Does Blockchain Tech Have a Future in Health Care?

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By Stephen P. Williams

Proponents of blockchain technology say we’re on the cusp of a revolution in health care. They envision a future where doctors and institutions share medical records easily, and patients control their personal data rather than letting tech companies harvest our data for free and sell it for profit. If the concept of Web3 — a blockchain and cryptocurrency-based internet that grows to naturally displace our current World Wide Web — proves out, it could make their visions reality.

But others in the health care industry, even if they see the need for a revolution, fear that blockchain currently has too many blindspots to be effective. “In my opinion, although I think the impact of blockchain technology will be huge in the health care system in the future, a successful and scaling solution is likely to be years ahead of us,” says Lukas S. Vogel, MD and blockchain expert in Baden-Baden, Germany.

What Is a Blockchain?

Blockchain came into the popular consciousness when it served as the foundation for Bitcoin, the cryptocurrency that was invented in 2008. Ever since, the technology has been misunderstood, both by the cult-like fanatics who believe it is the cure-all for every problem the world faces, and the narrow-minded cranks who say it serves only to support pyramid schemes, gangsters, and tyrants.

Let’s leave these fanatics and cranks to their Twitter wars, and approach blockchain and health care from the middle ground. First, a blockchain primer:

Blockchain is software, it’s as simple as that. This software is a digital version of the old green account books your grandparents might have used to track cents spent and cents earned. Except that instead of just two columns — debit and credit — blockchains (there are many blockchains, with many more to come) have three: debit, credit, and verification. This triple entry accounting system requires no auditors, verifiers, or gatekeepers. Because every transaction is public and immutable, no one can change the data without triggering alarms throughout the system. Once a transaction is registered on a blockchain, that fact remains there forever. It is associated with a specific blockchain address, but those addresses can remain anonymous.The actual data — such as written documents, videos, or test results — are stored “off chain,” in data banks, because blockchains are designed to record ownership, rather than store data.

No one owns these public blockchains; one innovation is that they are controlled by participants in the chain. Private, or enterprise, blockchains are owned by consortiums or companies, such as IBM, and they are more centralized.

To use public and private blockchains creatively, companies build apps (called dApps in blockchain lingo). The dApps generally track ownership of digital property, such as cryptocurrency tokens or health records.

 

Health Care Companies’ Interest in Blockchain

At the moment, a number of health care companies, including IBM, SAP, Centers for Disease Control and Prevention, Patientory, and Nebula Genomics are using enterprise blockchains for focused tasks such as:

  • Verification of credentials
  • Sharing medical records
  • Tracking costs and payments
  • Tracking organs and transplants
  • Following the pharmaceutical supply chain

According to some industry experts, it’s possible (though not guaranteed) that some very useful applications will become widely used in the next 5 years. There’s a big push to give patients and doctors sovereign ID’s, so that they can control their identity, reputation, records, and other data. Right now, we medical consumers give our data away.

“Now, the records are owned by the hospital or other corporation, which can sell the data — you still have to ask for permission to access your own data,” says Jose Morey, the North Carolina-based chief medical officer for a medical technology company.

Giving patients control over their own data won’t be an easy task. Even putting aside technical issues, it would require a huge amount of cooperation between companies that don’t have much of an incentive to cooperate. “It’s very hard to solve the health care problems,” says John Bass, founder and CEO of Hash Health, a Nashville-based venture studio that’s building new digital health startups. “That takes enterprises that are willing to work together. It takes new management techniques. It takes systems change.”

 

The Challenges of Blockchain for Health Care

Widespread adoption for this technology won’t be easy, and it might even be harmful. Here are the most important potential drawbacks:

Cryptocurrency

A cryptocurrency is a digital coin, such as Bitcoin, that’s tracked and certified by a blockchain. There are no actual physical coins. Rather, the digital coins are stored, as lines of code, in digital wallets that can only be unlocked on your computer or device with a private digital key. Bitcoin and ether are the two most used cryptocurrencies. The worth of each is highly volatile, rising or dropping in value by thousands of percent in a year.

Many business innovators, including in health care, believe that crypto coins could be used to incentivize behaviors — in health care, perhaps, you’d receive the hospital’s branded cryptocurrency if you showed that you exercised three times a week, as your doctor instructed. This concept is not far-fetched or technically difficult, though no hospitals are yet using it.

“There are regulatory questions around the normal crypto stuff, outside of health care. The coins that would be used in health care are even more complex without having to worry about that,” Bass says.

