Health IT, MedCity Influencers

Blockchain, IoT, and the healthcare industry: What you need to know

Blockchain-based systems could automate many administrative tasks in healthcare and remove human error from payment processing and claim adjudication, which can improve accuracy and reduce costs.

Blockchain is a buzzword in the tech industry — and for good reason. Besides providing the underlying foundation for the developing cryptocurrency sector, it also has the power to transform how businesses operate by decentralizing business models, creating more efficient processes, and providing a more secure and reliable way to exchange data.

While blockchain is capable of revolutionizing many industries, it shows considerable promise within the healthcare industry. Blockchain reduces the liability and accuracy concerns related to the exchange of medical data, and it provides built-in levels of cryptographic security to protect patient identity.

Eventually, patients may even have access to their own “data wallet,” giving them complete control over their own health data. While this is a controversial topic, with some people in the health industry believing only doctors should control that information to ensure proper care, there’s a growing number of people who want control of their own data.

As the possibilities of and interest in blockchain grow, more companies are jumping on the bandwagon. Patientory, for instance, is a self-described healthcare cybersecurity startup that’s particularly well-positioned in the aftermath of the WannaCry ransomware attack, which affected roughly 300,000 machines in 150 countries.

IBM Watson Health is also partnering with the Food and Drug Administration to use blockchain to exchange health-related data in a secure and efficient way. Eventually, IBM and the FDA plan to extend that into exchanging data between  devices connected to the Internet of Things, wearables, and mobile devices as well.

Improving the supply chain

Although blockchain is growing in popularity, it still has its challenges. Technology points aside, there are entrenched systems that touch patients, and health systems and their partners will need to work together before this type of ecosystem-centered technology sees wider adoption.

That’s why I predict that the area of blockchain technology that will develop the earliest in the health field is within the supply chain. Blockchain will be paired with sensor-enabled Internet of Things technology to increase efficiency in moving medical devices and pharmaceuticals from producers to patients.

There are three major groups within the supply chain: producers, intermediaries, and providers. By producers I am referring to the companies that manufacture pharmaceuticals, medical devices, and other healthcare supplies and equipment. Intermediaries are the distributors and group purchasing organizations that secure products from the producers, negotiate prices, and bring healthcare products to the provider marketplace. And the providers are the hospitals and medical practices that use those products.

The supply chain pain for these players is related to regulatory compliance, product security, product damage or spoilage, and the costs and waste throughout the chain. Producers must control and report on the origin of every component and raw material and then update that information as new vendors are added or removed, which is time-consuming and inefficient.

Furthermore, many pharmaceuticals and medical products require special handling, such as temperature regulation during transport. Shippers have to keep the product within the required range and prove to regulators that they’ve done so. Blockchain can make this far more efficient by simplifying the shipping process and saving time and money.

Blockchain and IoT devices offer many advantages to all companies within the healthcare supply chain, and the technology can transform the way these companies operate by providing a few key benefits:

Reduced costs

Because so many processes are done manually, they’re slow and inefficient. Blockchain eliminates the manual aspect and improves efficiency.

For example, modum.io is a startup that combines the IoT with blockchain by including a sensor device on the package that can regulate temperature, humidity, and shock, along with a smart contract that automatically checks, accepts, or rejects acceptance criteria for a product. The sensor then pairs with a smart device to review time-stamped data and automatically make decisions at each transaction point, making the process faster, smoother, and more cost-effective.

These savings can then be passed on to the customer. Healthcare prices are sky-high, partly as a result of thin margins, and blockchain can help improve those margins.

Confronting ransomware attacks

The WannaCry ransomware attack was a wake-up call for the healthcare industry, but there are still security risks and vulnerabilities in devices besides laptops and desktop computers. Consider, for example, implantable devices such as pacemakers.

Security firm WhiteScope recently discovered more than 8,000 vulnerabilities in pacemakers from four different manufacturers that made it susceptible to hackers. Researchers found that the software used in the devices was outdated and vulnerable, making it possible for hackers to take control of the device and threaten the life of the user. Furthermore, in some cases, researchers found unencrypted user data in pacemakers’ programming, including the patient’s name, Social Security number, and medical information.

With blockchain, there’s enhanced security built in to help prevent hackers from gaining access to information or devices, which is especially important as more hospitals embrace IoT technology.

Reduced risk of fraud

Healthcare fraud is an increasingly prevalent problem. In the first half of 2017 alone, federal healthcare fraud recoveries amounted to more than $2.04 billion.

While some healthcare fraud is the result of criminals intentionally trying to steal money, much of it comes from billing errors, with hospitals either overcharging patients or charging them for services that weren’t performed. Human error contributes to a lot of lost money.

Blockchain-based systems can automate many of these administrative tasks and remove human intermediaries, including payment processing and claim adjudication, which can improve accuracy and reduce costs at the same time.

Blockchain is set to transform the future but currently, it’s at the stage of development that the internet was in 1996 or cloud technology was in 2008. It’s a foundational technology, so in terms of technology adoption patterns, it will take years — and several phases — for blockchain to become the ubiquitous digital data basis of the healthcare value chain.

Within a decade, though, single ripples of transformation will turn into waves, which will quickly become a tsunami of digital change in healthcare. And the innovators will destroy the incumbents who waited too long to embrace it.

Photo: Pixtum, Getty Images


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Sandy Hathaway

Sandy Hathaway is a founding partner of Exit3x and also cofounded technology startups RetentionGrid, which focuses on big data and predictive analytics, and AVARI, involving machine learning and personalization. For the past 20 years, Sandy has worked in strategy, business innovation, go-to-market, and growth roles in the medical device industry, including with U.S. market leader Medtronic and German remote monitoring pioneer BIOTRONIK, and she specializes in working with companies in heavily regulated and deep tech industries.

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