and service logistics, and speed up pharma and genome research cycles.

Since doctors and other healthcare providers are naturally cautious and conservative, the healthcare blockchain ecosystem is growing slowly but surely. The best is yet to come.

Let’s examine how crypto technologies are being introduced into medicine and healthcare. We’ll look at the horizon for development, and highlight some projects and players in the fast-growing blockchain healthcare niche.

Why is blockchain so important for healthcare?

Just like it does for cryptocurrency in the financial world, blockchain technology offers healthcare communities more security, speed and transparency. Best of all, it’s cheaper than older technologies.

Standardization

Fragmentation of medical records and lack of “master records” is a chronic illness that can be treated by blockchain medicine. Since there’s only one database, the protocols can be standardized across all record holders.

With a standardized shared ledger system, stakeholders can cure the problem of maintaining non-chronological copies of similar records across multiple provider platforms. A single record helps prevent duplicate or tampered records. Since blockchain creates a single record, information stays consistent in spite of different providers’ databases.

The move toward standardization is being driven by the Health Information Technology for Economic and Clinical Health Act (HITECH Act) in 2009. It provides incentives and eventual sanctions to encourage providers to implement standardized electronic health records (EHR) in the US. The adoption of the related Fast Healthcare Interoperability Resources (FHIR) framework has now created an ecosystem for third-party developers to work in.

Security

Since append-only shared ledger systems only allow transactions to be added to a database instead of changed, they offer a better audit trail for processes ranging from patient medications and treatments to pharma research.

Ownership

Control and ownership of patient data and medical records is a sensitive issue. New platforms are designed to allow individual control over personal information. At the same time, blockchain allows anonymized data to be shared for research purposes, including genome and cancer studies.

Decentralization

With a decentralized database using multiple copies, administrative costs and intermediary delays are reduced. Decentralization also reduces vulnerability to ransomware and hacker attacks.

Still, there are many challenges. The easiest place to launch a decentralized health record registry is in a country which already uses a unique patient-identifier system, which the US lacks. Estonia is an example of a country using blockchain-based national healthcare data, and India is likewise experimenting with similar platforms, with mixed results.

Once decentralized medical records are more common, a dApp layer can be added for various services. These types of systems will also use mining and token incentives to verify transactions in the network.

Why is the healthcare industry adopting crypto now?

Investors caught the “ICO fever” in 2017, but the speculation has now cooled down significantly. Still, investors including venture capitalists and private equity funds continue to bet on make-sense utility tokens and asset-backed coins. After banking, healthcare is the next logical high-value area for blockchain developers.

First steps toward a healthy healthcare blockchain

There’s plenty of early awareness about blockchain’s potential ability to resolve healthcare issues, both patient-facing and provider-facing. And, new patents are being filed for blockchain-enabled healthcare applications. Still, progress is relatively slow because of concerns about medical ethics and legal liabilities.

Healthcare providers and insurers are now taking the first steps by forming industry workgroups to streamline back-office operations which don’t involve sensitive patient data. They’re using shared ledgers and permissioned blockchain platforms, such as the Estonian national healthcare system already mentioned.

Since much of healthcare’s waste and inefficiency results from duplicate record-keeping and repetitive lab testing, most of the early blockchain projects are focused on sharing non-patient data and preventing duplicate work. This solution will be especially helpful for large city and regional medical centers which often rely on a patchwork of databases kept by various hospitals and clinics.

Non-patient insurance data is on the block

One early project brings the healthcare insurance giant Humana together with OptumUnitedHealthcare, and Quest Diagnostics to update and synchronize their non-patient data. Specifically, the platform helps insurers keep their healthcare provider directories up to date.

Insurance companies are required by government regulators to maintain accurate current directories of all their third-party healthcare practitioners and providers. Since insurers may be fined for noncompliance, this project brings great value in a way that doesn’t involve sharing any patient data.

They haven’t yet launched any programs to share patient data because the topic is so sensitive, given the concerns about patient privacy and discrimination against people who seek insurance. Most industry leaders are developing new blockchain-powered platforms slowly and carefully, while awaiting more guidance from regulators.

Hashed Health is developing similar projects with smaller workgroups. Among other innovations, the company is working on an app for verifying physician credentials and practice specialties, including hospital licensing and drug prescription credentials.

Because of administrative delays, in a traditional hospital system it takes between one and three months for a doctor to receive permission to treat patients at a given hospital. The new blockchain-based credentialing platform can reduce the waiting time down to a few minutes. It gives doctors, nurses and technicians private keys that can grant access to their credentials.

Pharma & medical device supply chains

Logistics is another area of weakness in healthcare operations. Costly medications spend too much time in the warehouse, and they’re prone to pilferage. Worse, some medications require real-time monitoring of temperature and other conditions.

Counterfeit imports of common medications are also a major problem for pharma companies. Traceability is a high priority for all stakeholders – manufacturers, regulators and consumers.

Much development is being driven by the federal Drug Supply Chain Security Act (DSCSA), which requires interoperability and security features to allow tracking individual lots from manufacturer to retailer. Blockchain app developers should take note of the rich opportunities in this niche.

For example, the enterprise supply chain company Chronicled has launched an initiative called MediLedger in collaboration with several large drug companies. It’s a closed-blockchain product-tracking platform which is only open to vetted participants.

Since only licensed manufacturers can obtain serial numbers for their products, the system shuns counterfeits. The blockchain platform relies on zero-knowledge proofs to ensure the companies’ legal compliance with data privacy laws.

Zero-knowledge proofs allow two data-sharing partners to verify events without revealing underlying confidential data. This allows data to be analyzed even while personal identifiers are encrypted.

