Authored by Eric Cheng He
Edited by Americana Chen
OVERVIEW
This research paper intends to evaluate the potential and existing applications of Blockchain technology in the healthcare industry and provide several key recommendations and insights.
The research paper will consist of 3 sections. In the first section, we are going to introduce the concept of Blockchain technology and the current landscape within both the Blockchain and Healthcare industry. In the second section, we will explore some applications of Blockchain in the Healthcare industry, including preventing drug abuse and phishing, facilitating effective communication, and supply chain management. Finally, we will summarize the research and give recommendations regarding best ways for healthcare companies to improve their operational efficiency.
EXISTING APPLICATIONS OF BLOCKCHAIN IN THE HEALTHCARE INDUSTRY
What is Blockchain?
The basic idea behind Blockchain technology is to decentralize the storage of data, ensuring that a central agent cannot own, control or manipulate such data. Blockchain is the fundamental mechanism behind the birth of Bitcoin and other cryptocurrencies. However, the unique characteristics of Blockchain — transparency, safety, immutability, decentralization, and peer-to-peer connectivity has enabled it to play important roles in other sectors such as banking, healthcare, and much more.
According to Statista, the size of the Blockchain technology market worldwide between 2018 to 2025 is projected to rise from 1.2 billion USD to 39.7 billion USD. The Compounded Annual Growth Rate (CAGR) between 2020–2025 will be as high as 67.3%. The Blockchain industry is growing at an unprecedented pace, and a wide variety of potential opportunities are waiting to be unlocked.
Many experts suspect that the rapid growth and the hype of the Blockchain industry are results of irrational speculation and conformity psychology. We will review and discuss both perspectives in later sections.
Currently, the application of Blockchain mainly takes place in the financial industry. However, the adoption rate of blockchain is also increasing in other sectors such as telecommunication. According to an article from McKinsey, Carson and other researchers, healthcare is one the most desirable markets to apply Blockchain technology to[1].
In addition, the healthcare industry is ubiquitous and massive, so that a small change or innovation in this area could ripple through the market and create huge impacts on customer’s experiences in using healthcare services.
According to the World Bank, the current global average health expenditure in terms of percentage of GDP is 9.88% in 2017, which is around 8.02 trillion.
From the graph (Figure 2) below, there is an upward trend in the current healthcare expenditure and the rise looks to increase into the future.
Because of its vast size, a small increase in efficiency can help hospitals and other players in this industry to reduce expenditure by a significant amount. In the remainder of this paper, we are going to focus on Blockchain applications in the healthcare industry.
APPLICATIONS OF BLOCKCHAIN TECHNOLOGY IN THE HEALTHCARE INDUSTRY
Blockchain technology can be used to facilitate the secure transfer of patient medical records and medical payments, manage the pharmaceuticals supply chain and help healthcare researchers to unlock sharing of genetic code. Figure 3 below summarizes the blockchain opportunities by the industrial sector in the healthcare industry
Safeguarding Patient Records against Phishing
According to the Healthcare IT News, “healthcare continued to be a lucrative target for hackers in 2017 with weaponized ransomware, misconfigured cloud storage buckets and phishing emails dominating the year.” It also summarized the most significant healthcare data breaches in 2018. There were hundreds of thousands of patients whose information was stolen and used for illegal purposes. According to an article from Built In, “the perpetrators stole credit card and banking information, as well as health and genomic testing records.”
According to IBM, in 2020, healthcare organizations continues to have the highest costs associated with data breaches, on average, a healthcare data breach case could cost $7.13 million, up more than 10% from last year.
If a safer way is not implemented in the near future, millions of patients will be vulnerable to cyber-attacks, becoming hackers and criminals’ next target. So, ensuring that patients' data and information is properly safeguarded is crucial.
There are some companies currently working on improving the safety of managing, sharing, and editing medical records. For example, BurstIQ is a technology company from Colorado, and it provides a platform that can help healthcare agencies to manage patients' data along with safety and privacy. Furthermore, this platform can also help resolve problems regarding abuse of prescription drugs, as data of the patients will be complete and up-to-date all the time.
