Blockchains in Healthcare: From Bitcoin to Bitcare

Jack Plotkin
Oct 7 · 8 min read
Photo by André François McKenzie on Unsplash

A few years ago a friend of mine told me breathlessly about his investment in a new type of hedge fund. “They buy ICOs,” he said, “and they’re already up more than a thousand percent.” He asked me if I wanted to invest with him. “Let me get this straight,” I said. “Some group of people decide to create an electronic version of Monopoly money — a so-called initial coin offering — your fund buys this Monopoly money for real dollars, and then they pretend like it’s worth a lot more, which they can do because there is no real market for it.” My friend gave me the sort of pitying smile a teenager gives to a grandparent when explaining how texting works. “It’s blockchain,” he said. “You just don’t get it.”

At the time my friend was investing with the ICO fund and counting his future millions, the blockchain hype train had already gathered a titanic head of steam. Blockchain was the buzz in every corporate marketing campaign, the sizzle in every entrepreneur’s pitch, and the gee-whiz in every technology R&D effort. Start-ups were seeing their valuations quadruple by simply bolting the word “blockchain” onto their business plans. Keynote speakers at conferences were talking about “distributed ledgers” and “smart contracts” to sage head nods from their audiences.

In all of this, it was clear that many professionals who were talking about blockchain were struggling to understand how it could practically be applied to the unique set of problems that they faced in their very particular patch of business landscape. From white papers to marketing materials to sales pitches to investor decks, discussions of blockchain tended to stay at a frustratingly general level. For many executives, the question of “what actual thing can I build using blockchain that will provide a tangible return on my investment and how will it do that?” was proving elusive to answer.

Part of the challenge was that many explanations of blockchain-focused on how great it is rather than what it is. Because blockchain is a technical construct, it can be difficult to explain to a non-technical audience. The lowest common denominator explanation for blockchain is that it is a “distributed ledger”. However, both “ledger” and “distributed” are not the most intuitive concepts for many executives, particularly if they did not come from a financial or technical background.

I have found that sports often provide more accessible metaphors, so I liken a blockchain to an electronic scoreboard at a baseball game. Like the scoreboard, a blockchain provides a factual record of events. All the fans at the stadium can instantly see changes on the scoreboard — similarly, all the participants with access can instantly see changes in the blockchain. Just as the fans can’t change what’s shown on the scoreboard (no matter how much they may want to), the participants can’t change what has been recorded in the blockchain. And just as the scoreboard provides a historical record of everything that happened since the start of the game, the blockchain provides a historical record of everything that happened since the start of that blockchain.

In simplest terms, a blockchain is a method for recording and representing data. The electronic scoreboard did not create the sport of baseball, it did not introduce new rules to how it was played, it did not even invent scoring, stadiums, or scoreboards. It simply presented a way to improve transparency, security, and speed for information that already existed. And just as the electronic scoreboard may or may not be applicable to settings outside the baseball stadium, blockchain may or may not be applicable to settings outside of cryptocurrency.

In considering where and how blockchain may be applied to healthcare, a sensible approach is to consider each of blockchain’s key advantages and see how well it translates. The first major advantage of blockchain is transparency. All participants in the blockchain have access to the same information. Although it makes perfect sense for all the fans at a stadium to have access to every score of every inning, does it make sense for every healthcare professional to have access to every part of a patient’s medical history?

Many patients may feel comfortable with a physician or a nurse knowing every part of their medical history, but some patients may want to control the portions of their medical history to which a provider has access. There exists a formal concept of protected health information, which refers to sensitive diagnoses that patients prefer to keep private even from certain healthcare professionals with whom they interact.

On the other hand, placing all clinical history into a single blockchain record provides better transparency for patients themselves. It solves a major challenge that exists today, which is that clinical data for every patient is a broken jigsaw puzzle, with subsets living in various landlocked systems, whether it’s this doctor’s EMR or that clinic’s billing system. Current state, it is virtually impossible for a patient — or a trusted physician — to see a longitudinal record of all health-related information over that patient’s entire life.

Let’s say patients agree to have all their medical history placed into one or more blockchains. How would this work in practical terms? Right now, every time a patient visits a hospital, a doctor, or another healthcare professional, the information about the visit is recorded in that provider’s electronic medical record (EMR) system. There are hundreds of EMR vendors and each vendor’s system records data in its own proprietary format. Moreover, these systems do not communicate directly with one another. This means that if a patient visits three different providers that are not part of the same practice or hospital, none of those providers would know about the other two visits.

