Blockchain Applications in Healthcare: Unlocking a future of untapped potential

How Blockchain and Distributed Ledger Technology can help re-invent national healthcare systems

Ever wondered about blockchain applications in healthcare? This post will give you a well-rounded introduction to the transformative potential of blockchain in healthcare as well as set out the complex interrelated issues that stand in the way of change. Got questions? email directly to [email protected]

As an important step in becoming a doctor, graduating medical school students swear to some form of the Hippocratic Oath.

One of the vows within that oath is “first, do no harm” or primum non nocere”. 

While most medical professionals live up to this promise on a daily basis, the same cannot be said for the healthcare systems within which they operate.

Despite significant leaps in the medical field, from devices & wearables to genome sequencing and regenerative medicine, individual improvements have not created the fundamental transformation that national healthcare systems require.[1]

Health management and administrative systems remain relatively untouched by technology & regulatory reform and stand ill-equipped to serve the current and future needs of their target populations.

Demographic stresses

The world is getting older, especially in developed countries, which is placing a significant strain on healthcare systems. According to a 2015 report by the United Nations Department of Economic & Social Affairs[2] –

  • Between 2015 & 2030, those aged over 60 years will grow by 56%
  • In 2015, one in eight people worldwide aged 60 or over. By 2030, seniors are projected to account for one in six people globally.
  • The aging process is most advanced in Europe & Northern America, where more than one in five people are aged 60 or over as of 2015.
  • By 2030, the elderly are expected to account for more than 25% of the populations in Europe and Northern America, 20% in Oceania, 17% in Asia and Latin America and the Caribbean, and 6% in Africa.

In the developing world, particularly Sub-Saharan Africa and Asia, future challenges in healthcare will stem from population increases and economic factors rather than aging.

High population growth coupled with a trickle down of innovations is driving a growing middle-class.

blockchain and distributed ledger technology

With growth coming almost exclusively from emerging nations, the world’s middle class is expected to expand by another three billion over the next two decades.[3]

Delivering efficient, sustainable and affordable healthcare to the world’s aging population and emerging middle class will become more difficult without profound and substantive changes to national healthcare systems.

While problems are complex, systemic and by no means easily fixed, the vast majority of constraints experienced by healthcare systems can be traced to a single, yet highly corrosive root cause.

Myopic, outdated and restrictive compliance regulations

The costs, risks and societal sensitivities surrounding healthcare are profound. Due to the sensitive and central role healthcare plays in society, fearful government officials have been scared to make the deep regulatory changes required to reform healthcare.

“Officials know they will be punished by the public and politicians more for under regulating – approving a harmful drug, say – than for tightening the approval process, even if doing so delays a useful innovation.”[4]

Remember the Obama care saga?

Sure you do.

It’s still going on today, many years later. 

The divisive public and congressional debates. The multitude of vested interests and the tangle of regulations.

It’s not hard to understand why the implementation of far-reaching regulatory reforms have been unattainable and generally avoided by politicians.

blockchain and distributed ledger technology

Data sharing and privacy laws have resulted in gross inefficiencies, industry-wide fragmentation, and the prevention of real innovation in healthcare.

HIPAA, for example, the US Health Insurance Portability and Accountability Act, designed to protect health information, imposes strict rules on healthcare providers.

Despite the Act’s noble intention to keep patient data secure and private, it remains a large impediment to efficient patient care mainly because of the difficulties in accessing patient information and restrictions on electronic communications.

“Many physicians may be reluctant to embrace EHRs because of malpractice concerns. They may believe that they are better protected against malpractice lawsuits by the handwritten chart system. Furthermore, HIPAA has raised many new issues about data handling. There are also international legal issues about sharing health information. Many unresolved legal concerns surround legal liability in the event of medical errors that are byproducts of health analysis software or EHR data encoding.”[5]

Government regulations like HIPAA have caused a host of flow on problems.

Healthcare management systems designed to adhere to such restrictive regulations are antiquated and fragmented. Bloated systems that run on paper and siloed record-keeping practices have created healthcare management systems that are inefficient, fragmented, isolated and opaque.

The shift towards electronic health records (EHR) has done little to improve the splintered nature of healthcare. A severe lack of interoperability within organizations and at the inter-organizational level means that coordination remains minimal.

