Blockchain for Healthcare: Hero or Hype?

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Joonho J. Lee is a CEO and CoFounder of Cognita Lab INC developing risk management framework around Artificial Intelligence (AI) in healthcare and financial services industries. Here he discusses the use of blockchain in the healthcare industry and the need to remain “cautiously optimistic.”

 

Many people asked whether I have seen a successful Blockchain implementation. Although there may have been successful proof of concepts via pilot programs or operational efficiency cases, I have yet to see a notably impactful Blockchain implementation that has helped change an industry fundamentally.

 

The underlying technology of Blockchain is hardly new. On October 31, 2008, the white paper “Bitcoin: Peer to peer electronic cash system” was published by “Satoshi Nakamoto.” The paper, in fact, never mentioned the term Blockchain but explained the concept of chaining multiple data blocks in chronological order. It was a database solution to ensure that a payer had sufficient money to make the transaction to a payee (known as “double spending challenge”) without needing a central trust party such as a bank. This database solution made references of multiple prior studies, one of which dating back as far as 1957. We, the public, made a new brand name for this technology “Blockchain” and have been hearing that it can solve a wide range of challenges in our society including world hunger issue.

Perhaps the boom of Initial Coin Offering (ICO) made Blockchain popular. A new, alternative way for a company to raise funds. Instead of relying on the conventional and laborious process of Initial Public Offering (IPO) involving regulators, auditors and banks; ICO enabled crowdfunding mechanism that anyone can invest in a company. As return on investment, one would receive the company’s electronic coins (a.k.a. Cryptocoins) implemented and managed by the Blockchain technology. It is a great news that the ICO opened the doors to the public by allowing anyone to invest during the initial offering. This also significantly improved the company’s ability to raise funds efficiently. The brutal reality, however, is that the true value and acceptance of the Cryptocoins remains to be seen. For instance, if I cannot pay for a bowl of rice at my favourite restaurant with a dollar worth of Cryptocoin, the Cryptocoin does not deserve the word “coin” in our society. I am sure that the same concern was raised and addressed when a man sold his cow and came back with a bunch of papers during Tang dynasty in China (A.D. 618 – 907).

Regardless of how and why Blockchain became popular these days, the technology is an important part of the overall vision to any industry to improve or transform completely. However, it is not “the” automatic solution to a business problem no matter how small or large the problem is.

Before applying Blockchain to their existing business, every industry needs to first identify and clearly define needs or problems that they are attempting to solve for their customers. It is not a tangible technology that consumers can feel and experience since it serves as an underlying platform. For example, if you buy a Bitcoin and sold it later, would you have seen or even care about the “chain of data blocks” that made it happen? No.

 

The trend of blockchain in industry

When I was 7 years old, my father bought me a hammer so that I can help him around the house. I loved the hammer so much that I pulled out the hammer for every nail I saw. Big or small. Wooden or metal. Even for screws, I tried to use the same hammer. Adoption of Blockchain by almost all industries feels a bit the same way. Technology developers already developed many flavours of Blockchain platforms and have been looking for more nails to hammer in. It is also business leaders’ responsibility to ensure that statements of business problems to be solved are articulated well and applicable for Blockchain to solve.

Even if Blockchain is the right solution, business leaders must acknowledge that it is only one piece of the puzzle in their overall business, often referred to as, “Blockchain ecosystem.” Changing the industry to a desirable state is often much more difficult — not because of the Blockchain solution itself but other pieces of the ecosystem such as business process, workflow, and governing policy.

Many people asked whether I have seen a successful Blockchain implementation. Although there may have been successful proof of concepts via pilot programs or operational efficiency cases, I have yet to see a notably impactful Blockchain implementation that has helped change an industry fundamentally. Having said that, I give a lot of credit to the Bitcoin implementation itself for providing alternative means of payment that has never existed before in the financial industry.

When people lost trust in banks during the 2008 financial crisis, Bitcoin tried to address the problem by taking the banks out of the equation and enabled peer-to-peer payment without centralized bodies, banks. Did it change the current financial industry? No, not yet. It still lacks consumer protection interest and has high volatility. But, it did successfully offer an alternative means of payment without traditional banks being in the middle.

In healthcare industries, much discussion related to medical record management have flourished. Once medical records are generated and signed by a doctor, the integrity of the record must be secured. As the records are being used and updated, the trail of activity and changes must be recorded.

Since patients go to multiple hospitals and medical offices and see various healthcare specialists, easy access to their own medical records are critical. Blockchain could address the protection of data integrity, medical record history traces by creating the “chain” and providing transparency to multiple healthcare providers by distributed and open ledger solution. Blockchain can solve healthcare’s long overdue problem of medical record management. However, I would like to emphasize that the current organizations that are already in the position of creating, collecting and maintaining medical records, not only acknowledge that the patient’s data does not belong to them but patients also actively support and enable solutions to manage their own data. Transparency in patient’s data and interoperability within the medical industry are achievable only through the patient’s (data owner’s) empowerment, not the Blockchain itself. Challenges involving insurance payment workflow and medicine prescription workflow were also often cited by the industry.

Gartner, a leading technology research and benchmark company, noted the Blockchain’s trend well in March 2018 by stating the “massively hyped state of blockchain adoption and deployment.” I agree with the statement, but I do not think it is solely due to the immature aspects of the solution or the dependent components within the ecosystem, but more so caused by a disconnect between business expectation and what is meant to be solved by Blockchain.

 

Could Blockchain address these issues of the healthcare industry?

I would like to think so and remain cautiously optimistic. Blockchain’s key capability offerings have been an ability to:

1) create immutable records

2) exchange information or manage digital asset in peer to peer network

3) execute contract automatically (i.e. Smart Contract),

4) provide transparency in information within the network.

An organization should perform due diligence to think through which capability is to solve which problem within the clearly defined business challenge. If companies are thinking about starting a Blockchain initiative, I recommend three simple due diligence processes:

1) Forget about Blockchain and think about what business processes that you would like to fix

2) Elaborate why the processes need the fix

3) Try to map each of the “why” with one of the four Blockchain capabilities as listed above.

It sounds too good to be true as I think about what Blockchain could do for the healthcare industry. The successful implementation and adoption of the Blockchain depends on all market participants. They are accountable for being fair and honest within the industry. The Bitcoin white paper clearly noted this point by stating “the system is secure as long as honest people collectively control more computing power than a cooperating group of bad actors.” For example, a group of bad actors could potentially create a massive amount of fake records to invalidate patient’s information.

Instead of creating a trustworthy peer-to-peer network, my worst worry would be having multiple centralized hubs of Blockchain under the mask of “decentralization.” To protect against such bad actors, our society historically created and so far relied on centralized governing or regulatory entities. Through Blockchain, we can improve the market activities and fuel growth of the industry by removing those centralized entities, but we cannot ignore what they were originally meant to do for the public. To make this successful for whatever industry, we must be in it together.


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