In addition to BurstIQ, other similar companies include Factom, Medicalchain, and Guardtime.
Combating Long-lasting problems of Prescription Drug Abuse
Prescription drug abuse refers to the usage of medication in a way beyond what was intended by a qualified medical practitioner. According to a report from the National Institute on Drug Abuse, abuse of prescription drugs can lead to increased hospitalization visits and overdose deaths. Three types of drugs that are most commonly abused include opioids, Central nervous system (CNS) depressants, and stimulants. Prescription drug abuse is a long-lasting problem in the healthcare industry, and unfortunately, statistical evidence has shown that the situation is only getting worse and worse on a year-to-year basis.
Opioid prescription dispensed by U.S retail pharmacies increased by 60% from 131million in 2000 to 210 million in 2010. While total number of deaths due to opioid use disorders soared to 71% , with a 92% increase among women compared with 63% among men.
How do these patients usually obtain such drugs? A report from the National Institute on Drug Abuse points out that 12th-grade students usually obtain such drugs from their friends. Nevertheless, obtaining it through prescription is also a major source, and Blockchain technology can be used to tackle the loopholes that exist in the distribution of prescription drugs.
This report called for Prescription Drug Monitoring Programs to be implemented to resolve this long-lasting pain point. With Blockchain technology, we can track and connect supply chain information, patient's past record, and transaction record all in one recording ledger. The unique characteristic of Blockchain makes it difficult to manipulate any logged data. Doctors can identify those patients who are addicted to prescription drugs or those who are engaging in “doctor shopping”—moving from provider to provider— by sharing information among different relevant parties.
Improving Client-Patient Communication
Other than preventing phishing and drug abuse, Blockchain can also be used to improve communication channels between medical professionals by creating an integrated database that is accessible by the relevant medical staff.
An article from Becker’s Healthcare points out that “a survey from the Ponemon Institute of more than 400 providers found that poor communication is costing upwards of $11 billion industry-wide.”
By establishing a Blockchain-based database, faster diagnoses and personalized care plans can be provided to our patients. The four leading companies embracing this idea include SimplyVital Health, Coral Health, Robomed, and Patientory.
Efficient Supply Chain Management
When it comes to the supply chain, there are several concerns: How much do we really know about our medicine? Can we be sure it hasn't been tampered with? Is it coming from a legitimate supplier? Drug trafficking can be a serious problem for the healthcare industry. Complex supply chain in the healthcare industry consisting of many independent stakeholders including manufacturers, insurance companies, hospitals, and wholesalers, this problem becomes even more complex when it involves multiple regulatory agencies adhering to different international quality standards. Unnecessary healthcare supply chain spending hit almost $26 billion in 2020.
Blockchain can help identify all the points of shipments to prevent consumers from consuming counterfeit medicine. Furthermore, it could facilitate sharing of transaction information, ensuring that accurate data is disclosed to regulatory authorities and patients. Blockpharma is a company that focuses on applying Blockchain to supply chain management practices of the healthcare industry. According to the data from Built In, “with the help of a blockchain-based SCM system, Blockpharma weeds out the 15% of all medicines in the world that are fake.”
Facilitating Genomics Research
Blockchain can be also used in genomics as well, the fact that genomics involves sensitive information means it faces challenges from privacy requirements and cybersecurity risk. Pharmaceutical and biotech companies spend billions of dollars each year acquiring genetic data from third parties.
Blockchain technology has the potential to eliminate unnecessary spending and middlemen in the genetic research data exchange. Additionally, it ensures immutable storage of genomic data transaction record to ensure privacy, as it could safely store large amounts of genetic data points.
Nebula Genomics is an example of an application that uses distributed ledger technology to eliminate unnecessary spending and middlemen in the genetic studying process. It is helping to build a giant genetic database and incentivizing users to safely sell their encrypted genetic data.
EVALUATION AND RECOMMENDATION: ASSESSING BOTH SIDES OF THE STORY
We have seen some potential applications of blockchain in the healthcare industry, and they all look promising. However, Blockchain is not without its criticism.
