Why blockchain for health care may be finally turning the corner

Because it enables both the security and sharing of data, blockchain seems ideally suited to health care. Next year, the pieces may come together for it to finally get some real traction in the sector.

Blockchain is one of those curiosities like Picasso’s cubism: People admire it but don’t know what to make of it. There’s been a lot of buzz about how blockchain will alter data record storage and transactions, but so far the hype has outpaced the reality. Next year, however, could be the year blockchain turns a corner in health care.

What is blockchain?

A digital record or ledger—you might think of it as a mini-database—that is structured as a series of blocks that are strung together in a chain, thus the name. Each block—a digital expression of a transaction or an event—is validated by multiple computers on the internet. A key feature of blockchain is that blockchains are distributed on many computers so there is no centralized database to hack.

This fall PricewaterhouseCoopers issued a report on blockchain in health care and outlined six areas where it could have a profound impact: supply chain and inventory management; enrollment and provider data management; back office functions and payments; data management; managing risk and regulatory issues; and research and development.

Marco Iansiti and Karim R. Lakhani, writing last year in the Harvard Business Review (January–February 2017), pointed out the parallels between blockchain and TCP/IP (transmission control protocol/internet protocol), which provided the digital sending and processing foundation for the internet. “TCP/IP unlocked new economic value by dramatically lowering the cost of connections,” wrote the Harvard Business School professors. “Similarly, blockchain could dramatically reduce the cost of transactions.” Blockchain would be the digital register for transactions—“a peer-to-peer network that sits on top of the internet,” as Iansiti and Lakhani noted. TCP/IP took 30 years to develop fully; with blockchain, they said, the process will happen much faster. Bitcoin, for example, is built on blockchain technology.

Brett Blackman, CEO and founder of the health care technology company HealthSplash, describes blockchain as a continuously growing list of linked records, or blocks, linked together and secured via encryption. Write once and read only. It can record transactions between two parties, verify them instantaneously, and then transact payment—think claims and reimbursement—just as fast. Each transaction is assigned a block that cannot be altered unless the other blocks in the chain are altered. That, Blackman notes, would require collusion of a majority of the network. HealthSplash is in a pilot program with KanCare, Kansas’s Medicaid program, to create a platform to improve efficiency in verifying eligibility for participants through a singular digital platform.

For health care and the life sciences industry, blockchain represents “the perfect paradox” because the data must be both shared and secured, Mark Treshock wrote in the IBM Blockchain Blog. The technology can provide faster access to vast amounts of secured data, improve the patient experience because people can get information so quickly, and provide a guard against counterfeit drugs, he said. Yet an IBM survey in 2016 of over 200 health care executives found that health care organizations in North America were behind their counterparts in other countries in adopting blockchain. Blackman thinks, though, that 2019 could be the year that blockchain in health care goes from talk to traction. He points to initiatives that Experian, the consumer credit reporting agency, and Cardona, the cryptocurrency purveyor, have undertaken that could potentially give health care providers platforms for expediting payments for services. Both became members of Hyperledger, an open-source organization focused on blockchain technology. Other Hyperledger members include the health care technology company Change Healthcare, Aetna, Eli Lilly, and Hashed Health, which specializes in blockchain platforms for health care.

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