EHR’s are fragmented across hospitals, private practices, labs, pharmacies and many other industry players.[6]

“On average, Americans visit 16 different doctors in their lifetime. While both the HITECH and the Affordable Care Act’s now enable and in some cases mandate that data from your doctor’s visits be stored digitally, medical records and results from different facilities and physicians are often stored in incompatible databases.”[7]

Real-world implications for patient health

The inability to exchange and make use of electronic health records serves as a major impediment to the development of a robust data infrastructure.[8]

As you can imagine, when hospitals, clinics, insurers, governments and doctor’s offices are unable to share information, this has negative outcomes for patient health.

Einer Elhauge, Founding Director of the Petrie-Flom Center for Health Law Policy, Biotechnology & Bioethics at Harvard writes –

“Just as too many cooks can spoil the broth, too many decision makers can spoil health care. Individual decision makers responsible for only one fragment of a relevant set of health care decisions may fail to understand the full picture, may lack the power to take all the appropriate actions given what they know, or may even have affirmative incentives to shift costs onto others. All these forms of fragmentation can lead to bad health care decisions.” [9]

blockchain and distributed ledger technology

Take a look at this example scenario.

A patient seeks medical advice to find a remedy for his constant fatigue and muscle aches.

He visits a number of doctors, each a specialist in their respective areas and even visits the hospital on one occasion.

He receives a battery of tests from each doctor as well as the hospital and is prescribed a range of drugs.

The patient’s condition proceeds to deteriorate, so he decides to visit a new doctor who continues a new testing and treatment regime.

Throughout the process, the medical professionals treating the patient have little communication and share minimal information on the patient’s medical history.

Even though the doctors who treated the patient in this fictitious, albeit credible real-world example may have followed the right medical procedures to treat the problems they were trained to handle, the fragmented nature of the healthcare system resulted in no co-ordination and ultimately substandard patient care.

The incapacity to share vital information led doctors to be unable to see the patient’s bigger picture which could have shed further light on the health condition.

Information sharing between doctors would likely have resulted in better treatment and a reduction in patient, doctor and insurer costs that accompanied needless treatments.

The corrosive impact of government regulations doesn’t end here

Fragmented, siloed record-keeping practices and systems that lack basic levels of interoperability are responsible for other major problems in healthcare.

There is now a severe lack of advanced data available for clinical and scientific research and economic, behavioral and infrastructure purposes. With little meaningful data, it’s difficult for governments and the healthcare industry to see the bigger picture and make informed decisions to improve the quality of patient care.

There is also insufficient insurable data for the most at risk and underserved citizens and the tracking of population health trends.[10]

Perhaps the most destructive impact of fragmentation and the inability to share information is that it has caused deep inefficiencies. Healthcare costs, in the United States, for example, have spiraled out of control. According to the CDC, health expenditures as a percentage of GDP have risen some 4.5% since the year 2000.[11

Health expenditures % of GDP –
2000 – 13.3%
2009 – 17.3%
2014 – 17.4%
2015 – 17.8%

High costs have contributed to insurance companies’ reluctance to insure the population and provide an adequate range of services.

Many national healthcare systems are so inefficient they have become unable to deliver any form of care to the most vulnerable and at-risk members of society.

Many are even failing to deliver adequate care to those that can afford it. As demographic shifts take place, these inefficiencies will worsen. The reinvention of national healthcare systems is now required. 

As demographic shifts take place, these inefficiencies will worsen. The reinvention of national healthcare systems is now required. 

Blockchain technology is a key tool to achieve healthcare objectives for developing and “re-developing” nations

blockchain and distributed ledger technologyOne of the fundamental goals that governments and industry seek to achieve is to provide improved quality of healthcare at lower healthcare costs. [12]

Making this goal a reality will require governments and industry to play different, but equally important roles.

Governments –

Must lead change through regulatory reforms that incorporate technological advances and foster an environment designed around competitive collaboration and innovation amongst insurers, healthcare providers, and regulators.

It’s equally imperative for governments to participate in technological innovation programs and R&D to support the development of a robust health data infrastructure.

Industry –

Transforming the mindset of healthcare from a system centered around the care of individuals to a system focused on the overall health of individuals will be foremost. [13]

Industry will need to incorporate new technologies that redefine the value proposition and collaborate with other industry players that provide valuable yet asymmetric information. Industry must also seek new ways to reach beyond current customers by developing innovative business models that reach underserved and high-risk population groups.

Together –

Governments and industry must become more efficient with population growth and globalization.

Lowering administrative costs through innovative technologies, while scaling services, and enhancing outcomes is imperative for the sustainability and competitiveness of both nations and industry.

Growth will reward those who can embrace the technological arms race and create greater internal capabilities and efficiency.

