Blockchain in Healthcare: Probably Not Now…But When?
In my last post, I wrote about the untapped opportunities of cloud technology in the healthcare industry. A key takeaway was that healthcare is still heavily burdened with outdated technology and has a long way to go before catching up with other industries. So, naturally the next logical topic to talk about is how blockchain fits in — right? Sarcasm aside, I wanted to use this post to investigate a more advanced technology frontier and opine on a few use-cases proposed by industry analysts and supposed experts.
Unsurprisingly, the healthcare industry has been slow to adopt blockchain technology. In a blockchain market valued at nearly $6 billion, healthcare spending since 2018 makes up only $170 million (that is only about 2.8% for those reaching for their calculators). Nevertheless, optimists predict the healthcare blockchain market value to reach $5.6 billion by 2025. Sounds great, sign me up. But what is on the horizon that convinces analysts of this 30x growth in three years?
One promising application of blockchain in the healthcare industry is ‘block as a service’ (BaaS) — think enterprise solutions built on blockchain tech. Currently the electronic health/medical record (EHR/EMR) application market is dominated by a handful of large companies and frankly, their tech leaves a lot to be desired. We are left with an ecosystem of data silos, making it challenging to access one’s health data and share it across providers when necessary. To make matters worse, it can take a major health system several years to fully migrate to a new platform (it took our very own Columbia medical center nearly three years to onboard Epic). Alright, so current tech bad…blockchain good?
What blockchain could enable is a decentralized EMR, where our patient health data is stored and accessed via our digital wallet in a universally standardized format. This would greatly alleviate current constraints of unproductive healthcare database systems and limited interoperability of healthcare organizations.
It would also give power to the people, so to speak, allowing patients to control and access their own health data without having to go through the various healthcare providers they see for their care. Personal health apps and wearables are all the rage right now. We want to be in touch with our health in a codified, data-oriented manner. Moreover, individuals now more than ever feel strongly about their right to access their own health records and medical history. Decentralized EMR could be the answer.
Applying the stress test to BaaS and decentralized EMR reveals a few key challenges. The first is data security — health data is highly personal and protected under many regulations, and the same security concerns for blockchain users in the financial sector will be just as prevalent in healthcare. Until blockchain security is proven is the eyes of consumers and major enterprises, skeptics will hold their ground. Another challenge is speed to adoption. Many hospitals don’t even have their data on the cloud yet, so getting them on the blockchain by 2025 is wishful thinking. I’m bullish on BaaS and decentralized EMR in healthcare but foresee a long runway before industry-wide adoption.
Another interesting use case for blockchain in healthcare is the adoption of smart contracts and decentralized autonomous organizations (DAOs) to augment or replace traditional health insurance plans. Smart contracts are autonomous programs with strict rules-based logic that could rapidly expedite the patient claim adjudication and payment process, which currently can take 30–45 business days on average. DAOs could disrupt the health insurance market even further by enabling individuals to pay into a crypto-based insurance product that pools capital to be paid out based on pre-determined governance or voting rights. Members would have a stake in the capital pool in the form of tokens, incentivizing participant buy-in while disincentivizing abuse of the system.
Alright, I probably had you in the first half there with smart contracts, but DAO insurance plans? They sound like a reverse-engineered health insurance system that would be equally as complex and flawed as what we deal with now. In my view, DAO insurance plans would only work with rigid, enforceable rules for paying out claims which, if done properly, could lead to a more equitable system of coverage. But the powers that be in the existing health insurance market are not likely to lose market share any time soon, unfortunately. As for the smart contracts, I am highly optimistic that these could play a major role in the healthcare ecosystem, even with the current health insurance system in place.
The healthcare industry is bizarrely juxtaposed with outdated legacy tech and groundbreaking tech innovation. I firmly believe ‘out with the old, in with the new’ is inevitable, but will be easier said than done. Once security and governance concerns are sufficiently addressed, the future of blockchain in healthcare will quickly be upon us.
#CBSDigitalLiteracy
Blockchain may save healthcare $100B annually by 2025 (beckershospitalreview.com)
‘Bullish on Healthcare,’ says IoTeX Co-Founder Larry Pang By CoinQuora (investing.com)
Some crypto x healthcare ideas | Out-Of-Pocket (outofpocket.health)
