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Healthcare and Blockchain Technology (Part 1)

By: | Tags: , , , , , | Comments: 0 | August 23rd, 2018

In this new blog series, we are going to approach a subject we have hesitated to delve into.  First, it is very complicated, and second it is very controversial – Blockchain Technology (BTC).  The reason for the controversy is that it is the base technology used, in fact developed, for cryptocurrencies.  Yes, those like Bitcoins, and later Litecoin, Ethereum, Ripple and the likes.

If you are in any business ranging from finance to shipping, inventory and supply chain management, to government documents and healthcare, you cannot avoid reading or hearing how businesses could be impacted using Blockchain in the near future.

My personal and business relationships have opinions all over the road on cryptocurrencies.  Some think this is the biggest bubble since the Tulip bubble in Holland in 1936-1937; others believe it will cause the end of the (currently issued) fiat currency offered by central banks.

I have been reading and discussing the subject of Blockchain for the past two years.  Some think that it will transform healthcare by connecting all devices and putting the personal health record (PHR) on the internet via a blockchain; however, I think we are far from anything quite that bold.  First, let’s explain what is a blockchain.

Blockchain Technology was invented in 2008 however, it only came into the public conversation when Bitcoin launched.  Blockchain is the common short title for the underlying base technology plan.  It is Distributive Ledger Technology (DLT), which is quite simply a technology platform that allows digital information to be distributed, not copied.  This means, each individual piece of data can only have one owner however, it can exist in many locations.  This ingenious process then provides a true safety net in that any change to any individual block in the blockchain flags an error and invalidates the chain until it is resolved.

Blockchain was invented by Satoshi Nakamoto (probably a pseudonym) in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin.  The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server.  The bitcoin design has inspired an array of other applications.

You may hear it described as a “digital ledger” stored in a distributed network.  Blockgeeks has a good analogy to help understand how Blockchain works:

“Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.”


The information in the “ledger” or “spreadsheet” is constantly reconciled into the database, which is stored in multiple locations and updated instantly.  That means the records are public and verifiable.  Since there’s no central location, it is harder to hack since the info exists simultaneously in millions of places.

A block is a record of a new transaction.  When a block is completed, it’s validated and then added to the chain.

For example, Bitcoin owners have a private password (a complex key) to an address on the chain, which is where their ownership is recorded.  Cryptocurrency proponents like the distributed storage without a middle man — you don’t need a bank to verify the transfer of money or take a cut of the transaction.

William Mougayar, author of The Business Blockchain, described it this way:

“Imagine two entities (e.g., banks) that need to update their own user account balances when there is a request to transfer money from one customer to another. They need to spend a tremendous (and costly) amount of time and effort for coordination, synchronization, messaging and checking to ensure that each transaction happens exactly as it should. Typically, the money being transferred is held by the originator until it can be confirmed that it was received by the recipient. With the blockchain, a single ledger of transaction entries that both parties have access to can simplify the coordination and validation efforts because there is always a single version of records, not two disparate databases.”

As each transaction occurs – and the parties agree to its details – it’s encoded into a block of digital data and uniquely signed or identified.  Each block is connected to the one before and after it — creating an irreversible, immutable and unduplicatable chain.  Blocks are chained together, preventing any block from being altered or a block being inserted between two existing blocks.

Now that we have that out of the way, we will discuss healthcare opportunities with Blockchain Technology.  I will give you a short preview.  We are convinced that there will be valuable solutions in Blockchain for healthcare.  However, there will be a warning, Blockchain will likely not solve the basic underlying problems of healthcare.  Over the last six months, I’ve been in conversations with innovators and entrepreneurs that believe that patients and providers will use Blockchain Technology to fully interact, and even pay for services.  They believe that many applications, that are today paper or electronic, will be using the blockchain.  Some think that prescriptions and even provider credentialing will be in the blockchain.  Many tech companies are exploring with payors and/or hospitals to use Blockchain.

The reality is that Blockchain is not the solution for everything.  Some things in healthcare are working well and can be improved under current technology.  The one problem with Blockchain Technology in healthcare is that no specific entity owns it really, so if something were to go wrong, there is no one to hold accountable and this is a big problem for regulatory agencies such as the SEC for instance.

Here is one clear example – we have a built and certified an EHR in the U.S. today, based on current regulations; however, you cannot get a Blockchain EHR certified in the U.S., period.  That does not mean there are not real opportunities in healthcare for the blockchain and even for a Personal Wellness Blockchain Record.™  In our next blog, we will discuss the natural potential uses for Blockchain Technology in healthcare.  The headline is that Blockchain has legitimate value in healthcare, and over time, as we become more experienced with the internet, it is likely that we will see many applications and uses, some we can foresee and others are over the horizon.

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