Healthcare is a high-stakes game

Inefficiencies in healthcare systems bleed into all other parts of a society and the economy. Achieving improved quality healthcare at lower costs will prove key to the future success of developed and developing nations.

Overcoming the myriad of challenges will demand a new approach that focuses on the convergence of technology and networked alliances.

Blockchain technology is an important tool that can enable both government and industry make the fundamental changes needed to overhaul national healthcare systems and meet their objectives.

Blockchain technology is a resilient digital infrastructure to enable Governments to become more efficient

Technology is driving rapid change in the global economy. National governments are awakening to the realization that innovation and broad regulatory reforms will be the foundation for national success in the new digital economy.

As the world becomes more urbanized, vast megacities are serving as innovation centers and primary drivers of economic growth. [14]

Challenges that accompany urbanization and population increases mean that cities must become smarter in all areas including healthcare or risk losing out on key economic benefits.

A Blockchain is a networked database that can fuel and support smart city initiatives and drive economic growth. It enables the creation of a digital infrastructure that is necessary to enable mass transformation to occur and vital national industries to grow.

Cities, municipalities, and governments are turning to blockchain technology to prepare for current and future challenges.

From the US state of Delaware to Singapore, Estonia, Russia, Sweden, UK, South Korea and many others, blockchain based solutions are being sought to provide a better digital infrastructure now and into the future for governments. [15]

William Mougayar sets out four main areas where governments can utilize blockchain technology. They include[16] –


  • Verifications
  • Movement of assets
  • Ownership
  • Identity

The accurate and efficient verification of information such as licenses, permits, transactions, identities can solve a number of problems for government operations. Data lineage and integrity when handling sensitive information is in the public interest.

The ability to verify data has not been tampered with, identify the source of information and track a chain of custody from creation holds benefits that are self-evident. [17]

Just imagine the benefits to healthcare data and information sharing…

Governments and smart cities could issue e-identities to the population, enabling the frictionless use of a variety of national and municipal services. [18] Digital ID’s that act like a digital watermark to every transaction, will help governments check identities in real-time, dramatically reducing the rate of fraud other criminal activities.

Increased levels of data integrity could also redefine the relationship between citizens and their governments in terms of transparency and trust.

Another area where blockchain technology can be of great benefit is in the movement of assets. Blockchain can enable the direct and automatic transfer of payments or assets between governments and citizens for services rendered.

This will cut out excessive intermediary costs, redundancies and greatly improve the efficiency of government operations in healthcare and many other areas.

Entire government departments could be replaced by blockchain based registries saving billions of dollars of taxpayer funds. Government offices could become far more efficient as new registries powered by blockchain securely record data, transactions and track provenance.

“The truth about ‘Smart Cities’ is that there is only going to be one way that they can become truly ‘smart’: through data and analytics”. [19]

blockchain and distributed ledger technology

One of the most profound benefits of blockchain technology, however, is the ability for governments to securely utilize vital sovereign data.

For governments, this presents unique opportunities to streamline operations. Real-time analysis of pseudonymous data can be conducted to find trends in health, transport, security, city planning, crime, future proofing and a host of other important issues.

Armed with valuable data insights, governments can utilize resources in areas that will have the greatest impact on society. This newfound capacity will be a game changer for governments and their citizenry.

Blockchain technologies are an effective foundation to help industry redesign organizations, products, and services

It’s important to recognize early on that the drivers of business success are changing as we enter a new globalized digital economy. Consortiums and networked alliances are the new competitive advantage.

Companies and industries must connect, collaborate and build networks to help become more efficient and agile.

Those that choose to insulate themselves will find an already volatile and competitive global economy even more inhospitable.

“The emerging business models are founded on the notion of community: success will be achieved by those who involve their suppliers, their infrastructure providers, and-perhaps most important-their customers in a network where they can build value together. Networks that enable trading, sharing, and enhancing knowledge to build value for mutual benefit are essential.” [20]

There are three main categories of blockchain database applications.

A public blockchain is a fully decentralized platform where anyone in the world can view and add information to the platform as well as contribute to the consensus process. [21] A private blockchain, on the other hand, is centralized within one organization, allowing only the owner of the database to view and write information onto the blockchain. [22]

Arguably of most consequence to the healthcare industry are consortium blockchains which differ to private & public blockchains in that they are partially decentralized. As Vitalik Buterin explains,

“a consortium blockchain is a blockchain where the consensus process is controlled by a pre-selected set of nodes; for example, one might imagine a consortium of 15 financial institutions, each of which operates a node and of which 10 must sign every block in order for the block to be valid”. [23]

He continues –

“In general, so far there has been little emphasis on the distinction between consortium blockchains and fully private blockchains, although it is important: the former provides a hybrid between the “low-trust” provided by public blockchains and the “single highly-trusted entity” model of private blockchains, whereas the latter can be more accurately described as a traditional centralized system with a degree of cryptographic auditability attached.” [24]

Blockchain-based consortiums are key to the survival and success of the healthcare industry for several reasons.

