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"It’s all possible with blockchain…"

You hear this over and over at industry conferences. But this time, at the Distributed: Health conference in Nashville, this pie-in the-sky statement got a bit more pushback than usual.

According to many of the speakers at the on 3rd October show, blockchain tech stands to disrupt the complex and frustrating healthcare system in a positive way, mostly revolving around simplifying the management and transfer of health records and information.

Chris Kay, senior vice president and chief innovation officer at Humana, said during the morning keynote address:

"There’s a potential for blockchain and its enabling capabilities to solve core problems in healthcare. Healthcare is at a tipping point."

In his mind, a blockchain — which provides trust without a central authority, security and data transparency — could marry the disparate processes in healthcare. For example, a blockchain-based health care system might provide insight into the variety of medical issues a person might be suffering from and integrate health care with the social care of family and friends.

While the biggest issues to fix remain outside the scope of blockchain – think the difficulty in choosing fresh, healthy food over McDonald’s – Kay believes busting down the silos in healthcare could be the beginning stages of a healthcare revolution.

Data needs to flow between primary health care providers, specialists and holistic medicine practitioners that a patient is using. In that way, people could get better, more targeted recommendations on what they can do to better their health.

While Kay was optimistic about blockchain’s impact on the healthcare industry, when it came to the breakout sessions, both panelists and the audience seemed more skeptical.

"Any IT person from a health organization should come in with a healthy level of skepticism," said Andrew Beal, blockchain and distributed infrastructure lead at Ernst & Young (EY), adding:

"The tech is immature. Everything is in the proof of concept stage with dummy data and a couple partners."

What the industry really needs

The idea that the market is too immature for production-ready services was supported by Wayne Vaughan, founder and CEO of Tierion, a global platform for verifying data, during a panel discussion.

"I would caution that nothing is production-ready right now," he said.

That position was contested by Ted Tanner, co-founder and chief technology officer at PokitDok, a blockchain-based company focused on the healthcare industry. Tanner suggested that PokitDok’s proof-of-stake private blockchain is ready for production today.

"We have very large companies using our APIs. It’s just a matter of switching out the underlying infrastructure," Tanner said.

But the goal, according to Jeff Cunningham, another panelist and chief technology officer of health IT company Informatics Corporation of America (ICA), is more about updating existing infrastructure than ripping it up and replacing it.

Even for an industry where settling times for claims can extend more than 180 days and health payers spent $375b sending out paper claims, "if there’s a better way, the costs of re-architecting are so high it doesn’t happen", he said.

Healthcare today is largely a system of barriers. The industry itself is highly regulated, much like financial services. And this adds significant hurdles for any startup trying to enter the space.

Plus the federal government, through the Centers for Medicare and Medicaid Service (CMS) is the single largest payer of healthcare in America, so public/private entity partnerships are going to be a must.

"From a positive aspect, many of the challenges that exist in healthcare today are around complex distributed processes; it’s how the industry has grown up, all siloed," said Cunningham. "But if you start to rethink how healthcare should look as a more complex, team-based healthcare plus finance and payment with the care, the blockchain could be the fabric to ties that together."

The focus should be on how physicians, not patients, interact with the system, he said.

"For the most part to make progress in healthcare today … at least on the care side, it’s [about] how you interact with the provider," Cunningham said. "Provider interaction will be about interacting with those physicians and how they are interacting with the technology."

Security as a innovation motivator

Data security, from what event attendees and panelists had to say, seems to be the big driver in the push for the healthcare industry to adopt blockchain technology.

"Ninety percent of companies in this space have been affected by a data breach," said Micah Winkelspecht, founder and CEO of Gem during an afternoon keynote. With a distributed network, there will not be a single point of failure for fraudsters to try and hack into anymore, he contended.

Others are skeptical as to whether blockchain would actually solve that problem.

Several people voiced concern that blockchain merely shifts the security problem. Because blockchains are not good data stores, not all health information could be stored on it. Instead most startups think a digital identity that points to health records somewhere else is what will be housed on a blockchain.

Yet that brings in the existing issue with third party providers housing large data sets on centralized servers.

According to Andrew Keys, head of global business development at ConsenSys, the industry will fall back on traditional security mechanisms, like two-factor authentication and multi-signature transactions to shore up these gaps.

"You could have a perfect blockchain identity system but it depends how people on the outside decide to store and use the information," said Tierion’s Vaughan. "The network is a source of information but it doesn’t mean others won’t save it. Blockchain doesn’t mean the end of data silos."

Plus, large health IT providers aren’t going to want a shared infrastructure for archiving because it’ll be costly to maintain, Vaughan added.

Controlling medical spend

And according to nearly everyone at the conference, including Winkelspecht, healthcare spending is already out of control.

Healthcare spending in the US totals more than $2tn annually, representing one-seventh of the economy. By 2017, as reported by CMS, healthcare spending will grow to $4tn annually.

Many times, more than 300 people touch a single medical claim, he said, which only decreases security and costs stakeholders significant amounts of money. The healthcare industry spends about $10,000 per citizen every year, and spending is predicted to increase by 5.8% next year, he continued.

"Yet we still haven’t fixed the problem. You have a one in five chance of re-entering a hospital within 30 days," Winkelspecht said. "So the industry is spending on new technology but not making the care any better."

These all add up to a frustrating system that is in dire need of reworking. And while questions arose about how the industry might use blockchain to get there, many people remained optimistic.

Beal, who’s bullish on blockchain technology, said that within finance, blockchain started a conversation that led banks and payment providers to work on upgrading their systems. It’ll at least be the same in healthcare, he argued.

"If the only benefit … is that it forces IT professionals at hospitals and payers to look at their tech stack and areas they could update it, that’ll be enough," Beal said.

Image via Shutterstock

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