Healthcare Blockchain – Enterprise and Otherwise, Hashed Health
Hashed Health’s mission is to accelerate the adoption and development of valuable blockchain-based solutions for the healthcare industry. Like all mission statements, ours is layered with meaning derived from our team’s decades of practice in healthcare and health IT. We think now is an opportune time to unpack this statement a bit to explore some of the nuances that blockchain architecture has brought to health IT. The time is opportune for three reasons. Very first, we have spent almost a year now engaging healthcare stakeholders both in the United States and internationally, measuring industry practice with and interest in blockchain and distributed ledger systems. 2nd, we have also spent that time designing and implementing prototype blockchain solutions on numerous open-source protocols including Hyperledger Fabric, Ethereum, and commercial solutions. Ultimately, with more and more articles appearing in well-known health IT and healthcare industry publications, blockchain has ultimately “arrived.” A clearer picture is emerging about how the blockchain may switch market structures.
To fully articulate the chance that we believe blockchain brings to healthcare, it’s helpful to anchor the discussion inbetween a set of contrasts. On the healthcare side, it’s significant to explore the differences inbetween healthcare enterprise solutions and consumer-facing solutions. On the blockchain side, it’s identically significant to understand the differences inbetween open and permissioned blockchains. The interplay inbetween these poles is not ordinary or demonstrable. Importantly, it is also informed by the very structure and organization of healthcare, in the US and elsewhere.
Healthcare – Enterprise to Consumer
In the United States, healthcare is a elaborate interaction inbetween three broad sets of entities:
- Payors: Insurance Companies, Self-Insured Employers, Medicare, Medicaid
- Providers: Physicians, Inpatient Providers, Health Systems, Outpatient Providers, Post-Acute and Home Health Providers and Pharmaceutical Companies
- Consumers: Patients seeking care and related services.
As we’ve explored in previous newsletters, this configuration of healthcare creates an exceptionally inefficient market which has resulted in data and service silos, a lack of communication inbetween entities, and a lack of coordination of care. The result is high prices for the consumer, poor consumer/patient practices, and costly work-arounds for providers and payors. In response, health IT vendors have developed a range of solutions primarily addressing the “back-end” interactions inbetween healthcare enterprises leveraging siloed relational databases. The aim is to suggest less costly, technical work-arounds to address the inherent friction and inefficiency of the configuration of healthcare. This has been a growth sector for decades and resumes to grow despite the current political uncertainty over the fate of healthcare reform (1) .
The consumer-facing side of health IT is far more complicated. Consumerization of healthcare has been a buzzword for years now but has proven elusive. There are a few significant reasons why this is true. Very first, on many levels, healthcare is not like other markets. Healthcare is not a traditional commodity or service to be purchased. Even if they were totally free to do so (more on this below), consumers are not in a position to make the best judgments about purchasing healthcare, either because the of the complexity of healthcare treatments or due to the emergent need to seek care. Additionally, unlike almost all other products or services, a consumer cannot always predict the results of consuming healthcare. For example, purchasing a car products predictable results: wielding transportation equipment with stated features and in regulatory compliance. By contrast, a given treatment may or may not adequately address the illness or condition.
Beyond these economic basics, consumerization is complicated by the configuration of the healthcare system itself. The drive to “Uber-ize” healthcare runs smack into the wall the US payment and delivery systems. The consumer has no skill of price for services. Providers themselves often cannot give pricing in advance (Two) . Furthermore, the consumer is not a party to the pricing agreement as the contractual relationship is inbetween the provider and the payor, on behalf of the consumer. These are all well-known, almost hackneyed, issues related to US healthcare. By themselves, they do not prevent the creation of potentially useful consumer devices. Instead, to have utility, consumer devices need to “plug in” to the systems that supply and pay for healthcare services. Given the dizzying array of providers, payors and services providers, as well as their oft-conflicting motivations, consumer instruments are often stymied by the unwillingness of enterprises that control the healthcare marketplace. Consumerization of healthcare is elusive – not because of a lack of devices, but rather, due to the lack of an open platform.
Blockchain – Open to Permissioned
Blockchains have their origin in open, pseudonymous cryptocurrency networks. Anyone can choose to download the software and begin processing transactions on the network (i.e. mining). Also, anyone can choose to download wallet software and purchase cryptocurrency on any number of exchanges. With the creation of Ethereum, we now have a growing open platform for solutions well beyond cryptocurrency. Open blockchains share a set of features:
-Open and pseudonymous access
-Open transaction verification and consensus generation (i.e. mining)
-Transparency into all transactions and clever contract terms and functions.
These features are exactly what gives blockchains their resilience to tampering and censorship. However, they pose some barriers to enterprise adoption, depending on the use case.
Permissioned blockchains, by contrast, operate explicitly as private transactional networks in which enable:
- Closed and permissioned access and transactional verification
- Confidential brainy contracts
- Permissioned access to transactional data registered on the ledger.
There is an impassioned philosophical debate over whether permissioned blockchains are truly blockchains or whether they are merely distributed ledger technologies. Much has been written about the spectrum of technologies that fall under “blockchain.” We will not engage or contribute to that debate here. What is clear is that differing blockchain or distributed ledger configurations are better suited to certain use-cases rather than others.
Healthcare Blockchain is neither singular nor elementary. Rather, it is the intersection of a fresh technical architecture with the both well-known and promising areas of health IT. The deck can be shuffled in a multiplicity of ways.
Hashed Health is engaging a broad range of healthcare enterprises, exploring early proof-of-concept blockchain designs. We would categorize the majority of these designs as enterprise health IT solutions employing permissioned blockchains. These solutions address well-known multi-party business problems in the healthcare industry, leveraging the unique characteristics of distributed ledgers to streamline transactions and liquidate friction and inefficiency. Given the “back-end” business process concentrate, permissioned blockchains are ideal, suggesting many of the benefits of blockchains while maintaining business confidentiality. There is also an significant psychology at play wherein permissioned blockchains feel “safer” or more familiar compared to the open blockchains operating “in the wild.” This timid reaction is understandable, but we believe it undersells the powerful features of open blockchain solutions. In the end, as blockchains mature, we expect even enterprise solutions to be both able and desirable to operate on open platforms.
Consumer-facing blockchain health solutions are an titillating area of research and development that draws much attention. The promise of granting individuals autonomy and creating a truly consumer-centric health care system reflects the promise and essential functions of open blockchain protocols. Unluckily, as it applies to healthcare is where things get complicated.
Whether operating on open or permissioned chains, the same constraints that have hampered past consumer health IT offerings likewise apply to blockchain solutions. Simply putting consumer health data “on the blockchain” is insufficient. Consumer health apps (both blockchain and otherwise) need to articulate how they will “plug back into” to the healthcare system both from a technical and a business perspective. Failing to do that, these apps become cul-de-sacs which have little utility for the individual health consumer.
The real chance for blockchain to fundamentally empower the health consumer is not in any individual application or solution. Rather, it will require a blockchain platform that enables an entire health delivery ecosystem to “move on to the chain.” Such a platform would enable a spectrum of stakeholders and applications to operate. It is this enabling platform suggesting which holds the most disruptive potential for healthcare blockchain.