Blockchain + VC = Healthcare Fix?
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TL;DR:
- Healthcare systems are inefficient
- Blockchain has inherent capabilities to fix inefficiencies
- Venture Capital investment will be the driver to blockchain adoption by healthcare systems
- Blockchain utilization in healthcare will be later than other industries and will start with “Security by Blockchain”
The U.S. healthcare system is inefficient. Most likely, you have experienced the inefficiencies of the healthcare system. A number of businesses, widgets, standard operating procedures, and more are seeking to remedy healthcare’s inefficiencies. I outline below a possible cure all to healthcare’s inefficiencies: Venture Capital and Blockchain.
WHY BLOCKCHAIN?
The majority of clinics use online platforms and software to record, bill and store information. The needs of hospitals are not inherent to software and online platforms, therefore they must be built out, layered on, patched in, or otherwise installed as a widget. Conversely, the capabilities native to blockchain address a number of clinical problems. Secondly, the “New Frontier” promises a cleaner foundation that has been cluttered by the aforementioned software “fixes.”
What is one of the inherent capabilities?
As an example, think of the security needed to protect your personal records. Your records might contain your address, SSN, phone, email, DOB, next of kin, and more. Security measures are built into software but they are constantly in need of updating, patching, and hoping that no one figures out how to hack it (i.e. Solar Winds ransomware). Comparatively, blockchain has an immutable “chain” of your records, guarded by hashing. Meaning, if a clinic’s records were built on the blockchain your records would be inherently more secure than a different platform.
To illustrate in story form: Imagine you are living in the most remote geography of Alaska. Every time you catch and cook Salmon a bear comes pawing at your door (Salmon being your medical records). You have heard of others getting dogs to protect their cabin and ward off the bears. Amazon offers free dog shipping but you only have two choices: French Bulldog (Traditional Software) or the Karelian Bear Dog (Blockchain).
While both have the capability to protect you one has genetic traits to guard you against bears (the other has allergies). You COULD train, outfit, and motivate a French Bulldog to fight a hungry Alaskan bear, or you could purchase the Karelian Bear Dog and know that you would have to do little else to protect yourself.
How will blockchain create a new foundation?
As previously mentioned, the needs of hospitals are not inherent to software and online platforms, therefore they must be built out, layered on, patched in, or otherwise installed as a widget. Creating and building on a new platform means engineers can take the lessons learned from past projects and implement them from the genesis to avoid future fixes.
What is something you wish you could go back and change to avoid “problems” that you must iteratively fix now? Personally, I wish I would have gotten leather seats in my car. I have a child and dog and the stains and hair are impossible to clean. Leather seats would have allowed me to simply wipe drink spills and fur off the seats instead of stain treating them. This is analogous to current healthcare software systems. Blockchain engineers can look back on what should have been corrected from the beginning and build out accordingly.
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NOTE: I have listed a number of other interesting points I found in my research illustrating how blockchain can be applied to healthcare systems.
- Secure patient data
- Reduce cost of care & mishaps
- Trace drug manufacturing
- Quicken genomic breakthroughs
I will not delve into each point, and please know that there are MANY more points. Check out BuiltIn’s top 15 blockchain companies for examples of startups using blockchain to solve complex problems with interesting applications.
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WHY VENTURE CAPITAL?
Healthcare and hospital systems are risk averse by nature, and we should be glad they are. As an example, the last time I got surgery on the right side of my body I had 6 different people mark on my body which side would be operated on. This entailed a nurse viewing my chart, saying out loud what side would be operated on, lifting my shirt, and marking on my abdomen “R”. This process was repeated five more times by five more practitioners. Contrast that to the famous Lean Startup methodology of “Fail[ing] Fast.” Healthcare and hospital systems have not created sandboxes in which to fail fast, therefore someone who has operated in such spaces and with the network of employees to work in said space is needed.
What about raising capital by issuing alt coins?
A much smarter colleague posed this question and I did not have an answer. After researching this question I was going to address it at the end of the article but I think it deserves its own post (it’s a whole new world of equity investing and allocation). Stay tuned.
How will it be done?
Blockchain's inherent capabilities proffer it the ability to address healthcare problems without having to add many layers of coding and engineering. Venture capital has the risk tolerance and acumen to invest in blockchain solutions. What will the marrying of the two look like? Blockchain utilization will come in stages
Most, if not all, technological advances follow a hype cycle. Gartner Inc. has outlined the hype cycle of blockchain[1] nicely.
As you can see we currently sit 3yrs — 8yrs from some of the innovations that healthcare would adapt first (i.e. Blockchain for data security, Blockchain and IoT, and Distributed Storage in Blockchain). This means that these are the companies being created right now (if you are an investor it is a signal that you can be on the lookout for these types of blockchain-based companies.)
Blockchain utilization will start with security via blockchain As mentioned previously, blockchain has security inherent to its design. This means: security will be blockchain-based startups’ first selling point for two reasons:
- Blockchain security is easier to understand: For example, if I asked you which of the following five blockchain innovations you would feel most comfortable researching and pitching to a VC, which would you choose?
a.) Zero-Knowledge Proofs
b.) Data Security
c.) Ledger Database Management Systems
d.)Privacy-Enhanced Multi Party Computing
e.) Smart Contracts
My guess is that you chose B: Data Security. That is why startups will make a product based on blockchain for data security; venture capitalists will invest, and healthcare systems will buy.
2. It is a clear and present danger: Ransomware has increased by 62% globally and 158% in North America. [2] As cyberattacks become more frequent and publicized the C-Suite will take notice and ensure they have the systems in place to prevent being the next victim and front page news article.
Blockchain utilization will be adopted late by healthcare systems
As mentioned previously, healthcare is slow on purpose. The realm of medicine is composed of persons who conduct procedures that have been researched, proofed, and peer reviewed. Administrative staff must also operate under the umbrella of a number of regulatory bodies, many that you may have not heard of (Health systems, hospitals and PAC providers must comply with 629 discrete regulatory requirements across nine domains. These include 341 hospital-related requirements and 288 PAC-related requirements.[3]) Therefore, healthcare systems will be late adopters. As a founder this should not scare you from healthcare but tell you that the company that is able to build blockchain that abides by applicable healthcare regulations will have a superior barrier to entry, and head start, against competitors. If you are a founder this should tell you that more due diligence may be needed when vetting a blockchain company whose target market is healthcare systems.
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[1] “Gartner 2019 Hype Cycle Shows Most Blockchain Technologies Are Still Five to 10 Years Away From Transformational Impact.” Gartner, https://www.gartner.com/en/newsroom/press-releases 2019–10–08-gartner-2019-hype-cycle-shows-most-blockchain-technologies-are-still-five-to-10-years-away-from-transformational-impact. Accessed 19 May 2021.
[2] Ransomware Soars with 62% Increase since 2019. https://www.securitymagazine.com/articles/94831-ransomware-soars-with-62-increase-since-2019?v=preview. Accessed 19 May 2021.
[3] Usa-En.Pdf. https://www.who.int/health-laws/countries/usa-en.pdf?ua=1. Accessed 19 May 2021.
