Blockchain in financial services offers a case study for health care adoption – STAT
This story has been excerpted from the STAT Report , “STAT’s guide to blockchain in health care. ”
N ot long ago, blockchain technology captured the particular imagination — and the wallets — of monetary services firms that sought a “first-mover” advantage by integrating it into their outdated management systems. Experts predicted that blockchain could bring millions of dollars in savings, its uses ranging from real-time clearing and settlement of securities-related transactions, to cross-border payments plus regulatory compliance.
But with the particular finance industry’s fierce competition and wariness of transparency, the ownership of the technology offers so far brought few successes.
Now it’s the particular health care sector’s turn. Hospital systems, tech startups, pharmaceutical companies, payers, and others in the intensely competitive, $4 trillion healthcare business have set their sights on blockchain — the particular technology that will supports bitcoin and other cryptocurrencies — with the hope that it can cut costs and boost innovation. From 2018 to 2021, the global blockchain in the health treatment market grew at an average annual rate of approximately 55%, driven simply by security and transparency concerns throughout the industry’s value chain, according to a recent report .
It remains in order to be seen, however , whether medical care businesses can overcome the obstacles that have impeded its re-homing within the finance industry, or the hurdles specific to patient care.
At its core, blockchain is a ledger that can keep track of dealings and assets — regardless of whether it’s cryptocurrency changing hands, a patient’s medical chart, or the pill moving through the drug distribution pipeline. The technologies distributes information across multiple computer hubs, creating an immutable, decentralized system of linked and synchronized “blocks” associated with data, joined or “chained” by digital signatures.
Even more simply put, a blockchain is a decentralized list of largely uneditable electronic records, connected together by computer code. In health care, a blockchain network might work as follows: Imagine a lab technician who wanted to attach a doctor’s referral in order to a patient’s digital records on the blockchain. The technician would enter the transaction on the blockchain, creating a “block” consisting of the particular medical data related to the referral, the particular author of the transaction, and a timestamp. The particular block might then be delivered to the entire peer-to-peer network, which could include the patient’s physician and family members.
Proponents say that upgrading in order to blockchain can save the health care industry billions of dollars the year in costs associated with information breaches, information technology, operations, support function, personnel, counterfeiting, plus insurance fraud. It has tremendous potential to allow organizations to verify sources of goods, track their own movements, and strengthen openness in supply chains. Companies could pinpoint fraud, contamination, or counterfeit goods immediately.
The pharmaceutical industry, which usually loses approximately $200 billion to fake drugs yearly, would become a natural beneficiary from the technology.
Blockchain could also enable better health information exchange, which is essential in managing rising wellness care expenses and promoting quality treatment.
Covid-19 provides helped usher the health care business further into the digital world plus bring more attention in order to the potential of blockchain. The pandemic pushed providers to adopt electronic technology, remote patient monitoring , and artificial intelligence to help companies monitor plus treat a lot more patients from a distance. Telehealth use similarly exploded.
According to a 2020 Organization with regard to Economic Cooperation and Development report , blockchain-enabled tools are emerging to combat the virus, including an identity management system supporting contact tracing within South Korea, a system regarding data-sharing, and software in order to support research. Blockchain has also been used or even proposed intended for supply string management to get medications plus medical supplies, the statement said.
The financial services industry’s foray into blockchain technology illustrates some of its opportunities — and possible pitfalls — and may provide a road map, because healthcare innovators contemplate how to push forward blockchain’s use.
A fter the 2008 collapse of the particular housing and financial markets, traditional economic services companies faced a host of challenges to their business models.
New regulations, such since the Basel III framework — which set up international banking standards pertaining to capital adequacy, stress testing, and liquidity requirements — and Dodd-Frank legislation , which overhauled financial regulation, brought dramatic changes to the competing landscape, forcing firms in order to reassess how they deployed their particular capital.
What followed was an era of sweeping innovation. Rather than migrate to jobs within the community associated with traditional Wall Street investment banks, many of the particular newly unemployed opted to join or establish financial technology online companies. The departure of brainpower from global investment banks set the stage for these leaner, unregulated firms to gain traction.
