Blockchain and Healthcare

The Healthcare sector has been a laggard in leveraging technology for a long time, which has impacted productivity and the speed of innovation. A good example is the $30 Billion in incentive payments for meaningful use initiatives, which encourage things like the adoption of EHRs. Despite the benefits of moving to a digital platform, there has been little impact on cost reduction and quality improvement. In fact, concerns about usability, lack of integration and interference with patient interactions have plagued the technology.

One reason for this is that Healthcare is a very transactional industry. Each interaction among patients, providers, payers, pharmacies, pharmaceutical companies and other healthcare professionals is measured by the potential for reimbursement and managing costs. Therefore, digital health platforms so far have focused on optimizing existing workflows rather than improving or replacing them. The push for value-based care should change this, but it has been slow going so far. As a result, productivity growth in the industry is one of the slowest despite robust employment growth.

Blockchain and A Transactional System

The transactional nature of Healthcare, however, lends itself really well to one new technology, the Blockchain. There are thousands of articles around the definition, impact, benefits and downsides of Blockchain and I won’t repeat them here, but suffice to say that the technology can dramatically reduce the complexity and cost of transactions while improving transparency.

The applications in healthcare for Blockchain are numerous and cover many aspects of the industry. Any workflow that requires information to be exchanged, tracked, verified and acted upon by multiple parties can leverage the technology. Today a lot of this is done through paper, existing IT platforms like EHRs or through integrating a number of disparate systems, which creates huge inefficiencies. Some potential use cases are:

  • Identity: Establishing identity is critical to any transaction. As patients and physicians move around, reestablishing and verifying identity manually is onerous. Tracking identity through a blockchain system will enable an individual to own and manage his or her own identity.
  • Patient Record: Patient information is spread across a host of systems today, sometimes across multiple providers. This results in a constant exchange of data through faxes and email as all parties try to access, store and act on the information. Leveraging the blockchain to store pointers to this information and recording the transactions that update them would make healthcare data management considerably more efficient and move the sector towards a truly interoperable global network.
  • Authorization & Access: Due to the private nature of healthcare data, authorizations are a critical part of any workflow. A hospital or clinic visit often requires filling out numerous forms to ensure that privacy guidelines are met. All of this can be easily managed on a public blockchain with the patient being the ultimate delegator through smart contracts. The access can also easily be extended to non-standard parties such as extended family, home care professionals and other members of the care team.
  • Billing & Payments: Current IT systems are built around billing. The adjudication process is a painful one for all parties involved. Since every interaction can be recorded on the blockchain, the workflow is a lot more transparent, which makes management, settlement, and payment of claims easier. This addresses one of the biggest pain points in healthcare.
  • Supply Chain & Manufacturing: The US Drug Supply Chain Security Act (DSCSA) requires tracking and tracing the distribution of drugs across the US. This is a complex requirement that will need to track interactions between manufacturers, wholesalers, distributors, pharmacies, and hospitals. While basic systems exist today, a blockchain based platform will give true visibility into supply chain of drugs and help address numerous challenges around misuse, contamination and overall efficiencies in the system.
  • Clinical Trials: There are thousands of complex clinical trials that involve interactions between patients, physicians, sites, pharmaceutical companies and research organizations. Unfortunately, many of them are managed through manual workflows that are inefficient and result in errors and wasted time and resources. Leveraging the blockchain to store and access information can result in life saving drugs getting to market much faster.
  • Audit & Compliance: Since each interaction and transaction is recorded on an immutable blockchain, auditing and compliance are far easier. This is especially critical in a heavily regulated industry like healthcare.

Note that these are just some of the scenarios where blockchain technology can be leveraged in healthcare. While any centralized, scalable database can address some of these use cases, the decentralized, public and immutable nature of the platform offers transparency and cost advantages that are hard to find elsewhere. As a result, numerous healthcare organizations are experimenting with the technology.


While the potential for blockchain technology is huge, it is important to understand the limitations of deploying an actual healthcare application.

  • Deployment & Network: Healthcare workflows have been in place for decades and small changes can have material impacts on patient outcomes. As a result, any change must be managed without much disruption. Integrations with existing systems, which are very challenging, will be critical to getting the adoption and support of all relevant parties. Building the overall network to truly unlock the value of blockchain on a global platform will likely take a lot of time, energy and capital.
  • HIPAA & Regulation: Healthcare is a heavily regulated industry. The services provided by the chains and the applications that leverage them should be compliant. This puts a limitation on what chains are viable and the applications have to be built to adhere to the changing regulation. This can introduce significant overhead.
  • Data Standardization: A key benefit of blockchain technology comes from network participants being able to collaborate and act on the underlying data from disparate sources. This will require some form of data standardization so that the chain can effectively record transactions and support smart contracts. All users will need to agree to this, which is not only logistically difficult but functionally hard since a lot of the information is in the form of unstructured data like doctor’s notes
  • Performance & Scalability: Due to the distributed nature of the blockchain, a transaction can complete when all parties update their ledgers. As the blockchain scales, there could be a significant delay in this process, which would make it hard to drive adoption.
  • Immutability: The immutable nature of the blockchain that confers so many advantages also prevents anyone from ever removing data. This is important as no one wants PHI data lying around forever and deletion in many scenarios might be required.

While some or all of these limitations have workarounds, it is important for entrepreneurs and healthcare professionals to keep them in mind while exploring the potential of the blockchain. It is imperative that the technology not drive the business problem. Not ever use case will or should require a blockchain based solution.

What does it mean for Entrepreneurs?

  • Solution vs Platform: Focus on delivering a robust solution to a specific problem rather than delivering a technology platform. While platforms are great, they take time to build and it is hard to show value quickly. This is especially important when selling a new technology. It will also make it easier for your champion and buyer to support you internally.
  • Ease of Use: The more seamless the integration into existing systems, the easier the deployment and sale will be. Ideally, your users should not even have to understand the underlying blockchain semantics.
  • Patient Outcomes: Be clear on the ROI for your product and its impact on patient outcomes. That is ultimately where the value of any healthcare product lies and your customers will want to know that.
  • Costs & Support: It is important to understand who will pay for developing and running the blockchain service and what support tools are needed. The startup will likely have to build and maintain the chain or leverage an existing service. The network participants and buyers might have to host a node. Tools will have to built to make it easier for IT departments to maintain the service on their end. Understand and articulate these costs and requirements clearly.
  • Best Practices: The increased transparency will create new questions and workflows around data management, ownership, and use. For example, are patients really ready to own the data and control access? Be prepared to address them and develop best practices that will smoothen sales cycles.
Storm Ventures