Illustration by Cassandra Gibson

Blockchain: The Immutable Ledger of Transparency in Healthcare Technology

Blockchain technologies are the latest buzz across innovation both in startups and now enterprise companies. It is arguably one of the largest breakthroughs in technology since the early days of the internet as we know it, but it’s not quite clear yet where and how exactly the technology will impact our daily lives at scale.

The underlying technology was the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto and was popularized through the emergence of digital currency, Bitcoin, but in the last few years it’s potential use cases have shed light on something greater.

What is a Blockchain? How is it Inherently Secure?

At its core, blockchain is a new method of storing data that is different from the current method. Unlike what we do now, data on the blockchain isn’t stored on a central database. Instead, it’s stored in a “distributed” ledger of records. A blockchain is, as it’s name suggests, a linked set of records called blocks that grows as new data is added to the system. A “Block” contains a hashed key which links it to the previous block, a timestamp for when it was altered, and transaction data. By design, a blockchain is inherently immutable — once recorded, data on the blockchain cannot be changed retroactively without the alteration of all subsequent blocks and a collusion of the network majority. In other words, for past records in the blockchain to be altered, the vast majority of users in the network would need to agree on the change and be willing to spend resources to update all subsequent blocks of the chain since the change. By allowing digital information to be distributed, but not altered without consensus, blockchain technology creates the potential for a new system of trust to be leveraged as the backbone of the internet.

The challenge facing blockchain is the difficulty in separating potential and promise from practical reality. Blockchain is not a magic box buzzword that can be applied to solve regulation in any system that requires trust and data transfer between parties.

At Sidebench, we’re continually exploring use cases for emerging technology as it applies to our clients. One way we see this being incredibly valuable is in the healthcare industry where sensitive data requires transmission and validation between patients, providers, and insurers who interact through multiple disparate systems every day.

Blockchain Use Cases In Healthcare Technology

Blockchain can be applied to many different aspects of the healthcare space — managing Electronic Health Records (EHRs), validating patient data, and even tracking research methods used to make safer drugs across clinical trials.

At a high-level, think of Blockchain as a two-layer EHR. Put yourself in the shoes of an insurer who has a vested monetary interest in being able to track accurately everything that the patient and a care provider do, treatments performed, recommendations made, vitals logged etc. Updates are made immediately available and transparent to all parties across a distributed immutable database.

Last time you visited your doctor did you ask to see a copy of your EHR? Traditionally it hasn’t been necessary. You trust that the doctor and insurer have a system of record in how they communicate what procedures, prescriptions, and visits you’re entitled to based on conditions you have and the type of insurance you pay for. If you ever need anything you ask your doctor, when it comes time to pay for procedures you trust the insurance company has worked it out with your doctor and continue to pay premiums monthly with an expectation of a certain level of care.

One layer of the EHR handles all changes. It’s a living medical history that will automatically update when you note the patient is prescribed penicillin, for example. At any moment, you can see and update this to provide the most up-to-date patient information to all parties. This could even include a 4th party like the pharmacist who need access to only specific parts of your EHR, namely access to your records every time a doctor prescribes a medication.

The second layer is a complete medical file. It monitors and tracks changes, creating a note of the “who, when, and where” associated with all changes across the entire life of the patient’s records. Blockchain systems automatically add changes to this layer and prevent any edits or changes, creating a secure, permanent record that is validated by all parties with private access to the data.

That’s Just Where It Starts

Blockchain has the potential for a wide range of applications (across all industries) that can reduce costs, increase accountability, and promote better outcomes with proper, immutable data.

The best way to understand this potential is to look at some of the most expected use cases. Here are three areas with a clear business case where implementing blockchain technology can provide a significant ROI through cost savings: 1) developing better health exchanges; 2) protecting patients and practitioners through supply chain accountability; 3) and reducing fraud in billing and claims.

Creating Smarter Exchange Models

Blockchain investments often start by looking at ways to improve existing systems of record. In healthcare, this is the management and storage of patient data in an exchange.

Blockchain can be used to simplify the way practitioners, insurers, and even countries share health information. These systems can reduce the complexities of reporting and governance so that real-time data is always available and less continual audits and reviews need to be performed to ensure data integrity.

The blockchain can serve as a central record access, so all parties have the most accurate data. There is no more reconciling to determine a single truth across systems. It can also address how individual systems display the same data differently. For example, at the simplest level, dates may use the MM/DD/YYYY or DD/MM/YYYY format; blockchain can store date information uniformly but provide the data in a way each system can understand and appropriately display to maintain the correct date across all records.

Keeping the Supply Chain Secure

Blockchain’s focus on ledger management and indelible records also make it a perfect technology for decentralized tracking of the supply chain.

This will likely focus on counterfeit drugs because blockchain ledgers can track a shipment from production through every step until it is delivered to the end-customer — manufacturing, medical transport, inter-hospital pharmacies, to private practices.

Ledgers stored in the blockchain make it easier to track ownership and liability during transit, limiting liability protecting practitioners and pharmacists that administer drugs to patients.

Tracking Payments and Billing Models

Blockchain tracking of tests, results, medical billing, and payments by patients as well as systems like Medicare could reduce fraud and even save us money by eliminating middlemen meant to track the flow of information through systems. Under current means without immutable records like blockchain in place, entire companies and internal job functions exist to audit and report on the accuracy of logged information.

It’s estimated that 3% of U.S. annual healthcare spending, about $96 billion, is expected to be fraudulent. As we shift to outcome-based payment models, this could impact provider fraud. Immutable ledgers will make it easier to judge new models and adopt those that provide positive outcomes.

On the patient side, blockchain can make payments and insurance agreements clearer and reduce intermediaries, which could in turn reduce the healthcare costs we pay as individuals.

Bringing It All Together

Blockchain technology is still in its early stages of development and every day, new use cases are being defined across all different industries. In healthcare, blockchain can lead to better care, improved transparency, and added protection for all trusted parties. Immutable historical records are core to the way exchanges can be more accurate and useful, providers and patients can feel protected, and insurers can limit risk of fraudulent claims.

We’re excited to be on the forefront of healthtech innovation as the blockchain ecosystem continues to evolve creating technology for better practice and delivery of care.

— Jay Chang, Partner & Head of Product Innovation at Sidebench

Jay is a Partner & Head of Product Innovation at Sidebench, an LA based Corporate Innovation Lab, and an advisor to the USC Blackstone Launchpad Incubator. He’s also an avid foodie, chef, & Instagrammer publishing as @BehindTheKnife on Instagram. At Sidebench, he’s worked with with enterprise companies like Red Bull, Pabst Blue Ribbon, Sony, NBC, Cedars Sinai, Oakley, Facebook, and Andreessen Horowitz. Jay graduated from the University of Southern California with a BS in Business Entrepreneurship focused on technical entrepreneurship and marketing. Throughout his multidisciplinary product focused professional career, he’s developed a deep understanding of user first experiences and business case driven approach to technology consulting.

For more information on our health innovation practice at Sidebench visit http://health.sidebench.com.