Blockchain-Based Healthcare & The Challenge of Understanding the Nuances of New Markets

Experts at Consensus envision a future of decentralized healthcare, even in systems with an anti-transparency bias.

Healthcare is one of America’s most controversial, convoluted and opaque industries. And while blockchain technology can help temper and revamp some of the worst aspects of the status quo, those benefiting most from the current state of things will be resistant to changes in the direction of more transparency and accountability.

Blockchain has been touted as a silver bullet across a number of radically different industries. But no matter the market, it’s important to consider those who are currently profiting off the very things blockchain promises to change or make redundant, according to panelists at this week’s Coindesk’s Consensus conference in New York City. Providing new and creative incentives to these groups will be crucial to the future adoption and mainstreaming of blockchain.

Consider contract structures within the existing healthcare system. These are complex and multiparty, which can result in “tremendous friction,” said Corey Todaro, CTO at Hashed Health. “On a transactional basis, the physician gets paid in 60-90 days and 14 cents out of every dollar is spent on processing that payment and managing claims.”

What makes healthcare unique from other U.S. industries is an intra-party dynamic that complicates the alignment of incentives, according to Todaro, who likened it to “six people with knives in a dark closet.”

“We have to understand the politics in healthcare between pharma, providers and the innumerable other players who currently make things work in a way that benefits them,” said Todaro. “Change is difficult in healthcare because of this triangulation.”

In non-U.S. healthcare markets, understanding existing cultural norms and how they differ between jurisdictions before launching blockchain projects (or even imagining use cases) is equally important.

For example, in a developing country, the inefficiencies in our system may be irrelevant. 

“There’s stigma attached to certain diseases in Africa,” explained Vinny Lingham, CEO and co-founder at Civic. In some communities, “they’re not informed and they do not seek healthcare.” These markets could benefit from blockchain-based automated vending machines where people can get treatments privately without having a human ever look at the data, he said. 

The issue of privacy is inextricable from conversations about the healthcare industry, whether it’s protecting your identity and data in a third world country, or abiding by HIPAA laws in the US. This is further complicated by the fact that blockchain has proved fertile ground for hackers. Todaro believes some of these privacy concerns are overblown, however, and arise from a lack of understanding of the technology’s potential.

“Just don’t share the entire ledger,” he said. “Point-to-point architecture is enough for trust between counterparties transacting with highly sensitive information. It can be integrated without sharing it with everybody — it doesn’t broadcast the transaction.” 

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