Market pressures are now more intense than ever before. International competition, the need to develop new products & services at speed, concerns about meeting new regulatory requirements, reductions in corporate R&D budgets and other industry-wide problems, mean that companies are under constant pressure.

Consortium blockchains are an efficient way for industry players with shared goals to collaborate and create unique products and services.

Blockchain consortiums deliver everything that older style consortiums do but in a more efficient and secure way.

Intellectual property and other sensitive data sets have high-level integrity and information sharing is efficient and safe.

The construction of a shared industry data infrastructure where companies can gain and share knowledge and develop new technologies without compromising privacy and security is now possible.

Blockchain consortiums can serve as the backbone for innovation in healthcare products, services, and delivery.

Alliances are already forming

The healthcare industry is already witnessing the makings of some great alliances.

In early 2016, Gem launched the Gem Healthcare Network with Phillips Blockchain Lab. The Gem network, powered by Ethereum blockchain, aims to develop applications and shared infrastructure for healthcare. [25]

Phillips Blockchain Lab, the R&D wing of Phillips is the first healthcare operator to join the network. The network plans to build an inclusive ecosystem of industry players to identify and solve healthcare problems.

This is a step in the right direction.

Alliances will need to work outside the walls of the organization and across industry to find collaborative ways that provide mutual benefits to each party.

The future of the healthcare industry cannot be secured with isolationism and insularity, rather success will belong to those that are networked, open and nimble.

Efficient government, re-aligned industry, new products and service paradigms create sustainability in a changing and dynamic world

It all starts at the top.

Governments must lift their game. Innovation and deep regulatory reforms in the digital economy will be the foundation for success.

Restrictive and outdated government regulations currently stand as the single biggest inhibitor of healthcare transformation. Governments must release national healthcare systems from the regulatory prisons they have constructed to unlock true innovation.

Of course, industry will also need to come to the party.

Health management and administrative systems are rife with inefficiencies, misaligned incentives and remain relatively untouched by innovation.

Industry must follow government regulatory changes with the implementation of new technologies that enable collaboration and interoperability. They must reinvent their product and service offerings and adapt to new customer expectations. [26]

It’s also imperative for industry to seek new ways to reach beyond current customers by developing innovative business models that extend to underserved and high-risk population groups.

Governments and industry must cooperate, lead and utilize technologies that enable an unprecedented level of data access, interoperability, integration, and scalability. [27]

There are no grand delusions here.

The transformation of healthcare will be challenging and painful.

Mistakes will get made and temptations to revert to old systems and processes will be overwhelming.

But..the current trajectory is simply unsustainable.

Something must be done.

Technology and globalization, along with current global demographic shifts are demanding innovation and deep changes.

Blockchain technology is a key tool to achieve the central healthcare objectives of nations who must find ways to become more efficient with population growth, globalization, and increased demands on healthcare systems.

The technology is an effective foundation to help industry redesign organizations, products, and services at a time when collaboration, consortiums, and networked alliances are the new competitive advantage.

Countries and industry must begin utilizing blockchain technology as a foundation to explore the convergence of a variety technological tools to address customer centric needs and social problems that provide excellent business opportunities.

Nations and industries that embrace blockchain will be rewarded with a resilient and antifragile digital infrastructure that enables the cultivation of efficient ecosystems, better products, and services, lower costs at scale, and improved sustainable outcomes for all.

While the path forward may be complicated.

We can no longer use that as an excuse for inaction. The only thing stopping us moving forward and accessing a future of untapped potential is fear, uncertainty, and doubt.

In blockchain technology, we now have a tool that can help solve many of our greatest challenges.


If you like this article on blockchain in healthcare, discover blockchain and identity, trade finance, supply chain, compliance, insurance and government

Anthony is the head of content and research at Intrepid Ventures.He has spent the past several years researching and analyzing technologies and working with a diverse mix of blockchain companies to help them gain insight and develop authoritative content.

Realizing the revolutionary nature of blockchain technology and the existence of a significant knowledge gap among entrepreneurs, industry, and government, Anthony now concentrates his time on creating educational content, researching potential use cases and analyzing the impact of the technology on global industries.


 


Also published on Medium.