Why blockchain is the healthcare disrupter we’ve been waiting for

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Originally published in Fierce Healthcare

By Charles Moore

We all know the current healthcare system isn’t sustainable.

It’s too expensive, the fee-for-service model is challenged and our aging population demands quality. With healthcare expenditures approaching 20% of GDP—that’s trillions of dollars!—we can’t bear much more. Worse yet, it’s generally agreed that $500+ billion of this expense is unnecessary.

Everyone’s looking for a solution: a silver bullet that will transform the healthcare industry overnight; a mechanism that can end fragmentation, unlock and make meaningful patient data housed in “silos,” often traditional databases, while cutting costs and improving quality.

A dynamic “distributed ledger” may just unlock the silos.

Blockchain could be that answer. While still a ways off, the secure digital distributed ledger system that powers Bitcoin promises technological advancements that could serve patients, providers and insurers in ways that will improve quality and efficiency.  Blockchain is not new. It’s been known within management information science for some time. It’s the newer applications of blockchain that are making headlines.

Whether that promise will be fulfilled is complicated and is a matter of will.

Nothing will transform healthcare unless we do it right

Blockchain technology in healthcare is expected to be worth over $5.6 billion by 2025, according to a recent report. And that’s exactly the problem.

Right now, we’re seeing plenty of new players in the space, but they’re not focused on how to turn blockchain into a potentially universal solution. They’re focused on how to get a piece of that $5 billion.

We all know change in healthcare is slow. It typically takes cycles of at least a decade for any real change to take place, and sometimes longer. Startups looking to bring blockchain into healthcare might not be willing or able to wait that long.

Besides the time horizon, real change can’t occur in healthcare—whether we’re talking about blockchain or anything else—until we take a step back and consider whether we’re approaching change the right way. It’s like good urban planning, where you have a sense of how things will come together in the future.

The answer is to come together and set standards now. If we don’t, we risk the application of blockchain and other emerging technologies only serving to further fragment the system. We saw this in the early days of the internet, when companies racing after new opportunities would each come up with their own standard and try to box one another out, slowing down innovation.

When it comes to setting standards, a division of the National Academies of Sciences, Engineering and Medicine offered Six Domains of Health Care Quality, a great start for guideposts in applying blockchain integration. The benchmarks are that any innovation is safe, patient-centered, timely, effective, efficient and equitable. Adhering to these quality guidelines will help to ensure that blockchain or other technologies are part of a meaningful, long-term solution and not just another flash in the pan.

As we consider the technological applications, I like the approach that Ewout Kramer has taken at Health Level Seven International, a not-for-profit organization dedicated to setting standards around the integration of technology in healthcare delivery. HL7 has been the driving force behind the “FHIR” health data interoperability standard. In a recent document, Kramer noted the practical application of blockchain. He said: “Healthcare is very suitable for blockchain, because a lot of data is still stored in data silos at hospitals, doctors, health insurers and other institutions. … Cryptographic technology can enable secure exchange, so that they communicate with each other.”

The real argument for blockchain in healthcare: Use cases

In healthcare, quality is everything. Unlike other industries, the higher the quality in healthcare the lower the final cost. Higher-quality care is associated with fewer office or hospital visits and less need for high-cost procedures.

Blockchain, just like everything else in healthcare, should also be measured by whether it’s improving the quality of patient care.

And just as the distributed ledger of the blockchain grows, I believe providing the value of utilizing blockchain technology in healthcare will be built block by block. However, a critical component is collaboration from the perspective of the vested parties, to include patients, providers, payers, regulators, etc.

Let’s take one of the hardest and most common problems to solve in healthcare: tracking medications and prescriptions.

Patients rarely get all of their prescriptions from a single pharmacy these days. They might go to different locations, go through Canada to save money, pay cash for some and go through insurance for others. They may also take other over-the-counter medicines that could affect their prescriptions.

Physicians have no single snapshot of this pattern when a patient walks in the door. The closest they can get is when a patient walks in with a bag full of all their medications.

A centralized ledger powered by a blockchain, “pointing” to different authorized patient data sources, could offer a solution in tracking medications and prescriptions, assigning an identifier to each patient and tracking every medication in real time, updating the ledger with each transaction. This would provide an immediate benefit for doctors, cut costs by streamlining data sets and improve the quality of care for the patient.

This is just one use case, of which there are many, and blockchain’s value in healthcare will be proven when these kinds of incremental use cases are shown to improve quality.

Blockchain is foundational, not disruptive

There is a potential future where blockchain technology can bring structure to the unstructured and siloed proprietary databases we have in healthcare today and create a form of meaningful interoperability across disparate systems.

This is, in part, due to the “shareable” nature of blockchain’s distributed ledger structure.  Specifically, the encryptable blockchain ledger is shared and resides in multiple secure locations, updated in real time at all locations.  

But it will take a long time, probably decades. The potential is there, but funneling hundreds of millions of dollars into investments looking for a quick return won’t get us to the future we’d all like to see.

We must consider making more mature decisions around integrations which will require a more long-term and nuanced approach to making blockchain a real game changer in healthcare. It’s more than possible, but there is a lot more work to do.

Charles Moore is an informaticist and founder of Moore Advisors, where he focuses on delivering corporate advisory and private equity transaction execution to healthcare, business services and manufacturing companies.