I. Abstract

Blockchain is the buzzword that is getting more and more attention throughout many industries in the world. The distributed ledger technology promises to overcome current shortcomings in the healthcare industry, which is mainly characterized by different infrastructures for data storage and inefficient structures. Due to its decentralized, immutable and transparent transactions, blockchain provides interoperable, accessible and secure data for healthcare providers. Thus, the quality of care for patients could be improved by enabling and simplifying interoperability and data sharing processes amongst hospitals and doctors, as well as for medical research. Moreover, the blockchain technology enhances the traceability throughout the drug supply chain, which prevents fraud and abuse in the pharmaceutical sector. Regarding the field of clinical trials, which is known for its high chance of data manipulation, blockchain provides absolute data protection and transparency across all parties. Since the elimination of intermediaries by using smart contracts leads to reduced administrative tasks and costs, claims and patient billing processes get less complex and more efficient.

There are several start-ups who are already offering blockchain-based solutions for the healthcare sector, which also demonstrate the potential for innovation and disruption. Based on the analysis of the value creation with blockchain in healthcare, it is to say that the technology provides efficiency, transparency and security. Nevertheless, the industry calls for further development, research and use cases of the distributed ledger technology.

Keywords: blockchain, blockchain technology, healthcare, value creation, disruption

II. Introduction

Whether financial or non-financial businesses, blockchain is the disrupting technology in many industries worldwide. In healthcare in particular, the blockchain technology has a massive opportunity to fundamentally change the entire industry. The global blockchain in healthcare market value is expected to hit more than 1.7 billion U.S. dollars by the year 2026 at an annual growth rate of 48.1% (Acumen Research and Consulting, 2019). These figures clearly illustrate the rising potential of blockchain in the healthcare industry.

Blockchain is a technology that stores information about records, transactions and digital events in a decentralized network and shares it between participating parties, who all validate the transactions by reaching a consensus. One main characteristic of the blockchain compared to other technologies is that the registry is not stored in one place (Arslanian & Fischer, 2019; Crosby, Pattanayak, Verma, & Kalyanaraman, 2016). It is a public ledger, which lists all transactions that have been executed, whereby each transaction is immutable and time-stamped. The data in the blockchain is described as chain or blocks, linked together by a hash and updated continually (Crosby et al., 2016). The distributed ledger technology (DLT), based on a peer-to-peer network, provides a high level of security, transparency and the elimination of an intermediary. In fact, blockchain is a type of DLT and is considered as subcategory (Arslanian & Fischer, 2019). To simplify, the terms ‘blockchain’ and ‘distributed ledger technology’ have the same meaning in this paper. Through smart contracts, it is possible to interact with the blockchain programmatically to support on-chain storage (Zhang, Walker, White, Schmidt, & Lenz, 2017).

All the features of the blockchain technology result in new business models and use cases. In this context, blockchain could save time, remove costs, reduce risks and increase trust. This paper presents the value creation with the blockchain technology for the healthcare sector based on a literature review. Starting with current challenges the healthcare industry is facing, the paper subsequently explains potential solutions and benefits due to the key characteristics of blockchain for the following application areas: (1) medical records, (2) drug supply chain, (3) clinical trials and (4) claims and patient billing. Furthermore, existing start-ups should give a brief insight of the current activities in the market and show who is already working on disruption.

III. Challenges in the healthcare sector

The healthcare sector is one of the largest and fastest-growing industries in the world, driven by growing health costs, rising patients’ life expectancies, developing consumer demands and complex health ecosystems (Allen, 2019). Despite being is such an important industry, it is at the same time slowly adopting new technologies (Christodoulakis, Asgarian, & Easterbrook, 2017). Hospitals and doctors work to a certain extent with outdated technologies and processes. To name one, medical records are still filled out on paper. Over the course of a patient’s life span, their file becomes longer and more complex. The issue arises, when a doctor needs to take several preliminary tests, whilst those have already been conducted from another doctor or hospital. Thus, it is not only time consuming and costly to do the same tests again, but also inefficient because there is no automatic and easy way to get access to the patient’s data from another instance (Chen, Ding, Xu, Zheng, & Yang, 2019).

The problem is that healthcare providers search, share and retrieve patient data differently. The missing interoperability of data between various entities in the healthcare system leads to information blocking due to existing policies and different processes amongst providers (Gordon & Catalini, 2018). In addition, violation of privacy for individually identifiable health information is a concern regarding HIPPA (Health Insurance Portability and Accountability Act of 1996), specifying health and genetic data as Protected Health Information (PHI) (Ahram, Sargolzaei, Sargolzaei, Daniels, & Amaba, 2017).

Furthermore, another challenge in the healthcare system is the correct matching of patients to their medical records from multiple providers because of incomplete or incorrect data as well as identical patients’ names (Regenstrief Institute, 2017). Unique patients’ identities would solve identifying problems between hospitals and doctors and therefore improve processes and data interoperability (Gordon & Catalini, 2018).

