Is Now the Time for Healthcare Entities to Consider investing in Blockchain Technology?

The technology has tremendous promise to radically disrupt some of the basic underlying principles in how the business of healthcare is transacted

What is it?

Blockchain is essentially a distributed database. A data structure that allows for a digital ledger of transactions that are shared between multiple computers (i.e. Networks).  Blockchains share many traits with traditional databases, but it is the differences that make them exceptional.  Blockchain technology was designed with collaboration in mind by organizations or devices. In a digital world, where databases are the infrastructure, blockchains are shared across the enterprise and many data types can be stored, referenced, transferred and a mechanism exist by which that activity can be immutably recorded and secured without the need for a central authority that is common in many healthcare transaction processing arrangements.

How does it work?

An entity in the network securely submits a block of data to be recorded on the ledger (i.e. prescription, lab results, diagnosis, etc.) to the network of computers. Multiple computers on the network will use an algorithm (i.e. business rules) to validate the transaction if most the computers in the network agree that the entry is valid, then the transaction is recorded, another chain is added to the block. (i.e. EMR is updated for new information).   Blockchain configurations can be public or private as required for the implementation, Bitcoin uses a public or permissionless configuration, whereby anyone can participate and hold the ledger. As Blockchain comes to reality in healthcare, it will be provisioned as a private or managed configuration consisting of only known members.

What is the Value Proposition?

Blockchain Technology has the potential to disrupt some long-standing processes in healthcare such as claims processing, network management and other processes that rely on a central processing authority (Figure 1) as the system of record.


Figure 1 – Typical healthcare business relationship in today’s world

Blockchain could empower new networks of healthcare providers who may decide to work together to improve patient care.


Figure 2 Possible network arrangement using Blockchain Technology

Any group of healthcare providers (Figure 2) who can put together a viable financial model to work together could utilize Blockchain as the underlying infrastructure.  Providers could form their own networks independent of today’s dominant Pharmacy Benefit Managers (PBMs) and health insurance companies who set the rules and define the relationships for being a part of their centralized infrastructure.  Blockchain can enable a single patient medical record across multiple provider systems.  The possibilities are endless, any type of provider who can aid in patient health: physician, pharmacist, dietician, fitness trainer, behavioral therapist, home health nurse, wellness coach, etc. could participate and provide updates to the chain.  The more insight into a patient’s health, the better the rules can be refined and hence better outcomes can be realized.

Is now the time to jump on the bandwagon?

The promise of Blockchain to change healthcare is real; however, the timing of events that might affect business models is probably 3-5 years in the future.  Gartner’s 2016 hype cycle [i] indicates that Blockchain is at the “Peak of Inflated Expectations”.

The technology has tremendous promise in financial services (fintech) as well as healthcare and for that reason, we will see continuous innovation over the next 3 – 4 years that will create new possibilities for innovative service offerings.  We will also see new players enter the market as traditional players will attempt to hold on legacy business models.

The decision to invest in Blockchain today should be weighed carefully, particularly for small to medium size healthcare entities with constrained IT budgets.  Blockchain should not be an immediate concern, but it should not be totally overlooked either.  Strategy discussions should consider and stay current on Blockchain’s maturity.  There are several high-profile startup projects in motion including MedRec [ii], an MIT Initiative to create a longitudinal EHR that spans multiple provider systems.  Guardtime has partnered with Estonian eHealth Foundation to deploy a blockchain-based system that will secure over 1 million patient healthcare records. [iii]  Gem Health, a company focused on blockchain tech is collaborating in the healthcare space with Philips.  All the major cloud service vendors Amazon, Microsoft and Google have developed Blockchain as a Service (BaaS) offerings for their clients to start to get comfortable with the technology.

Bottom-line, it won’t have a major impact in 2017, but the change is coming a lot faster than past technology cycles.  All healthcare service areas should assign a resource to become the subject matter lead and perhaps a small team to consider how Blockchain could be used to transform the organization.  The strategy discussion should proceed now, with staged investments to follow as the technology matures.




About the author: Warren Williams

Warren Williams is a Healthcare Program/Project Manager with over 25 years experience in technology project management.

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