Beyond the Buzz: Real Opportunities for Blockchain in Health Care

This much-hyped technology may be part of the answer to making the fragmented U.S. health care system more efficient.

Blockchain has been touted as a way to track diamonds or even prevent counterfeit goods — and the hype has spread to health care.

A blockchain is essentially a database in the form of what’s called a distributed ledger. That is, information is distributed across a network of participants. The participants can see activity on the ledger, but no single party controls it. Once data is in the blockchain, it can’t be changed. New information is timestamped and linked to the previous entries, making the blockchain auditable and secure.

Blockchain is probably best known as the technology that supports bitcoin, but its potential goes well beyond cryptocurrency. Innovators see promise in using a trusted, shared database of transactions for payments and money transfers, records and verification, to reduce risk and fraud.

The technology, while still evolving, is becoming mature enough that some states have announced that blockchain would be treated similarly to existing electronic record systems. This development should encourage broader acceptance of blockchain applications.

Steve Betts, chief information officer for Blue Cross and Blue Shield Plans in Illinois, Montana, New Mexico, Oklahoma and Texas, explains why health care innovators are excited about blockchain.


The perfect fit

Some experts also believe blockchain has the potential to revolutionize health care.

“The reason all the hype is there is because if it works, if it’s true — if half of it is true — it has the potential to fundamentally change market structures and the movement of value,” says John Bass, founder and CEO of Hashed Health, a company focused on solving problems in health care with blockchain technology.

“There’s so much potential to improve how care is delivered and paid for, and that’s got everyone very, very excited,” Bass says. “Part of what’s driving all the cost and quality problems is fundamental issues around trust, transparency and sense of alignment.”

That’s because the health care industry has so many different parties — insurers, doctors, hospitals, consumers and more.

These groups have their own data, and it’s often a struggle to share accurate, up-to-date information in a secure way. That’s what blockchain was designed to do.

And innovators are taking notice. More blockchain initiatives are focused on health care than any other sector, according to a report from the Stanford Graduate School of Business.

Bass is particularly excited about blockchain’s potential to shift the health care industry toward true value-based care — paying for care that improves patients’ wellbeing and rewarding physicians for quality instead of the quantity of services they provide.

Recipe for success

“I see so much of a sweet spot of a fit between (blockchain and health care),” Steve Betts, chief information officer of the Blue Cross and Blue Shield Plans in Illinois, Montana, New Mexico, Oklahoma and Texas, told a crowd during a recent speech on blockchain.

But for blockchain to reach its potential, he says the participants using it need three things:

  • A shared sense of value of a blockchain network. Everyone involved needs to feel like they’re gaining something from using the technology. Betts says this is easy to find, because many players would benefit from the shared source of truth that comes from blockchain’s secure ledger.
  • The right group of partners. You can’t make a blockchain network in a void; multiple parties need to sign on to make it work. Usually it’s recommended to start with the smallest group of trusted partners possible, Betts says, also known as a minimally viable network. Once the solution is in place for that group, the network can scale more broadly.
  • A commitment to ongoing governance. The original partners in the network need to agree to a governance model prior to entering into it. The rules of the road should cover how the network is going to solve problems or possible legal disputes that may come up, as well as how the network may evolve over time. It also should be an adaptable model as the network grows and changes over time.

Potential uses

Once those criteria are met, blockchain may solve real-world problems in health care — especially ones that involve new ways to pay for care or the exchange of large amounts of data among multiple parties. Here are a few potential uses:

Provider information. Doctors and clinics need to share their information, like licenses, credentials and even current addresses, with the payers and hospitals they work with. Right now, if something changes, they need to update each partner separately — a time-consuming and expensive task. Experts estimate the industry may spend billions of dollars each year on maintaining provider data. Many believe blockchain can make accessing provider information more efficient.

Shared accumulators. Many health plans have a deductible, which members must cover before the plan pays for covered services. Medical, pharmacy, behavioral health and other services all go toward a deductible. Health plans always need to know how close members are to meeting their deductibles so they know what to charge; but keeping that information current from those disparate sources can be difficult.

Betts says this is a good possible use for blockchain because it creates a transparent and trusted source of this information. However, he also notes that it may be hard to get started because a minimally viable network is hard to define.

Bundled payments and other value-based contracting. In a bundled payment arrangement, insurers, surgeons and hospitals team up and set a target price for a particular service, like a knee replacement. If the total cost of care is under the target price, the providers share in the savings.

“In the current claims-based structure, surgeons see those bonuses well after the procedure, which negatively impacts incentives,” Bass says. “A blockchain network would allow more immediate payments because it keeps an up-to-date ledger of patient-care activities and can be used to move value based on those activities without all the administrative burden.”

Accountable care organizations. An ACO is a group of doctors, hospitals, clinics and payers that is responsible for a group of patients’ health. If the ACO coordinates care and meets certain quality and cost goals across its patient population, the providers get rewarded financially.

“It creates a closed group of parties that are intentionally sharing data around patient outcomes,” Betts says, which is the ideal situation for a blockchain solution.

An ACO in Arizona started using blockchain earlier this year. Right now, providers are getting paid on the blockchain, and the ACO may expand the technology’s use down the line.

Patient medical records. This would be the “holy grail” of blockchain, Betts says, since so many health care parties need access to up-to-date, complete patient information, but don’t currently have it. One company is working on this in the United Kingdom, where having a national, single-payer health system makes it more feasible. Betts warns that deploying a blockchain solution for health records in the U.S. would be more challenging because the industry here is more complex.

Some of these use cases are in the works now, while companies are just starting to explore others. Betts and his team are forming partnerships and identifying the right place to get involved in blockchain.

“I’m very bullish on the potential and feel cautiously pragmatic on the path to get there based on the work we’ve done,” Betts says. “When we get there, there will be a sweet reward for the industry.”


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