In addition, the inefficiency in the healthcare sector is caused by wasteful spending. High costs through administrative fees, medical tests, ineffective treatments and missed prevention opportunities are outcomes of bad communication between doctors and hospitals (Dattani, 2019). According to McKinsey, the healthcare system is losing about 300 billion U.S. dollars each year due to poor data integration (Raghupathi & Raghupathi, 2014).

Regarding the drug supply chain, several shortcomings like fraud, abuse and pilferage demand for a holistic solution, providing absolute safety at every stage of the supply chain, preventing counterfeit and ensuring quality (Rabah, 2017).
Fraud and abuse are also critical issues in clinical trials, speaking of data manipulation and scientists who withhold information which causes obstruction in medical research (Nugent, Upton, & Cimpoesu, 2016).

Shortcomings in the healthcare sector

• Medical records on paper
• Limited access to patient data
• Inefficiency through different infrastructures and standards of healthcare providers
• Lack of interoperability of health information and unique patient identities
• High costs and wasteful spending
• Fraud and abuse

The shortcomings mentioned above show that the healthcare sector requires changes to develop new structures as well as to adopt innovative processes. These should help to effectively meet the patients’ needs but also to facilitate the daily work of healthcare providers. With the use of blockchain, it is possible to disrupt outdated technologies in order to make healthcare more efficient, transparent and secure.

IV. Value creation with blockchain in healthcare

Due to the increasing demand for cost-effective, time-effective and preventive healthcare, fundamental changes in the current healthcare system are indispensable (Christodoulakis et al., 2017).

The key features of the blockchain technology are decentralization, transparency and immutability (Arslanian & Fischer, 2019). Based on these characteristics, the following section presents different application areas of the healthcare industry, where blockchain could create value.

This paper focuses on four major application areas in the healthcare sector, namely (1) medical records, (2) drug supply chain, (3) clinical traits as well as (4) claims and billing. The reason for this limitation is the scope for this paper. The selected fields are considered as most important regarding the potential of value creation with blockchain (Dattani, 2019; Rabah, 2017; Zhang, Schmidt, White, & Lenz, 2018).

Medical records

Electronic medical records are very important for the modern healthcare system. Since hospitals and doctors have different systems of data storage, it is not easy for physicians to obtain all of the required data (Ahram et al., 2017). There is no existing system where the medical history of a patient is securely and uniformly stored and accessible for all healthcare providers (Ahram et al., 2017).

The distributed ledger technology could be applied so that the patients’ records are stored on the blockchain. The information will be saved on a virtual cryptographic database without incompatibility problems, which provides access to the data for patients and doctors at the same time (Rabah, 2017). Giving authority for their entire health records, patients can decide who has access to it. This patient-centered system has also the huge advantage, that the data can’t be modified or deleted, as well as it brings data security and trust to the system (Zhang et al., 2017).

For example, a smart contract between a doctor and patient can give permission to access the data, so that the doctor is able to automatically see the results of previous medical examinations. Furthermore, it is possible to query the data without revealing patient identity in order to prevent privacy violation (Ahram et al., 2017). In addition, the decentralized characteristics of blockchain can serve as patient identification system to solve the digital identity problem in the healthcare sector (Zhang et al., 2018).

There are several start-ups disrupting the healthcare industry with blockchain-based patient data management. Patientory Inc. and Medicalchain both provide secure control and management of medical data and the possibility for patients and healthcare providers to transfer information safely (Medicalchain, 2018; Patientory Inc., 2018).

To sum it up, the blockchain technology could generate value for the healthcare sector in the field of medical records by providing interoperability, accessibility, data security and therefore efficiency.

Drug Supply Chain

When it comes to drug supply chain, the pharma industry has high standards for drug safety and stability. Nevertheless, the industry is attacked by counterfeit and theft, which results in health risks and financial losses (Li, Nelson, Malin, & Chen, 2019; Rabah, 2017). The tracking of drug origin has never been more important. Not only to overcome counterfeit, but also to control manufacturing mistakes and complex supply chain processes, which can impact the quality of drugs due to the neglect of standards, human mistakes, time delays or poor shipping conditions (Rabah, 2017; Schöner, Kourouklis, Sandner, Gonzalez, & Förster, 2017). With the blockchain technology, it is possible to ensure the immutability of data for every product, which ensures trust and drug security. Furthermore, the blockchain-based solution tracks every step throughout the drug supply chain and facilitates the identification of any stakeholder in order to guarantee drug quality (Schöner et al., 2017). These improvements would save monitoring costs and human resources. Additionally, smart contracts can determine rules to all parties involved in the supply chain to make trade transparent (Schöner et al., 2017).

