Can Blockchain Revolutionize the Health Care Industry?

When 200 healthcare executives were surveyed, 16% expected to have a commercial blockchain solution this year

Ramy Caspi
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The blockchain revolution has the potential to transform our lives. By enabling organizations and institutions to transact with less friction and more trust, blockchain technologies will usher in the next era of the Internet. When 200 healthcare executives were surveyed, 16 percent said they expect to have a commercial blockchain solution at scale sometime this year.

Healthcare is a highly regulated and complex business, which makes identifying viable solutions challenging. Moreover, insurance companies and other industry players often pursue their own interests to the detriment of the individual patient. The average, everyday consumer therefore has little or no sway in terms of personal accountability or "skin in the game" in regard to managing their own health.

While blockchain is being considered for many uses, its potential to revolutionize healthcare is evident. Having an open blockchain for medical data can prove useful as most healthcare data now is segregated amongst different providers, who often use different database systems.

Current healthcare record systems are a mess of disconnected databases. Medical history is fragmented and siloed, preventing doctors and patients from building a complete record of health. Records are often spread across different facilities and providers in incompatible databases. The vast majority of hospital systems still cannot easily (or safely) share their data. One of the big problems with the current system is knowing whether the information that has been shared is accurate and that it has not been tampered with.

Lets take the city of Boston, where there are 26 different systems used for electronic medical records. Each system has its own “language” and crucial information is often scattered and inaccessible, which is very dangerous in an industry where even a few extra seconds or minutes to obtain critical information could be the difference between life or death for a patient.

Interoperability issues continue to be a chief concern throughout the health industry. The lack of interoperability leads to high costs. But it also makes these systems loaded with private patient information very vulnerable for security breaches, fraud etc. Medcare fraud is estimated to have cost around $30 billion in the past 20 years.

By having blockchain systems built for healthcare, important healthcare-related data can be more easily accessible amongst healthcare providers, which can lead to better and faster treatment.

At the beginning of 2017, a number of healthcare, blockchain and business professionals – researchers and physicians at the top of their fields – came together with an interesting idea. They knew, already, that lots of data was being collected. Patient records have been stored digitally by doctors for years, and a wealth of data, including medical research and information on patient outcomes, has already been gathered. This group of physicians realized right away that this data can be stored on distributed ledgers – on the blockchain – to keep it secure, but also accessible in such a way so as to make medical care more effective. This data, that has already been collected, and continues to be collected, could be processed using artificial intelligence algorithms, machine learning, and neural networks.

However, the key players for blockchain adoption will be regulators, industry groups and market makers. Managing and securing data within healthcare and supply chain management are two great examples of principal concepts influencing and being impacted by possible blockchain adoption.

  1. Healthcare: Better data sharing between healthcare providers means a higher probability of accurate diagnoses, more effective treatments, and the overall increased ability of healthcare organizations to deliver cost-effective care. Blockchain technology can allow various stakeholders in the healthcare value-chain to share access to their networks without compromising data security and integrity, by allowing them to track data provenance as well as any changes made.
  2. Supply Chain Management: One of the most universally applicable aspects of blockchain technology is that it enables more secure and transparent monitoring of transactions. With blockchain, the transactions can be documented in a permanent decentralized record — reducing time delays, added costs and human errors.

What is blockchain and how can it provide opportunities for health care?

A blockchain powered health information exchange could unlock the true value of interoperability. Blockchain-based systems have the potential to reduce or eliminate the friction and costs of current intermediaries.

The promise of blockchain has widespread implications for stakeholders in the health care ecosystem. Capitalizing on this technology has the potential to connect fragmented systems to generate insights and to better assess the value of care. In the long-term, a nationwide blockchain network for electronic medical records may improve efficiencies and support better health outcomes for patients.

