Blockchain: A Healthcare Warning for All That Hype

Despite all the hype around Blockchain in U.S. Healthcare, it will likely be InsurTech, not the hospitals, that are the first adopters

Last summer, the Office of the National Coordinator for Health Information Technology in the U.S. held the ‘Blockchain and Its Emerging Role in Healthcare and Health-related Research’ Ideation Challenge, which resulted in a flurry of white papers followed by a lot of online buzz around  Blockchain as the next big thing in patient health records. Many have (rightly) pointed out all the potential benefits of establishing a Blockchain network across the U.S. Healthcare ecosystem:

  • Greater interoperability across industry stakeholders
  • Extra security
  • Better integration with the increasing amount of patient-generated data
  • Less administrative burden on doctors and nurses
  • A data lake to advance research and public health initiatives
  • Putting the patient firmly in control of their own data

Ultimately, it all comes down to improving patient care…


All this buzz around Blockchain in Healthcare is quite timely. Innovation seems to be everywhere in the Healthcare industry right now, particularly in preventative care and diagnostics, with apps, IoT, wearables and robo-doctors fast replacing an “apple a day” to become the consumer preference for a healthier lifestyle.

Security in healthcare data has also been a talking point recently, prompted by the ransomware attacks in May 2017 that affected the U.K.’s National Health Service (NHS) and 2 hospitals in Indonesia. This attack has highlighted how vulnerable healthcare systems are to security breaches due to outdated IT systems. U.S. healthcare may have dodged a bullet this time, but considering that an estimated 75% of large healthcare organisations have already been affected by malware[1], a discussion around alternative technologies to boost security has never been more relevant, and this is where Blockchain has been positioned by some as a solution.

Having said this, hurdles do exist outside core functions, for instance with integrating information held on legacy software installed on medical equipment. Integrating this equipment from numerous suppliers onto a Blockchain is therefore certainly not without its challenges.

Blockchain should come with a health warning and the enthusiasm must be tempered with a healthy dose of realism. The fact is, the cost of operating Blockchain technology is still unknown and incurs a strain on computing power, which is an important consideration for a margins squeezed industry.

Creating a Healthcare-wide Blockchain also requires a huge amount of cooperation in establishing data standardisation and scope. For instance, deciding what data would be stored ‘on-chain’ versus ‘off-chain’ in a data lake, who has ownership of records and conditions on use, etc.

In addition, despite the touted security benefits, cyber-attacks on Blockchain are out there and are far less understood than those on conventional architectures. Moreover, the ransomware attacks on the NHS in May 2017, while highlighting a need for better data security, may also be damaging to the case for Blockchain in healthcare.  During the attack, hackers demanded Bitcoin payment in exchange for access to patient data. Considering that the crypto-currency is often associated with Blockchain, its role in the attack is arguably damaging to trust in the technology among both healthcare organisations and the wider public. A considerable amount of education and awareness of the security benefits of the technology would be required in order to gain backing beyond the tech community.

Finally, giving patients total control of their own health records, while noble, is somewhat misguided; there would still be cases where third-parties need to access the data without patient permission (e.g. in an emergency situation), which would require built-in access, incurring auditing implications.

It is also worth noting that hospitals and health systems in the U.S. tend to be laggards when it comes to updating back-office processes. Although Healthcare organisations rely on cutting-edge technology in the operating room, back-office technology is often behind the curve. In B2B payments, for example, accounts payable processes are still heavily paper-based, with cheques king and Electronic Funds Transfer (i.e. Bank Transfers) still a hot topic for technological advancement. There is likely to be little appetite at present for ‘leapfrogging’ to implement blockchain payments in the supply chain.

In an industry where getting it wrong can literally be a matter of life or death, it is unlikely hospitals and health systems will be the first ones over the top into the minefield of an untested and unregulated technology. That is not to say it will never happen, and certainly government encouragement is likely to provide some impetus, but Healthcare organisations will not risk being the first casualty.

For those looking for a proven deployment, the Estonian government is boldly playing the guinea pig. It has recently partnered with Blockchain vendor Guardtime to secure all citizens’ health records on the Blockchain, providing a Patient Portal to increase patients’ visibility and access to medical documents, prescriptions and insurance information. This could certainly provide the U.S. with an insightful case study; however, given the differences between the two countries in terms of population size and the structure and complexity of the Healthcare systems, it can in no way be considered a perfect proof of concept. In addition, there are also a few Blockchain pilots around patient records being tested, such as MIT’s MedRec in the U.S. and DeepMind in the U.K. Yet these are still in early stages and, as the DeepMind project demonstrates, still have many issues to iron out before deploying further afield.

It is perhaps more likely that the U.S. health insurance industry will sooner find a use for Blockchain technology. The U.S. health insurance space is increasingly competitive and prone to disruption from FinTechs that seek to shake off the bad reputation the industry has earned to provide a more customer-friendly journey (think NY-based Oscar and WEX Health Cloud, which offer alternative health insurance products and Consumer Directed Healthcare platforms respectively). Many customers perceive contracts to be opaque and purposely elusive and distrust the incumbents to pay out when a claim is made. This is where Blockchain could provide some relief. Interesting features of Blockchain are smart contracts, which essentially create a consistent, rule-based method for automatically executing transactions when pre-determined conditions are met. In other words, smart contracts could remove the arbitrary nature of insurance pay outs and move the industry towards auto-claims processing, potentially improving customer engagement by boosting transparency of tariffs and claims handling and automating payments.

Indeed, health insurance giants such as Humana are already taking note and have publically praised Blockchain as a natural evolution for the industry. In other areas of insurance, Blockchain start-ups such as Dynamis and InsureETH have started innovating insurance products by utilising smart contracts technology; Dynamis’ P2P insurance product leverages smart contracts for automating underwriting and claims handling, and InsureETH’s smart contract technology initiates pay outs for insured flight tickets that are cancelled or delayed. Surely then, is it not time for more InsurTechs and incumbents alike to consider how Blockchain can improve patient experience in Healthcare? And if so, might thisbolster the confidence of Healthcare organisations to also adopt the technology across the ecosystem?

[1] Security Scorecard, 2016 Annual Healthcare Industry Cybersecurity Report

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Blockchain in Healthcare, A KAE Blog Post