Some start-ups already work with the blockchain technology to solve drug-related supply chain issues. MediLedger, for example, is an open and decentralized network for pharmaceutical supply chain. They offer immutable records, drug authenticity, trusted service partners and data protection (MediLedger, 2019). Besides, start-ups Chronicled and Modum are pioneers for blockchain-based logistic solutions (Chronicled, 2019; Modum,2020 ).

The values created by the blockchain technology for the drug supply chain are given through its immutable, time-stamped and forgery-proof ledger. The benefits are traceability, reduced counterfeit and accountability.

Clinical Trials

Clinical trials include several stages, starting with initial human volunteers testing and ending with the approval phase through regulatory authorities. The entire process may take up to 15 years, requiring quite an investment by pharmaceutical companies to fund clinical trials (Schöner et al., 2017).
A huge amount of data is generated, consisting of reports, patient information, statistics, surveys and many other elements. Clinical trials are often victims of fraud and data manipulation, many times by the contracting company itself, in order to get the desired results (Nugent et al., 2016). Due to the large amount of manipulated findings, clinical trial data is losing credibility.

A blockchain-based solution provides data integrity which eliminates data manipulation (Zhang et al., 2018). The blockchain is used as a proof of existence of documents, and by extending this method with smart contracts whose execution is cryptographically validated by the network, it eliminates data manipulation (Nugent et al., 2016).
Trials are complex and also need a lot of time and money. However, researcher often fail to share their results which leads to knowledge gaps, safety issues for patients and waste of money and time (Rabah, 2017). With the distributed ledger technology, which provides time-stamped, immutable records of clinical protocols and results, the loss of valuable and sensitive data can be prevented.

According to the Healthcare Information and Management Systems Society Inc. (HIMSS) (2020), recruiting and retention of research participants for clinical trials are big challenges. Referring to clinical data sharing and health data monetization, both parties, healthcare organizations and research participants, could benefit through the application of blockchain: On the one hand, healthcare organizations could get access to clinical data relevant to the treatment and care of patients, which accelerates the improvement of therapies. On the other hand, patients could get access to their own data in order to share their genomic data securely for research. In addition, it could encourage patients to participate in clinical trials. Besides, blockchain promises personal health data monetization e.g. in the form of cryptocurrencies, which allows participants to get an appropriate reward.

Encrypgen is an example for a DNA data marketplace, where DNA data can be sold to researchers and pharmaceutical labs to help finding better treatments for diseases (Encrypgen, 2018). Regarding data manipulation, the TrialChain blockchain-based platform aims to validate data integrity from biomedical research studies (Dai et al., 2018).

In summary, blockchain provides data protection as well as secure data sharing without a middleman. It prevents data manipulation due to time stamps, immutable clinical trial data and network validation.

Claims and Billing

The existing claims adjudication and patient billing processes are very complex and often attacked by fraudulent activities. Health insurances are known for its fraud regarding medical claims. Moreover, hospitals often charge for medical services inappropriately or even unnecessarily in order to make profit, ignoring the patients interests (Zhang et al., 2018).
Furthermore, the complexity of verification processes, involving a huge time effort and intermediaries, demands for a solution which simplifies claims adjudication and billing (Rabah, 2017). Introducing the blockchain technology could help to overcome the shortcomings in these processes.
With smart contracts, the intermediaries will be removed, and the adjudication process will be automated in order to make claims transparent and expose potential errors. In addition, it ensures that all entities know about existing policies and rules, and also get notified if they change (Zhang et al., 2018).

iXLedger, for example, offers a blockchain solution in the insurance sector, promising increased trust, efficiency and transparency. They aim to reduce intermediaries and inefficient processes in order to reduce costs (Crunchbase, 2020).

The blockchain provides time and cost saving through the elimination of intermediaries and the reduction of administrative tasks. Due to the automation of claims, the processes speed up and get less vulnerable.

V. Conclusion

The blockchain technology provides multiple benefits for the healthcare sector. The key characteristics of blockchain are transparency, decentralization and immutability, which lead to different use cases in the healthcare industry. One main reason, why blockchain has a huge potential to disrupt healthcare is the patient-centered approach, enabling patients to allow access to their own medical data. Since the data can’t be modified or deleted on the blockchain, it provides trust and security. Furthermore, the interoperability of data improves the daily work in hospitals and doctors’ offices as well as it makes healthcare processes more efficient. The blockchain technology prevents fraud and abuse regarding drug supply chain, which ensures the quality of drugs and what’s more, patients’ lives will be saved.

There is already a lot of activity in the market; interesting concepts and business ideas demonstrate how multifaceted the blockchain technology is regarding its application in healthcare. Nevertheless, the industry demands for more use cases, research and development of the distributed ledger technology, in order to transform ideas and start-ups to integrated systems.

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