Blockchain is a distributed system for recording and storing transaction records. More specifically, blockchain is a shared, immutable record of peer-to-peer transactions built from linked transaction blocks and stored in a digital ledger. Blockchain relies on established cryptographic techniques to allow each participant in a network to interact (e.g. store, exchange, and view information), without preexisting trust between the parties. In a blockchain system, there is no central authority; instead, transaction records are stored and distributed across all network participants. Interactions with the blockchain become known to all participants and require verification by the network before information is added, enabling trustless collaboration between network participants while recording an immutable audit trail of all interactions. Which gives it unprecedented security benefits. Hacking one block in the chain is impossible without simultaneously hacking every other block in the chain’s chronology.

This makes blockchain incredibly appealing to the doctors and hospitals that need secure access to a patient’s entire health history.

Image Source - Deloittes

The Value Proposition:

  • By decentralising this data, and securely encrypting it, we avoid single points of failure.
  • By making the data broadcasting permission-less, anyone can contribute to the democracy.
  • By demanding consensus, we create the most probable version of the truth.
  • By timestamping, we ensure a fully transparent, auditable chain of events.
  • By cryptographic hashing and crypto-economics, we make the record censorship free and incentivise good behaviour.

Application examples for blockchain technology in the healthcare sector:

  • Digital, encrypted storage of patient records
  • Protection against drug counterfeiting
  • Interception-proof communication between doctor and patient or between professionals
  • Digital prescriptions for drugs
  • Central, uniform and secure storage of patient data
  • Securing the Health Cloud

Secure storage of data

There are two issues when using blockchain as a secure storage of health data:

  1. Inefficiency – Blockchain is a network of thousands of nodes and a piece of information added to the blockchain is stored on each and every single node of the network, replicating it thousands of times. This makes storage incredibly expensive and inefficient. To prevent data loss, replicating it a few times is enough and we do not need blockchain to do this.
  2. Openness – All data stored on the blockchain is publicly accessible. We do not want to or are legally allowed to make personal health data available to everyone. Often a proposed solution for this is to encrypt the data before storing it on blockchain. That is a dangerous proposition as we must keep in mind that while blockchain is eternal, encryption is not. Encryption that cannot be cracked today, could be cracked in the future, especially when quantum computing becomes a reality, making all that information wide open for everyone to see.

Public or private blockchain?

There is the issue, what kind of blockchain is applicable for healthcare: a public or private one? On public or permissionless blockchains, all parties can view all records. Given the privacy that is not the most suited solution. Under private or permissioned blockchains access can be gained only by those who have been granted access. Privacy can be maintained by agreement about which parties can view which transactions – and where desired, by masking the identity of the party.

Because the healthcare industry is subject to unique patient privacy and security regulations, identity management is a critical competency for any provider organization looking to use data for clinical or operational improvements. In private blockchains organized around an individual patient, that patient may be given the ability to authorize all data sharing transactions, making it easier for him or her to manage where data is going and who has access to sensitive information.


Shifting profit pools: Healthcare organizations aren’t just moving faster to market than many expected; they’re investing broadly. By 2018, nine of ten healthcare organizations plan to finance blockchain applications in each of the areas IBM surveyed.

Blockchain is a potential game-changer for business; however, there is no clear and easy route to adoption.

While traditional models of infrastructure have worked to bring the healthcare industry to where it is today, many analysts see these systems as expensive, outdated, and susceptible to failure. Old technology systems that are put to the test by increasing amounts of data and stringent industry standards have not served to improve patient care, the argument goes.

Consulting firm Deloitte believes that ‘Blockchain technology has the potential to transform health care’, placing the patient at the center of the health care ecosystem and increasing the security, privacy, and interoperability of health data. This technology could provide a new model for health information exchanges (HIE) by making electronic medical records more efficient, disintermediated, and secure.

There are still several challenges, including a lack of common technical standards, transaction speeds, verification processes and data limits, which are still being resolved. In a sensitive industry like healthcare, government and regulatory approval is a must to ensure legal clarity.

Despite these challenges, the intrinsic properties of blockchain technology — such as interoperability, data security and authenticity — can help in tackling some of the major problems in healthcare.

While it is not a panacea, this new, rapidly evolving field provides fertile ground for experimentation, investment, and proof-of-concept testing.