Blockchain is driving change in financial markets, but it will also serve as the catalyst for transformation across many other industries. Front and center: healthcare. Maven Wave Principals Andrew Dunmore and Nick Polachek describe the five foundational characteristics of blockchain and explore how these factors apply to the future of blockchain in healthcare.
Blockchain began as a financial product and it’s widely known as the technology that drives cryptocurrencies like Bitcoin. As discussed in the Spring 2017 Maven Wave newsletter, blockchain is starting to gain traction in financial markets but it’s growth is not limited to financial applications. Earlier this year, Harvard Business Review stated, “Blockchain is a foundational technology: it has the potential to create new foundations for our economic and social systems”. Opportunities as diverse as voting, land titles, and supply chain management are all witnessing experiments with blockchain.
One of the most promising areas for blockchain is healthcare. Beyond the fraught political debates currently swirling around the subject, the fact remains that healthcare comprises 16% of the economy in the United States and all sides agree that there is a great deal of inefficiency and waste in the system. This inefficiency has large and dramatic effects: according to the Premier Healthcare Alliance, a lack of information interoperability in healthcare costs up to $18.6 billion and 150,000 lives per year. Clearly, opportunities exist in healthcare that blockchain may be able to address. But how can we assess whether or not blockchain is actually applicable to healthcare?
Foundations: A Framework for Evaluating Blockchain
The opportunity for improvement in healthcare may be large but is blockchain the answer to address these problems? In order to evaluate this opportunity, it’s incumbent to first set forth a framework for understanding the factors that make blockchain a principle technology in the first place. From there, we can apply these factors to healthcare and determine whether or not blockchain is a good fit for industry transformation.
In our estimation, there are five pillars that make blockchain a compelling solution:
- Symmetric information: Although decentralized, blockchain technology enables all market participants to have access to the same information at the same time. This symmetry of information means that “truth” is shared and known in real-time by every entity that has access.
- Historical integrity: Blockchain is immutable; it is designed so that you cannot append a record without the entire chain of history and this history cannot be discarded. Blockchain is a complete record in and of itself and by design, past records cannot be altered.
- Extensible security: Blockchain has a sophisticated encryption methodology that is ideal for compliance in highly sensitive industries where the risk of failure is significant. Importantly, this design means that users don’t have to give up flexibility for security, or vice versa.
- Democratic authenticity: Blockchain has multiple, independent validators and consensus is employed for validation. This structure empowers all blockchain validators equally and ensures the authenticity of records.
- Decentralized fault tolerance: In blockchain, if a node were to be hacked and corrupted, the remaining nodes in the system would correct that inconsistency until the impacted node came back to the agreed upon state. This self-correcting functionality is a form of built-in insurance that both deters would be hackers and provides resiliency for industry participants.
In the big picture, the beauty of blockchain is in how all of these factors fit together so elegantly. Each element in and of itself is not overly complex or difficult to understand but each is critical to the technology’s purpose: symmetry and governance. The interconnection of these principles makes blockchain both simple and powerful for industries to enact a new blueprint for economic and social interaction.
Blockchain Principles and Healthcare
Given this framework for blockchain, how does it stack up when it comes to the structure and challenges that are present in healthcare?
Symmetric information: Existing electronic health record sharing protocols have serious flaws and at times they can be the difference between life and death, e.g. when a patient’s critical medical information is inaccessible in a siloed system and there is an emergency situation. Therefore, blockchain’s promise of real-time universal availability is suited to the data exchange needs in healthcare. In addition to the life saving example above, real-time availability can also dramatically reduce costs and accelerate insights for medical advancement.
Historical integrity: A complete healthcare history is vitally important and blockchain can serve this requirement with its commitment to perpetuity. Not only is patient identity immutable and permanent but the information accurately presents insights from healthcare outcomes as well as new treatments and products. Furthermore, eliminating redundant historical record capture will also help to significantly lower costs and shift focus toward industry innovation and patient outcomes.
Extensible security: Current healthcare information systems are both siloed and brittle and have proven to be extremely vulnerable to hacking and other malicious behaviors. Offering a highly sophisticated, infrastructure-agnostic security solution addresses these concerns once across the entire industry. Adoption of blockchain will give newfound control of private information to both individuals and institutions. Patients will be able to grant, deny, or revoke access to their information while institutions will have greater control of their own IP when it comes to research investments. Further, extensible security will support data aggregation while protecting privacy creating large sets of medical data for research and outcomes measurement. Finally, extensible security seems particularly relevant at a time when healthcare providers are being plagued by ransomware attacks.
Democratic authenticity: With democratic authenticity, no single influencer can manipulate the day-to-day events that persist in the system and this instills greater confidence and certainty. By sharing the responsibility for validating information across all nodes, it becomes possible to have universal trust in the system and this trust allows for greater sharing and cooperation than would otherwise be possible. Once a cooperative model is achieved, data can be exchanged and healthcare decisions can be accelerated.
Decentralized and fault tolerant: Arguably, nothing is more important to people than their healthcare records and a blockchain application insures that these records are always up and always on. These attributes are essential when it comes down to saving lives but there are other benefits as well. With universal availability and perfect up-time, blockchain reduces the need for system recovery models, removes drags on operations and research, and these reductions go directly to the bottom line.
What is the Future for Blockchain in Healthcare?
One look at recent headlines reveals that healthcare is an area of intense interest and debate. Health is universally important to individuals, but it also has profound impact and implications for organizations, states, and, ultimately, the world. The healthcare sector is going through a major transformation as the industry tries to improve individual patient experience and the health of the overall population while also lowering the cost of care.
In our analysis, the pillars that comprise the promise of blockchain are of obvious benefit in healthcare just as they are in financial markets. Healthcare is big and complicated and full of restrictions so we cannot expect a foundational technology to change an industry overnight. However, the issues are so important and the payoffs are so large that blockchain is certain to transform the industry over the next decade. By providing the infrastructure to share information while protecting privacy, blockchain has the potential to improve the accuracy and efficiency of health outcomes for both individuals and the overall population.
Andrew Dunmore is a Senior Principal at Maven Wave Partners with over 10 years of solution delivery experience. Mr. Dunmore is one of Maven Wave’s thought leaders in digital innovation, Agility, and delivery excellence. Prior to Maven Wave, Dunmore served as a Vice President at Bank of America in their global private equity investment office. Dunmore also served as a Assistant Vice President at LaSalle Bank in their credit derivatives servicing division when it was acquired by Bank of America in 2007. Dunmore started his career at Hewitt Associates, which was later acquired by Aon in 2010.
Nicholas Polachek is a Principal at Maven Wave with over 10 years of consulting experience focused on strategy and transformation initiatives. He is currently focused on the life sciences and healthcare industry as the account lead at our largest life sciences client. Prior to joining Maven Wave, Nicholas held consulting roles at Deloitte Consulting and Accenture.