Blockchain has the potential to redefine healthcare, but healthcare is not the first industry to attempt to improve transaction flow with the emerging technology.
Financial Services, like healthcare, deals with large amounts of secured data, with many firms differentiating themselves by optimizing the speed and security with which they can conduct transactions. Since Financial Services has been working to leverage blockchain architecture for the past 2-3 years, there is an opportunity for those of us looking at applying blockchain to healthcare to learn valuable lessons from their experience with this transformative technology.
I had the opportunity to speak with my former boss, Jim Cunha, SVP Treasury & Financial Services at the Federal Reserve Bank of Boston, who’s deeply involved in the evolution of blockchain in Financial Services.
According to Cunha, “Healthcare has the opportunity to leapfrog some blockchain developmental phases if professionals pay attention to what other industries have already learned.”
Below are some of the lessons Cunha shared from what he has seen over the past few years in Financial Services and how I see potential for applying the technology in healthcare.
Lesson 1: The technology is the easy part.
For those of us trying to get our heads around exactly what blockchain is and what it can do for healthcare, the technology might seem overwhelming. However, the way Cunha sees it, “The technology is the easy part. It’s all the other stuff that an industry has to do for the technology to work across many stakeholders that’s the hard part.”
In a nutshell, blockchain technology can be explained like this:
Sounds simple? As always, details make the difference. To make blockchain work for an industry, the following non-technology elements must be developed:
Common LanguageEven though healthcare is no stranger to complex terminology, it will still take a while to develop a common language around blockchain. Over three years in, Financial Services is still working to align the vocabulary used around blockchain. For example, there is often confusion around the definition of “immutable.” (An application in healthcare: If an error is made in the creation of a patient record, should the original record be considered “immutable,” or the correct information?)
This means that the blockchain professionals we’re working with will likely be speaking languages we don’t understand. Like Finance, things will likely be very “loose” in the beginning before we can find a lexicon that works for healthcare.
Data StandardizationJust because there is a new way to exchange data does not mean all of the parties involved will do so effectively. If Provider A sends clinical data to a payer in one format and Provider B sends data in a different format, the payer will still need to normalize the data before it can be used.
Healthcare needs to define what data will live in the blockchain and how it will be stored. If we do not work as an industry to develop the standards, multiple blockchain networks will develop with different data requirements. Then, a couple of decades down the road, we’ll still be working to get all stakeholders on the same standard or hoping one naturally wins out — just think of VHS versus Betamax.
Data RightsIn the Financial Services model there are clear definitions around who the owner of the data is (most simply, the account owner). In the world of healthcare, we have a heated debate around data rights. The way blockchain technology works now, the patient could be considered the ultimate owner of the data which would have vast implications for other stakeholders and use. (For example, what about doctors’ notes? Right now only about 3 percent of the population has access to written notes in their charts.)
Lesson 2: Don’t look for the big benefits too soon.Start-ups are not successful overnight and that waiting period also applies to new business ventures betting on blockchain. According to Jim Cunha, “Businesses in Finance that have based their business models on blockchain are still in the red. Right now, most Financial Services blockchain companies are VC-backed or have been acquired by existing Financial Services firms.”
From another perspective, Financial Services has some real needs that blockchain can address, such as faster post-trade processing of securities transactions, something it can do with less manual processing and potentially with fewer middlemen.
Healthcare has also identified several potential use cases such as:
More time and proofs of concept of these and other applications are needed to assess whether these business opportunities will be better served by blockchain or remain challenged regardless of new technology.
It’s tempting to expect change to happen quickly (as a few in the world of bitcoin, blockchain’s claim to fame, have) but that’s not how change works. From terminology, to value, even to building profitable new businesses, realizing the advantages of blockchain in healthcare will take time.
Lesson 3: Blockchain will not eliminate middlemen like clearinghouses.One of the big benefits that gets touted around blockchain is its ability to cut out the middleman. Like Healthcare, Financial Services has many middlemen, such as clearinghouses, many of which are risk averse and have been slow to change over the past 15-20 years. Middlemen play an important role in connecting stakeholders and when forced to change most can and will evolve. Entities in both industries have the hard-earned trust of the parties they connect, so they’re likely to find a place in a blockchain-enabled future.
In healthcare, clearinghouses also play a key role in helping providers and payers translate data to exchangeable industry standards. Even if the entire industry agreed on standards for what data lives in the blockchain, new data structures would emerge, and all parties cannot always update to the new standard cost effectively. Healthcare clearinghouses can continue to help stakeholders send or receive data in ways that are not exactly the same by closely monitoring industry trends while being able to reformat data from various legacy systems.
Cunha believes that “Ultimately, these organizations are smart and strategic enough to evolve.” The stronger organizations can and will find their place in a new world of blockchain-enabled healthcare transactions.
You can read more about Jim Cunha’s thoughts on Blockchain here:
Boston Fed VP: DLT Could 'Fundamentally Change' Financial Industry
3Qs with Jim Cunha: distributed ledger technology and what it could mean to the Fed
Boston Fed VP: Blockchain Will Wake Up Swift and Other Middlemen
Questions on what blockchain means for healthcare? This is the first post in a series, so let me know in the comments what you’d like addressed in future posts.