By Deborah Borfitz

September 11, 2018 | Affordable healthcare requires a better way for providers, patients, and payers to exchange information, and blockchain could be the means. Emily Vaughn, blockchain product director for Change Healthcare, and Nelson Petracek, chief technology officer at TIBCO Software, made a compelling case for blockchain’s role at the recent Health:Further festival in Nashville, Tennessee (further coverage of the event here). “Token technology was one of first applications [of blockchain] but the infrastructure of it has more utility,” says Vaughn, especially when it comes to making healthcare more patient-centric.

Change Healthcare, which processes over $2 trillion in claims annually, launched the industry’s first enterprise-scale blockchain network earlier this year enabling real-time tracking of claims status. And there are plenty of other use cases, ranging from blockchain-based pharma track and trace solutions to risk-sharing agreements and decentralized medical data management.

The use cases in healthcare tend to be consortium-based and permissioned, placing restrictions on who is allowed to participate in the private blockchain network and for which transactions. Multiple computer systems (aka “nodes”) are involved in supporting the network and hold their own identical copy of the digital ledger (aka the blockchain).

Much of blockchain’s relevant value comes from “smart contracts,” built chiefly on the Ethereum platform, which are decidedly not legal contracts, says Petracek. They simply express business logic as a computer program. Smart contracts run autonomously on top of a network and are constrained by all same rules of consensus about how information will be structured and exchanged so transactions are deemed valid. The business logic gets executed based on the same version of the data. “It’s a better way to do B2B—that’s the big driver.”

Smart contracts are also written by humans and therefore subject to error—as Ethereum has embarrassingly experienced firsthand—and they have no standards. There are today over 100 blockchain formats, and many more emerging, representing a growing variety of programming languages, says Petracek. “The platform that will win probably hasn’t been invented yet.”

Blockchain 101

The underlying ledger technology is the core function of blockchain, says Vaughn, which is “kind of like a database” but not of great utility as such. Blockchain records transactions that computers send to it and allows transacting parties to more efficiently and transparently do business with one another—including financial apps like Change Healthcare’s own Intelligent Healthcare Network.

As consumers, providers and payers exchange data, information assets get registered on the blockchain much like a library book on a card catalog, she explains. The technology is extendible to the consumer environment and patients can participate in the healthcare workflow “without compromising the integrity of the network as a whole.”

Cryptography is a big component, Vaughn continues, but techniques for securing communications in a blockchain use a hash function rather than encryption. The authenticity of a piece of data is based on unique identifiers created for users and assets. Each transaction, or data block, is connected to the next and has its own name. This creates a “computational requirement” to hack the network that is unfeasible for anything short of quantum computing. “Cryptography is math and all participants in the network have access to it and can independently verify it without involving a third party at a cost. It’s more of an egalitarian process.”

Which isn’t to say that blockchain creates a perfectly “immutable” record—a common myth. A particular blockchain may need to change, points out Petracek. Immutability conflicts with the “Right to be Forgotten” provision of GDPR that seeks to harmonize data privacy laws across Europe. The blockchain data structure also isn’t geared to provide quick access to a large amount of data, so a digital ledger is often used as a “pointer” to off-chain information sources.

The entire network depends on always-vulnerable computer systems. The decentralized nature of blockchain, where every participating node in the network must process every transaction, also creates a latency problem that—for now anyway—limits scalability. “The typical size of a blockchain transaction is about the size of a text message,” says Vaughn. “Blockchain is used more as a reference system.”

More Myths Debunked

Blockchain transactions are considered “valid” only in a technical sense, not as a good-or-bad judgment call, Vaughn notes. Mistakes in the data will get recorded to the blockchain, and can later be appended with an update, but “there’s a cost to store even the flubbed [transactions].” Data analytics and artificial intelligence have roles to play in improving the quality of data before it goes on the blockchain.

And this is not a completely decentralized proposition. A small number of developers control what happens on blockchain networks, particularly the “permissioned” ones most prevalent in healthcare, says Petracek. Notably, they need to manage the code and help prevent “forks” in the network that can happen when different users don’t agree on the consensus protocol. The network also needs a governing board empowered to make decisions such as how a code upgrade will be validated. On the other hand, blockchain has strong potential to disintermediate the clearinghouse layer in claims transactions by connecting payers directly to providers.

Getting Going

Blockchain use cases can run inside an organization large enough to have computer systems that don’t speak to each other. But the true value of the technology won’t be seen until its use extends beyond a single organization, says Petracek. And that could take a while. “Remember, legacy systems—anything not on the blockchain—have to integrate with blockchain networks. And you need secure APIs and have to do analytics,” in addition to ensuring off-chain data matches the on-chain references.

But it’s time for organizations to start exploring where the technology is a fit, Petracek says. “The underlying concept is important to understand and it’s not all new,” he says. “Do a proof of concept—it’s easier to get started today than two years ago.” Major cloud providers, including Google, now offer platforms for blockchain-based applications.

Distributed ledger technology is well suited to the world of RegTech, including consent management with patients and regulatory compliance auditing, the focus of many emerging blockchain startups. It’s also ideal for contract management to automate standard terms of agreement providers have with suppliers and payers, says Vaughn.

On the claims processing front—a function that can be dissected into 39 discrete steps—is just getting started by applying blockchain technology to lifecycle transparency. Reconciliation before patients even come in for care, and using digital tokens as a form of payment, are the “next levels of value to be discovered,” says Vaughn.

Regardless of what healthcare organizations choose to do, blockchain technology is being adopted by consumers on a global scale—as of 2017, close to 30 million people worldwide were using virtual currencies like bitcoin—and the uptake was swift. This parallels the internet, Vaughn points out, which saw usage skyrocket in the year after the web was adopted.