In order to get all patient medical records onto a unified blockchain technology, all EMRs would have to agree to and then implement a common format for how data is recorded and managed. Given that EMR vendors are highly competitive with one another, this would be akin to asking Google and Microsoft to use the same search algorithm or asking Coke and Pepsi to use the same soda recipe. It’s a tall order, to say the least, and nothing short of a regulatory requirement is likely to make it a reality. Setting blockchain aside, the problem of EMRs not sharing data is one that federal, state, and local governments have tried to address through initiatives like health information exchanges and format standards, such as HL7. Unfortunately, the problem largely remains.

The good news is that after being recorded in an EMR most medical services are then billed to health insurance companies. Much of the information recorded in the EMR, including diagnoses, prescriptions, labs, and procedures, makes its way to health insurance claims systems. As a result, health insurance companies often have the most complete central record of a patient’s medical history, especially if the patient stays with the same health insurance company for many years.

Given that health insurers have complete control over their internal systems, they can make the decision to create a blockchain-based medical record using claims information and then make this available to the patient. In turn, the patient could then decide which providers or other care team members get access to this blockchain record. If the major health insurers could agree on a standard format, the blockchain record could then follow the patient even upon transitioning to a different health insurer.

The second major advantage of blockchain is security. It’s in the name: a blockchain is literally a chain of data blocks, with each successive block incorporating certain data elements from the preceding blocks. As a result, the blockchain is immutable. This means all parties can be confident that the information that was recorded in the medical record was not tampered with. On the flip side, if a healthcare professional realizes that a data input error was made — for example, a prescription was accidentally recorded for the wrong patient — the only way to address that error would be to input a new record saying that the erroneous record should be ignored or suppressed. The only other way around this limitation is to use private blockchain technology that supports block modification, meaning that mutability is permitted but only under certain circumstances, such as error, fraud, or regulatory action.

In the scenario where a health insurer is using private blockchain technology, the ability to make modifications can be built in, subject to the appropriate technical and administrative controls. This would allow authorized parties, such as the provider, to request updates to the medical record in the event of a problem, such as an incorrect claim being submitted for a patient. The appropriate controls can ensure the record is minimally modified and only to the extent necessary to support accuracy.

At the same time, a blockchain-based medical record will support exceptional traceability. Since the blockchain will be largely immutable, it will be possible to trace back every entry to the medical record, including the servicing provider, the nature and location of the encounter, the related diagnosis and procedure information, any medication or lab orders, and any other relevant information, such as vitals, referrals, and narratives.

There are other advantages to blockchain, such as speed and lack of central authority, but these are more applicable for use cases such as cryptocurrency than healthcare. From a speed perspective, many health insurers already have enterprise claims systems that can support managing millions and tens of millions of records. While a blockchain-based system may further speed up transaction processing, it would likely not be a driving force to make the switch. Similarly, a decentralized authority may not work as well in healthcare where a limited set of entities, such as providers and health insurers are explicitly vested with authority to record and update health information.

It is not altogether surprising that claims present an interesting use case for blockchain. The industry where blockchain has received its widest use has been finance and, in many respects, health insurers sit at the crossroads of healthcare and finance. It’s in the name: insurers are frequently referred to as “payers” and, along with providers and patients, make up the three Ps of healthcare participants. With the rise of new paradigms, such as value-based care, and new technologies, such as cloud computing, health insurers have been innovating at an unprecedented pace. Many are starting to look more closely at blockchain.

Ultimately, the key to effectively applying blockchain to healthcare, or any other industry for that matter, is to get beyond the buzz and delve into the details. Blockchain is a type of technological solution that offers a clear set of advantages for certain problems. However, these advantages must be considered in the very real world of corporate operations and regulatory guidelines. Otherwise, they are simply imaginary constructs, much like the thousand percent profits of my friend’s ICO investments.

Today we go to the doctor, pay our co-pays with dollars, and have our medical data recorded in the doctor’s EMR. Tomorrow, we may well be paying with bitcoin and have our medical data written into our permanent bitcare records. It may take time, but technologies that are objectively good for the consumer tend to be inevitable. Whether or not blockchain is the mechanism, greater transparency and continuity for medical records is something that we can certainly expect in the coming years.

Jack Plotkin is the CEO of Cardinal Solutions, a boutique advisory and investment firm based in New York City. He has more than two decades of experience at the crossroads of business and technology and has advised more than a hundred Fortune 500 firms across all major industries, including healthcare and life sciences.

Analytics Vidhya

Analytics Vidhya is a community of Analytics and Data Science professionals. We are building the next-gen data science ecosystem https://www.analyticsvidhya.com

Jack Plotkin

Written by

I have devoted much of my career to solving complex business challenges through the application of technology across multiple industries, including healthcare.

Analytics Vidhya

Analytics Vidhya is a community of Analytics and Data Science professionals. We are building the next-gen data science ecosystem https://www.analyticsvidhya.com

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