In 2018, McKinsey's analysts have remarked that Blockchain technology is still “three to five years away from feasibility at scale, primarily because of the difficulty of resolving the coopetition paradox to establish common standards.” It also points out that reduction of costs will be the main function of Blockchain in the short term before the advent of transformative business models.
On the other hand, Deloitte’s 2020 Global Blockchain Survey report published in 2020, provided countering arguments to these concerns. It suggested that many sectors have already shifted from “Blockchain tourism” to the implementation of practical business solutions. Technology advances and a structured ecosystem is established from multiple aspects including governance, compliance with established audit and accounting frameworks, and other consortium-related issues.
In conclusion, Blockchain applications in the healthcare industry are moving from conceptual ideas to pragmatic business solutions. Given that the market is still nascent and growing, there are many untapped potential segments in the industry. Recommendations for different companies will vary based on their market dominance and the different regulatory barriers they’re facing. According to the journal article from McKinsey, we can construct a strategy map as shown below.
References
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National Institute on Drug Abuse. “Prescription Drug Abuse.” rxreportfinalprint.pdf, 2011, https://www.drugabuse.gov/sites/default/files/rxreportfinalprint.pdf. Accessed 17 November 2020.
the World Bank. “Current health expenditure (% of GDP).” Current health expenditure (% of GDP) | Data, 2017, https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS. Accessed 17 November 2020.
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Deloitte. “Deloitte’s 2020 Global Blockchain Survey.” DI_CIR 2020 Global blockchain survey.pdf, 2020, https://www2.deloitte.com/content/dam/insights/us/articles/6608_2020-global-blockchain-survey/DI_CIR%202020%20global%20blockchain%20survey.pdf. Accessed 19 November 2020.
Carson, Brant, et al. “Blockchain beyond the hype: What is the strategic business value?” Blockchain beyond the hype: What is the strategic business value? | Mckinsey, 19 June 2018, https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/blockchain-beyond-the-hype-what-is-the-strategic-business-value. Accessed 17 November 2020.
the World Bank. “Current health expenditure (% of GDP).” Current health expenditure (% of GDP) | Data, 2017, https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS. Accessed 17 November 2020.
Carson, Brant, et al. “Blockchain beyond the hype: What is the strategic business value?” Blockchain beyond the hype: What is the strategic business value? | Mckinsey, 19 June 2018, https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/blockchain-beyond-the-hype-what-is-the-strategic-business-value. Accessed 17 November 2020.
Healthcare IT News. “The biggest healthcare data breaches of 2018 (so far).” The biggest healthcare data breaches of 2018 (so far) | Healthcare IT News, 2018, https://www.healthcareitnews.com/projects/biggest-healthcare-data-breaches-2018-so-far. Accessed 17 November 2020.
Daley, Sam. “15 EXAMPLES OF HOW BLOCKCHAIN IS REVIVING HEALTHCARE.” Blockchain in Healthcare: 15 Examples Reviving the Industry | Built In, 25 March 2020, https://builtin.com/blockchain/blockchain-healthcare-applications-companies. Accessed 17 November 2020.
National Institute on Drug Abuse. “Prescription Drug Abuse.” rxreportfinalprint.pdf, 2011, https://www.drugabuse.gov/sites/default/files/rxreportfinalprint.pdf. Accessed 17 November 2020.
Becker's Healthcare. “Top 5 inefficiencies in hospital operations.” Top 5 inefficiencies in hospital operations, 2016, https://www.beckershospitalreview.com/quality/top-5-inefficiencies-in-hospital-operations.html. Accessed 17 November 2020.
Daley, Sam. “15 EXAMPLES OF HOW BLOCKCHAIN IS REVIVING HEALTHCARE.” Blockchain in Healthcare: 15 Examples Reviving the Industry | Built In, 25 March 2020, https://builtin.com/blockchain/blockchain-healthcare-applications-companies. Accessed 17 November 2020.
Deloitte. “Deloitte’s 2020 Global Blockchain Survey.” DI_CIR 2020 Global blockchain survey.pdf, 2020, https://www2.deloitte.com/content/dam/insights/us/articles/6608_2020-global-blockchain-survey/DI_CIR%202020%20global%20blockchain%20survey.pdf. Accessed 19 November 2020.