Traditional financial solutions firms found their company models under attack through Silicon Valley, causing a disruption in almost every silo of the financial services vertical, from banking in order to payment processing.
This rise of unanticipated competition and the overhang of new regulation paved the way for the particular financial industry’s embrace associated with consumer-oriented fintech — the portmanteau meant for “finance” plus “technology” — and gave rise to Stripe, PayPal, Robinhood, Square, and numerous other fintech companies whose applications can be found on almost every smartphone today.
Yet another byproduct was increased consumer access to digital currencies supported by blockchain technology.
Initially, financial providers firms stuck to investments in bitcoin wallets and exchanges. But in time they shifted their focus to blockchain, the technological infrastructure underpinning cryptocurrencies.
In the race in order to real-time finance, stakeholders at the highest levels saw blockchain’s wide-ranging possibilities and cost-saving potential. Seemingly overnight, financial services firms along with other strategic players sought to invest in commercial applications for blockchain technology writ large. By 2016, blockchain efforts comprised nearly 70% of Series A funding, with bitcoin investment trailing at around 30%.
How did this flurry of investments within blockchain designed for financial services pan out?
“Initially, it was very hyped upward, ” said Larry Tabb, head associated with market structure research at Bloomberg Intelligence. (Tabb is the former chairman of TABB Group, where the author previously provided consulting services. )
“We have observed very little of anything go into production, ” Tabb added. He and others said that the costs, the particular back-end infrastructure, and the reticence among financial market players has meant this has failed to gain traction.
The wellness care sector may be able to succeed where Walls Street offers not. If successful, the particular resulting disruption could change the way businesses in the medical care sector deliver their services. Many of the particular habits woven into the financial industry’s DNA, such as the aversion to sharing data, are less prevalent in health care. And while the finance industry is loath to upgrade the back-end techniques to accommodate blockchain technology, the care industry provides a regulatory requirement to do just that.
Financial services plus health care are different animals, but the two industries share certain pressure points. Both industries are usually saddled along with legacy administrative systems and carry a significant responsibility in order to consumers.
“You could argue in health care, you make an error, and people die. In financing, you create an error, you completely ruin people’s lives, ” stated Mariya Filipova, chief innovation officer associated with CareQuest Innovation Partners. “There are probably parallels to be made in how the industries have handled complexity, high risk, and controlling highly sensitive information plus dealing with development. ”
On the some other hand, solutions that may be undesirable for the finance business model may accrue to the benefit of healthcare companies trying to trim their dependence and their own spending on third parties.
Because many blockchain projects in healthcare are still in the study and development stages, businesses have some runway before blockchain-based partnerships and programs reach critical mass. That said, several players are showing the particular way simply by delivering, in a variety of ways, on the promise associated with this growing technology, offering proof that the blockchain can be more than buzzwords plus hype.
To give one example, San Francisco-based Chronicled, a company using blockchain to assistance the pharmaceutic supply chain, has 2 blockchain-based technologies in manufacturing: one to authenticate drugs and another to automate revenue management.
Another company, the particular digital wellness startup Patientory, is using blockchain to assist safeguard medical information. Health records on blockchain systems can be linked to existing medical record software and act as one overarching view of a patient’s record without placing patient data on the blockchain. Each new patient record may be appended to the particular blockchain within the form of an unique hash function, which can be decoded only if the data owner consents.
“We sought in order to really create a secure platform that would certainly allow users to take control of their particular health information. Because right now, it’s within the control of the electronic medical report systems plus the hospital systems, ” said Chrissa McFarlane, the company’s CEO.
The popularity of cryptocurrencies has given blockchain technologies almost mythical status in the general public. But although blockchain addresses many persistent issues, such as data security, privacy, and supply chain administration, there are usually other problems this revolutionary technology does not address, particularly in medical care.
“It’s nevertheless fairly new, when a person think about it, electronic health, ” said McFarlane. “I would say it’s still early days. I mean, if you look at the particular industry overall, knowing that health care is always ten years behind, we’re like in 1994, right? ”
“We’re still in that pilot phase and implementation phase, ” she said. “I would say to see critical bulk, it won’t be until another five years, really. ”
But , she added, “It’s here to stay. ”