This story is taken from the STAT report “STAT’s Guide to Blockchain in Healthcare”.
N.Long ago, blockchain technology captured the imagination and wallets of financial services companies seeking “first mover” advantage by integrating into outdated management systems. Experts predict that blockchain could save millions of dollars, with uses ranging from real-time clearing and settlement of securities-related transactions to cross-border payments and regulatory compliance. range.
However, due to the fierce competition in the financial industry and the fear of transparency, adoption of this technology has so far been largely unsuccessful.
Now it’s the healthcare sector’s turn. Highly competitive $4 trillion healthcare businesses, including hospital systems, tech startups, pharmaceutical companies, and insurance companies, are turning to blockchain (bitcoin and other cryptocurrencies) in the hope that it can reduce costs and foster innovation. technology that supports According to a recent report, from 2018 to 2021, the global blockchain in healthcare market grew at an average annual rate of about 55% due to security and transparency concerns across the industry value he chain.
However, it remains to be seen whether healthcare companies will be able to overcome the obstacles that have hindered adoption in the financial industry and the hurdles specific to patient care.
In essence, a blockchain is a ledger where transactions and assets can be tracked. Whether it’s cryptocurrency transfers, patient charts, or pills moving through the pharmaceutical distribution pipeline. This technology distributes information across multiple computers in his hub, creating an immutable distributed system of linked and synchronized ‘blocks’ of data, joined or ‘chained’ by digital signatures.
More simply, a blockchain is a decentralized list of mostly uneditable digital records, linked by computer code. In healthcare, blockchain networks work like this: Suppose a laboratory technician wants to attach a doctor’s referral letter to a patient’s digital record on the blockchain. A technician enters a transaction into the blockchain, creating a “block” consisting of medical data related to the referral, the creator of the transaction, and a timestamp. Blocks are distributed across peer-to-peer networks, which may include the patient’s doctor and family members.
Proponents say upgrading to blockchain could save the healthcare industry billions of dollars annually in costs related to data breaches, information technology, operations, support functions, personnel, counterfeiting and insurance fraud. It has great potential to enable organizations to verify the origin of their goods, track their movements and enhance transparency in their chain of supply. Businesses can quickly identify fraud, contamination, or counterfeit goods.
The pharmaceutical industry, which loses about $200 billion annually to counterfeit medicines, will be a natural beneficiary of this technology.
Blockchain could also enable better health information exchange, which is essential for managing rising healthcare costs and promoting quality care.
Covid-19 has helped push the healthcare industry further into the digital world and draw attention to the potential of blockchain. The pandemic has forced providers to adopt digital technology, remote patient monitoring and artificial intelligence to monitor and treat more patients remotely. The use of telemedicine has likewise exploded.
According to a 2020 Organization for Economic Co-operation and Development report, blockchain-enabled tools are emerging to combat the virus, including identity management systems to support contact tracing in South Korea, data-sharing systems, and software to support research. Blockchain is also being used or proposed for supply chain management of pharmaceuticals and medical supplies, the report said.
The financial services industry’s foray into blockchain technology presents some of its opportunities and potential pitfalls, and as healthcare innovators ponder how to drive the use of blockchain, the roadmap is set. may provide.
aAfter the housing and financial market crashes of 2008, traditional financial services companies faced many challenges with their business models.
New regulations, such as the Basel III framework of international banking standards for capital adequacy, stress testing, and liquidity requirements, and the Dodd-Frank Act, which overhauled financial regulations, are dramatically changing the competitive landscape. , companies were forced to reassess. how they deployed their capital;
What followed was a period of radical innovation. Rather than transitioning to jobs within the traditional Wall Street investment banking community, many of the newly unemployed chose to join or form financial technology startups. The brain drain from global investment banks has set the groundwork for these lean, unregulated companies to gain traction.
Traditional financial services companies have found their business models under attack from Silicon Valley, wreaking havoc on nearly every silo in the financial services industry, from banking to payment processing.
This unexpected rise in competition and new regulatory overhangs has paved the way for the financial industry to embrace consumer-oriented fintech (a coined word for “finance” and “technology”), with the likes of Stripe, PayPal, Robinhood, Square, and numerous other fintech companies whose applications can be found on almost every smartphone today.
However, another by-product has been increased consumer access to digital currencies supported by blockchain technology.
Initially, financial services companies stuck to investing in Bitcoin wallets and exchanges. But over time, they shifted their focus to blockchain, the technical infrastructure that underpins cryptocurrencies.
In the race to real-time financial services, stakeholders at the highest level have recognized blockchain’s broad potential and cost-saving potential. Overnight, financial services firms and other strategic players have sought to invest heavily in commercial applications of blockchain technology. By 2016, blockchain efforts accounted for nearly 70% of Series A funding, while Bitcoin investments remained around 30%.
How did this wave of investments in blockchain for financial services go?
“Initially, there was a lot of excitement,” said Larry Tubb, head of market structure research at Bloomberg Intelligence. (Tabb is the former chairman of TABB Group, where the author previously provided consulting services.)
“We saw very little of it in production,” added Tabb. He and others said costs, his infrastructure on the back end, and the reticence of financial industry insiders meant it was not gaining momentum.
The healthcare industry could succeed where Wall Street failed. If successful, the resulting disruption could change the way companies in the healthcare sector deliver services. Many of the habits built into the DNA of the financial industry, such as the aversion to sharing data, are less common in healthcare. And while the financial services industry is reluctant to upgrade their backend systems to accommodate blockchain technology, the healthcare industry has regulatory requirements to do so.
Financial services and healthcare are two different things, but the two industries have certain pressure points. Both industries have traditional management systems and have significant responsibilities to consumers.
“Arguments and mistakes in healthcare kill people,” said Mariya Filipova, chief innovation officer at CareQuest Innovation Partners. There are probably similarities in how we have managed high-risk, highly sensitive information and dealt with innovation.”
On the other hand, unfavorable solutions for financial business models could benefit healthcare companies looking to reduce third-party reliance and spending.
Many blockchain projects in healthcare are still in the R&D stage, so companies have several runways before blockchain-based partnerships and programs reach critical mass. That said, several players are showing the way by delivering evidence that blockchain can be more than buzzwords and hype, delivering on the promise of this emerging technology in a variety of ways. increase.
In one example, San Francisco-based Chronicled, a company that uses blockchain to support the pharmaceutical supply chain, has produced two blockchain-based technologies.
Another company, digital health startup Paychetri, is using blockchain to protect medical records. Health records on a blockchain system can be linked to existing medical records software, acting as her one comprehensive view of patient records without placing patient data on the blockchain. Each new patient record can be added to the blockchain in the form of a unique hash function that can only be decoded with the consent of the data owner.
“We really wanted to create a secure platform that allows users to manage their health records, as they are now under the control of electronic medical record systems and hospital systems,” said Chrissa, CEO of the company. McFarlane said.
With the popularity of cryptocurrencies, blockchain technology has attained an almost mythical status among ordinary people. But while blockchain addresses many enduring issues, such as data security, privacy, and supply chain management, there are others, especially in healthcare, that this revolutionary technology doesn’t address. .
“Digital health is still pretty new if you think about it,” McFarlane said. “I think it’s still early days. I mean, if you look at the industry as a whole, healthcare is always like 1994 if you know he’s 10 years behind, right?”
“We are still in the pilot and implementation stages,” she said. “I think it will take another five years to see critical mass.”
But she added, “It stays here.”