RFID + IoT

RFID tags are another blockchain-enabled link in the logistic trail. RFID tags combined with Internet of Things (IoT) and blockchain technologies can facilitate temperature-logging functions during drug storage and shipment.

For example, if a shipment of sensitive medication is mistakenly allowed to freeze, it may become worthless. But if the rules for its smart contracts are written correctly, then that medication will “call home” to complain about a cold warehouse long before any damage is done.

Sensitive personal health data is the next step

Going forward, the next step in development will be putting sensitive patient data into the blockchain. Eventually, the ideal goal is to track patients through the entire lifelong continuum of care. By using unique identifiers, patient data can be managed, tracked and used securely.

Healthcare administration and insurance are complex, slow and expensive. Medical bills and insurance costs are said to represent about 18% of our total national health costs. This area is ripe for saving money by identifying and improving inefficiencies.

Once the major healthcare players are comfortable using blockchain apps to manage non-patient data, they’ll move onward toward projects involving a wider range of stakeholders. These initiatives will focus on ways of using blockchain to share confidential patient data. The risk of data leakage is higher, so the project participants will be more cautious.

Burdened by multiple layers of state and federal regulation, insurance companies are developing blockchain tools to expedite billing and claims adjustment and management, as well as provider payment authorizations for medications and surgeries. These will use encrypted and/or anonymized medical records and other healthcare data.

Change Healthcare has developed a blockchain-based system for tracking and assessing insurance claims at each stage of the cycle. The goal is to improve billing accuracy and expedite payments, improve patient comfort, provide enterprise-wide imaging solutions (X-rays, etc.) and generally improve overall financial performance. Scalability is a key advantage of blockchain-enabled insurance processing.

Likewise, the PokitDok platform-as-a-service lets healthcare organizations bring new apps and services to market quickly. The platform allows providers to plug into nearly 800 payers for real-time integration at scale.

The goal is to speed claims approval and other routine insurance administration tasks. With this type of platform, the network can authenticate and pay healthcare providers according to smart contract rules. Once the pre-set conditions are met, the system can automatically approve payments.

Similar blockchain technologies can be used with pharmacy service providers for prescription authorization and refills. For example, if strong drugs are being over-prescribed, a smart contract could stop the refills and alert authorities.

Apart from reducing abuse, blockchain can also enable prior authorizations by codifying payers’ rules about whether the appropriate diagnostic tests have been completed first, and whether medications may cause dangerous reactions when prescribed together.

Apps to solve real-world problems

App developers can look at PatientPing as an example of a blockchain solution for a pressing problem – Keeping track of admission and discharge for patients. The platforms give real-time notifications.

Caregivers and service providers are automatically notified when patients are admitted or discharged, as well as other treatment details. This can save an enormous amount of money in scheduling transportation and staffing, especially for assisted-care patients.

Further ahead in the healthcare blockchain

As consumers, regulators and providers become more comfortable with the idea of putting sensitive personal data on the blockchain, there will be a new round of development in health information exchange platforms. Data is needed for AI to train new algorithms, and discover better medications.

Another factor driving healthcare blockchain development is privacy legislation. Governments are now requiring organizations that handle sensitive data to document consent and audit trails for all processes.

There are opportunities for healthcare providers to monetize their databases, and there’s also room for blockchain app developers to make a buck by serving the needs of consumers and providers. Another factor driving healthcare blockchain development is privacy legislation.

Governments are now requiring organizations that handle sensitive data to document consent and audit trails for all processes. Before the arrival of blockchain technologies, third parties were the only way for healthcare providers to safely de-identify patient data so it could be used for research purposes.

HealthVerity is a blockchain-based health data exchange platform that provides patient de-identification, de-duplication and mastering services. It lets users find, link and license data in a HIPAA-compliant way.

The platform covers insurance claims, consumer data, pharmacy and medical device data, as well as lab test results and biomarkers. The result is a consolidated, anonymized dataset with a single unique ID.

Bigger priorities get faster development

Some projects are designed to bypass healthcare exchanges and speed the development process. The idea is to encourage patients to donate their own data for research purposes.

Because of privacy concerns, this trend is emerging first for cancer and other difficult diseases where active patients and families are more willing to rely on blockchain and other new technologies. Genome research is another area where blockchain methods are quickly taking root.

Monetizing healthcare data

Beyond profiting in fiat currency, some organizations are exploring other alternatives. For example, Luna DNA gives users the appropriately-named “shares” for sharing personal data. Likewise, Doc.ai gives utility tokens to users in exchange for data, which can be used to pay for services. Medibloc and Patientory let users control and monetize their medical records.

Research

Beyond secure data sharing, blockchain combined with AI can improve healthcare outcomes by helping to design, manage and interpret the results from clinical trials. Smart contracts can help control biases and ensure that all results are reported accurately, even when outcomes are negative. This element of neutral oversight and control is especially important when pharma companies are eager to highlight the benefits of new products while ignoring the downsides.

Takeaways

The long term outlook is for blockchain-enabled universal sharing of unique-identity health records, and AI-driven research into genomes, pharma and medical therapies. Decentralized health records and research databases can give patients and consumers better control, and also lead to new development models.

Old-school business models that rely on a moat of data hoarding are threatened with extinction. Consumers will soon have broad powers to control and leverage their own healthcare records.

Still, there will be plenty of new opportunities for entrepreneurs and third-party app developers at the interface between patients, providers, pharma companies, researchers and insurers. The challenge is to create real value around collecting, de-identifying, analyzing and using healthcare data.

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