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Blockchain in Healthcare: Practical Use Cases

  • 17 October 2018
  • Sam Mire

According to one study, the United States healthcare system ranked last among 11 industrialized nations in terms of access, equity, quality, efficiency, and healthy lives. And it’s not as if there was foreign bias skewing the results — the Commonwealth Fund, which published the study, is a U.S.-based foundation aiming to improve the overall state of healthcare through objective analysis. Their analysis found that the United States spent $8,508 per person on healthcare in 2011, compared with $3,406 in the United Kingdom, which ranked first overall. Other findings suggest that hospitals could increase care output by as much as 26% if they were to find new ways to eliminate inefficiency in their operations. The blockchain may serve as the means to realize greater outputs, especially if hospitals are able to employ it in a comprehensive manner, from improving time-consuming electronic health records systems to rooting out fraud and exploring other ways that the technology can help strengthen the standing of the American healthcare system.

Blockchain in healthcare - Practical use cases


Electronic Health Records

Blockchain use cases in healthcare - Electronic health recordsElectronic Health Records (EHRs) were mandated under the Affordable Care Act, but their rollout has been far from smooth. Despite promises to the contrary, 74% of physicians surveyed said their productivity was the same or worse after EHRs were implemented. EHR systems are expensive, too. One assessment showed a 10.1% decline in absolute operating cash flow as the result of EHR installation costs. Further, EHR contractors can raise their annual fees by as much as 5% each year, an expense that quickly adds up.

And still, a single database that delivers on the promises of industry-wide records unity has yet to emerge. Patients still find themselves filling out the same forms and answering the same questions time and again, and doctors face similarly disconcerting redundancies, too. Interoperability is one of the hottest buzzwords in health IT, as doctors and patients were promised an easy, shareable, secure system of health record accessibility. But it’s yet to be delivered. Though less than 5% of healthcare provider ICOs have blockchain in their business plans, proponents for the EHR use case believe they can finally make the efficiency promised by EHR adoption into a reality.

Companies Trying to Solve This Problem 


Insurance Records and Reporting

Blockchain use cases in healthcare - Insurance records and reporting

When it comes to health insurance, potential penalties, fees, and fines abound, especially for healthcare providers. The penalties begin with the patient, or would-be patient. Under the mandate that all Americans must have health insurance, 7.5 million tax filers were subject to penalty in 2014, while another 12.5 million escaped a penalty through an exemption. In 2017, more than 4 million tax returns reported paying penalties totaling nearly $3 billion as a result of being uninsured.

The trouble with health insurance compliance extends to healthcare providers and insurers in a major way. In 2018, UnitedHealthcare was fined $2.5 million for various insurance law violations, which included but were not limited to sending a patient to a hemophilia service provider that wasn’t approved by the state. Aetna, another large healthcare insurance provider, incurred a $350,000 fine for issuing new policies. It’s fair to assume that these companies did not willingly incur fines. The cobweb of reporting requirements, outdated records, and fragmentation between insurers, healthcare providers, patients, and regulators is bound to get somebody in trouble eventually, and it has.

The blockchain’s distributed ledger technology has prompted some insurers to investigate how it can assist in creating an interoperable record of changes in patient data in real time. When perfected, the tech will allow insurers and healthcare providers to avoid massive, draconian fines that are often incurred by archaic recordkeeping and transmission systems. It can also improve the quality of care for patients when switching care providers or insurers.

Companies Trying to Solve This Problem 

Humana, UnitedHealth, and Optum are working together on a pilot of blockchain tech to simplify provider directories and patient data management. 


Preventing Fraudulent Billing

According to a 2017 report from the Department of Health and Human Services and the Department of Justice’s Health Care Fraud and Abuse Program (HCFAP), $3.3 billion in healthcare fraud judgments and settlements were recaptured in FY 2016 — and those are just the claims that were snuffed out. The Medicare Advantage program carried an improper payment rate of 10% in 2016, adding undue costs totaling $16.2 billion.

With approximately 56 million people enrolled in Medicare, the opportunity for fraud is significant, and the combination of fines and jail time haven’t proven to be strong deterrents. Blockchain-based fraud prevention solutions would help lower the cost of administrators, who are seemingly incapable of justifying their high cost, by automating claim adjudication and processing. Additionally, the decentralized blockchain ledger would present an interoperable, real-time record to monitor fraudulent claims more quickly and affordably.

Companies Trying to Solve This Problem 

  • Healthcombix – Decentralized healthcare payment networks

Reducing Counterfeit Pharmaceuticals

Drug counterfeiting takes a staggering toll on global health and the cost of pharmaceuticals. The World Health Organization estimates that worldwide, 10% of pharmaceutical drugs are counterfeit. This amounts to $75 billion annually going to illegal drug manufacturers, who are responsible for an estimated 100,000 deaths due to the drugs being either unsafe, ineffective, or both. However, this is a particularly difficult market to police, as 40% of pharmaceutical drugs are manufactured overseas, and approximately 80% of the active medicinal components of drugs are imported.

These figures illustrate why the blockchain is so needed as a record to unify drug suppliers, with the decentralized technology taking the place of what have proven to be dangerously centralized databases. The blockchain record would provide greater accountability of supply chain members and allow authorities to identify and root out fraudulent batches more rapidly. See the section on supply chain to understand how blockchains can improve provenance of goods like pharmaceuticals.

Companies Trying to Solve This Problem 


Clinical Trials

Blockchain use cases in healthcare - Clinical trialsRisk aversion in medical testing and research has led to an industry standard of near 100% source data verification, which is a measure to ensure that no fraudulent data exists in any aspect of a study. This is costly, with studies finding that more than one-third of a Phase 3 trial budget is typically consumed by source data verification processes. In medical device clinical trials, 15% of the overall budget is typically dedicated to SDV monitoring processes, with little return on investment. The $150,000 spent on SDV in a million dollar trial has been found to produce a return on investment of $525.

By utilizing the blockchain’s cryptographic hashing systems, which verify and timestamp data, these costs could be drastically reduced. By hashing and storing each element of a clinical trial as the proceedings occur, the current post-study verification processes — which is riddled with costly redundancy — will become a tragic figment of the past.

Companies Trying to Solve This Problem 

  • Innoplexus – Blockchain for drug discovery and trials

Protecting Patient Data

Blockchain use cases in healthcare - Protecting patient dataIn 2017, the cost of a single stolen record in the healthcare industry averaged $380 in the United States, a staggeringly high number when compared with the global average of $141. The cost of data breaches in healthcare becomes even more overwhelming when considered on a larger scale. Data breaches in the United States healthcare system cost $6.2 billion every year, and that cost is inevitably passed down to the patient. Healthcare organizations lose approximately $3.7 million in revenue per data breach, with HIPAA fines, lawsuits, and recovery costs quickly adding up.

Making the matter worse, consumers even ranked data privacy ahead of cost of care as the most important concern they have regarding their healthcare. Something has got to give. Advocates of the blockchain in healthcare point to the technology as a viable solution to the massive problem of data insecurity. Blockchain systems provide multiple security points to decrease vulnerability to breach. The technology could also give patients greater oversight of their own data, providing greater checks to changes to and acquisition of data than current Health Information Exchanges employ.

Companies Trying to Solve This Problem 

  • Healthcombix Preserving patient data privacy with blockchain technology
  • MedicalChain – Blockchain secured EHRs
  • MedRec – MIT project to improve patient data integrity on the blockchain
About Sam Mire

Data journalist and market research analyst focused on emerging technology, trends, and ideas.

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