Web3 believers would like to incentivize patients to be healthy, share their records, and do other things by paying them with cryptocurrency. But there’s a good chance that speculators would enter that ecosystem and possibly manipulate the value of the coins. Plus, the IRS and the SEC have not yet settled on specific rules about coins, tokens, and NFTs. There is a real risk that new regulations will severely hamper companies’ ability to use these incentives.

NFTs

Nonfungible tokens, or NFTs, are similar to crypto coins, except that each NFT is one of a kind. So far, NFTs have been used as art objects: you buy a token that says you own a picture, and the investment can appreciate just like an actual picture (Except you can’t hang it in your house).

But the tokens can serve well to register permanent records of your identity, medical records, and other health care data. The information is sharable, as you wish. You could own the NFT that has all of your exercise data, for instance, and use it to share relevant information with your physical therapist, or sell your data to a research company. The biggest problem now is that acquiring and storing NFTs requires some technical skills, and the user experience right now is too cumbersome to onboard a lot of people.

Security

Blockchains are nearly impossible to hack. The Bitcoin blockchain has never been hacked, and the Ethereum chain was only hacked once, soon after its inception. Given its current size, it’s extremely unlikely that it could happen again. However, the dApps built on top of blockchains to manage data, IP, ID, and other functions are sometimes vulnerable to sophisticated hacking. And when, if ever, quantum computing becomes common, that technology will be powerful enough to crack the cryptologic codes on blockchains.

Until that time, users are quite susceptible to hackers running phishing schemes. While blockchains themselves can’t be hacked, people can be tricked into surrendering the secret phrase that gives them access to their private wallets. Sharing those phrases is like sharing the code to your secure vault. Once someone has that, they can steal any coins or NFTs in your digital wallet, and also steal your health records and other info. Given the nature of the technology, the thefts would be registered immutably on the blockchain. But since blockchains are amoral, the blockchain wouldn’t do anything about it.

Distributed Autonomous Organizations (DAOs)

DAOs are groups of people organized on the blockchain who use cryptocurrency as a funding mechanism, and make most big decisions by voting. They have no central leader or authority. These organizations with minimal hierarchy have only been around for a decade or so, but recently DAO’s have exploded in popularity among startups in all sectors. Some health care innovators now are interested in funding their ventures with DAOs, or organizing patients with rare diseases to raise funds to research medicines for their disease. This is important because many less common treatments and illnesses are not of interest to venture capitalists and others who want giant returns from huge products. Yet most everyone is waiting until DAOs are less risky, and easier to explain to stakeholders. No one has really nailed the user experience of DAO’s yet. They are like 1970s communes, but with lots of money and a focus on business. They communicate through chat rooms in an online platform called Discord.

“The Discord servers are pure chaos,” Bass says. “Asking a health care provider to join Discord would be sort of a joke.”

Cross Chain Portability

While there are dApps that help transmit data from one chain to another, the level of interoperability between chains that would be necessary for transforming the American health system simply doesn’t yet exist. For example, it’s important that a hospital that uses one chain be able to share data with a doctor who uses another. At the moment, that is sometimes difficult. The health care system will not be unified until this is more possible.

Credentialing

Blockchain seems to offer the perfect solution to a credentialing, which is a common health care problem. Every physician has a relationship with four or five health systems and payers. Each of those businesses must certify that the physician is who she says she is. This process now is mostly analog and can take months, and has to be reconfirmed every 2 years. No hospital shares this data, so each hospital has to do it for themselves. This is a perfect use case for the efficiencies of blockchain, and some companies are working on it. In the meantime, companies pay millions of dollars for more traditional certification services every year.

A good way to store a doctor’s credentials would be on NFTs stored in digital wallets. But that might be too technologically challenging for today’s doctors because of the technical savvy required.

“If you created a self sovereign wallet for a physician right now they wouldn’t know what to do with it,” Bass says.

The Environment

Many knowledgeable people are concerned about the amount of energy the computers of two of the largest chains, Bitcoin and Ethereum, use to verify and secure “blocks” of data on the chain. This is currently a very real issue. However, Bitcoin participants are increasingly switching to using renewable energy, because it’s cheaper and sustainable. And Ethereum is expected to start using a different blockchain technology, called proof of stake, this year, which will reduce its electricity usage by more than 90%. There are a number of other chains, both public and private, that already use this low energy method of certifying data.

It seems certain that blockchain is going to have an impact on health care. The technology might even lead to a revolution in health care, where data is private and charges are billed transparently. Where organ transplants run smoothly and equitably, and payment friction is reduced. It’s all possible, but the technology definitely has to leap some hurdles before it can happen for real.

Editor’s Note: Stephen P. Williams is a co-founder of Evertunes Studio, which builds coins and NFTs for art and money games. In his spare time he collects and sells fine-art NFTs, using ether and other currencies.

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