Blockchain opportunities in Healthcare

Probably some time last year, blockchain took off to become one of the biggest tech trends these days. In healthcare, it’s especially appealing as a data management technology that maintains a single version of truth of data in an immutable time-stamped ledger, with copies being held by multiple parties thereby eliminating the need for a single trusted party. Blockain’s most well-known applications today are cryptocurrencies (e.g. Bitcoin, Ethereum, Ripple, Litecoin, or IOTA), and Initial Coin Offerings (ICOs) as a method of crowdfunding.

Why is it trending in healthcare?

There is a rich ecosystem of new and well-funded blockchain startups emerging. As per CBInsights data, venture and ICO funding that went into blockchain companies increased from 638m in 2016 to 2.8b in Q1–3 2017. Over the same 3 quarters, the cryptocurrency market cap of existing tokens has increased almost 10x with a current total of >170b.

There is a promise of blockchain transforming industry operating models with healthcare & life sciences being considered one of the main industries. Potential benefits comprise e.g. eliminating requiring a trusted party by giving that role to software, creating a universal view of information from a single source of truth, getting transparency on the provenance of data, lowering complexity of data management, and maintaining an immutable data record. It is expected to make firms’ back-end operations more efficient and cheaper, and some cases even replace certain types of companies altogether.

People in the in the industry are convinced of its potential. As per a Deloitte survey, 35% of life sciences and healthcare executives say their company plans to deploy blockchain technology within 2017, and 28% said their companies have already invested 5m or more. Therefore it is not surprising that Forbes called blockchain out to become one of the most important technologies in the healthcare industry. Even when the US government was hosting a blockchain hackathon, it put a strong focus on health care use cases.

What’s happening right now?

Startups: Blockchain technology startups started to develop life sciences & healthcare solutions, and startups have been emerging that focus specifically on that sector, e.g.

• Pokitdoc is developing a platform to capture medical & administrative transactions
• Gem is building a solution to create a secure data exchange infrastructure for health data
• Factom got a grant by the Gates foundation to develop a blockchain-based distributed health record for developing countries
• Blockchain Health is working on a supply chain tracking solution for components that go into a pharmaceutical product
• Patientory is building a health record and cross-organization care coordination solution
• Blockpharma develops as solution to fight counterfeit drugs by improving drug traceability
• Link Lab develops a solution for tracking and tracing the movement of prescription drugs from manufacturers to the pharmacies
• Medicalchain is building a patient-controlled permissioned solution to store health records
• Hashed Health is providing services for a consortium of companies that want to leverage blockchain for healthcare use cases

Industry: Even though many companies are known to experiment with blockchain technology, not much has been publicly announced; the few exceptions are

• Capital One is testing blockchain for health care claims management and partners e.g. with Gem and PokitDok
• Merck & Co is exploring its application for clinical trials and electronic health records
• Roche, Pfizer, AmerisourceBergen, and McKesson are part of a working group together with LinkLab to to help improve supply chain security

Big Tech: Technology firms started both developing enterprise-grade blockchain tech stacks as well as healthcare specific solutions, but most is still in a very early phase, e.g.

• Accenture is developing solutions that will help make blockchain more viable for enterprise applications, e.g. integration with hardware security modules, or how to make blockchain editable; and they recently joined the Hashed Health consortium
• IBM offers a blockchain product line, and IBM Watson and the FDA partner to study the use of blockchain technology for sharing of health data
• Philips Healthcare launched a Blockchain Lab and became a partner in Gem’s healthcare network
• The Linux Foundation launched a healthcare working group in its Hyperledger project, and started to develop healthcare specific solutions

What are the opportunities from blockchain?

From a business perspective, the three key benefits from utilizing blockchain technology are:

1. Facilitation of trusted collaboration between multiple organizations without establishing a dedicated trusted (3rd) party
2. Cost savings and efficiency gains from utilizing blockchain’s impermutability feature whenever data security & provenance is required
3. Software automation on blockchain-held data through the use of smart contracts

Applied to healthcare, opportunities can be identified in clinical healthcare, healthcare system administration, life sciences R&D, and manufacturing and supply chain, e.g.:

Clinical healthcare

• Patient data sharing: Securely aggregate, link and share patient data beyond individual points of care. This could help bring together data from electronic health records, genomic data, claims data, data from pharmacies, wearables, implants, and other IOT devices without comprising data ownership and privacy (as e.g. in the MedRec project).
• Vaccination registries: Create a global registry of patients and administered vaccinations; a digital version of the WHO’s International Certificates of Vaccinations booklet.

Healthcare system administration

• Identity management: Having a master patient index (or master HCP index) accessible on a blockchain could help prevent identity fraud
• Claims management: Putting claims data on a private blockchain that is accessible to the organizations that exchange the data could lower incorrect reporting and make sure the final payment is correct
• Smart reimbursement: With patient health data on a blockchain, smart contracts could execute payment based on these data in outcome-based reimbursement contracts

Life sciences R&D

• Trial data tracking: Would reduce complexity of multi-site collaboration, ensure data can’t be tampered, and provide data provenance. This could help lower the cost to maintain integrity and make data auditing easier.
• Regulatory reporting: Putting reporting data on a blockchain would make sure data cannot be changed and provide proof of upload to the entity filing the report.
• Sharing safety data: Would make it less complex to collaborate on collecting and sharing real-world safety data e.g. between license partners.

Manufacturing and supply chain

• Supply chain tracking: Cross-organizational tracking of ingredients and how they are moved and processed within the supply chain would help ensure that products have the claimed ingredients.
• Counterfeit prevention: Drug packages could include a unique verification tag that can be cross-referenced on a blockchain to ensure the legitimacy of the pharmaceutical product.

How real is it?

Most opportunities still need to be validated. Even though there are a lot of promising opportunities in healthcare, the often mentioned premise “Blockchain is a solution looking for a problem” is still true. There is a lot of thinking and exploring, but little has moved beyond prototyping and testing of fundamental concepts yet.

The technology is in its infancy. Topics such as scalability for high volumes are still being solved with new versions of the established blockchain tech addressing this step by step. And security issues are an ever-present risk, as the 2014 Mt. Gox collapse, the DAO hack that led to the Ethereum Classic fork, or the increasing number of wallet hacks demonstrate.

Regulation is still unclear. The current technological developments are outpacing regulators’ ability to keep up. We don’t know yet what will be accepted by authorities and to what degree they will accept blockchain features as compliant with their regulations.

Data compatibility issues need to be solved, too. Existing healthcare systems and medical data remain highly heterogenous (e.g. Boston alone has 26 different electronic medical records systems in use). Whereas blockchain might help solve the collaboration challenge, it doesn’t solve the whole problem.

What are the implications?

I would argue that the benefit potential of using blockchain in healthcare is undisputed. There are no real success stories yet though, and many aspects still need to be solved. There is a sentiment that blockchain is a foundational technology; it is not just a cheaper way to replace an existing solution, but it has the potential to reshape how we interact and solve problems in a completely different way. This comes with more prerequisites though, and therefore a potentially longer lead time. So for now, would keep on watching, exploring, and experimenting, but might need some more effort before its healthcare applications become mature enough.

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