by John Murray Research Director
View the the full panel discussion here.
The opportunities and challenges for deploying and expanding the use of digital assets in healthcare was the topic of one panel session in a recent Global Investor Conference.
Of particular interest were issues like how the current global health situation is opening surprising new doors to digitally-enabled healthcare, and how important health information can be better utilized and securely shared among doctors and patients.
At first glance, the introduction of sophisticated fintech systems in the healthcare domain would seem to be a valuable way to streamline payments and improve efficiency on the financial operations activity within this industry sector. In theory, the fractured structure of the United States healthcare system should encourage the use of distributed ledger technology (DLT) to manage the myriad of transactions within and across provider networks, which occur between hospitals, physicians, medical centers, and insurance entities. In addition, the fact that the system is heavily contract-bound, has significant privacy restrictions, and lacks financial transparency should make it a good candidate for introducing smart contracts and payment-handling operations.
However, as one of the GIC panelists noted, 30–40% of US healthcare funds are spent on financial intermediaries like billing consolidators, payment aggregators, etc. And a further 10–25% is expended on the financial operations within hospitals, clinics, and medical practices. As a result, there will be strong institutional opposition from these incumbents to change the situation. So the very nature of the payments system, which should actually promote DLT adoption, is ironically also a core impediment to its deployment.
An alternate approach for introducing digital assets may be electronic record portability, which enables individuals to transition their personal records reliably and safely among health providers, or at least keep track of where their record has been, both internationally and within the US borders. Blockchains and tokenization also enable payer contract transparency, so that a person could seamlessly transition their benefits from one employer to another, or from one healthcare system to another.
The Covid-19 pandemic has added fresh urgency on the need for much better portability for medical credentials, which would enable clinical and pharmacy professionals to work across state borders and countries. This was one area of focus for the Blockchain Trust Accelerator, a US government-industry partnership program that was initiated during the Obama administration, although interest in it seems to have languished in recent years.
On the other hand, the US Dept of Health and Human Services (DHHS) has been pressing ahead with initiatives to deploy shared ledger technology in other operational areas like health data management, distributed contract handling, and medical device approval processes. DHHS has under its purview numerous US health service administrative arms, like Medicare and the Centers for Disease Control, as well as major research and development agencies like the Food and Drug Administration and the National Institutes of Health. This places the DHHS in a significant position to influence the widespread adoption of digital assets systems across the healthcare field.
The Covid-19 pandemic has also brought into focus the need for sophisticated sharing of pharmaceutical sourcing and tracking information, so that manufacturing, logistics management, and distribution supply chains can be provably validated. In 2019, the US FDA funded a series of pilot programs under the Drug Supply Chain Security Act (DSCSA), which were tasked with exploring opportunities to address these challenges. The interim results from twelve pilots, which were published in July 2020, included four innovative applications of blockchain technologies. Among these were several data interoperability projects involving teams from UCLA, Merck, Walmart, CardinalHealth, and IBM.
As a result of the Covid-19 pandemic, it may well turn out that the greatest inroad for digital assets innovators into the healthcare field will be through the ‘back door’ of logistics and data sharing, rather than trying to mount a direct assault on the healthcare payment systems.
The “Digital Assets in Healthcare Panel” featured Gabriel Reyna (Founder, Bandera Capital), Clayton Saliba (CoFounder, Duality Health), Dr. Richard Peters (Asst. Professor, Univ. of Texas Austin), Taylor McPartland (CEO, ScaleHealth), and Calvin Diaz (Sr. Systems Architect, Houston Methodist).
If you would like to attend the next Global Investor Conference, taking place December 8th & 9th, 2020, you may click here to register.
Chien, William, et al. “The Last Mile: DSCSA Solution Through Blockchain Technology: Drug Tracking, Tracing, and Verification at the Last Mile of the Pharmaceutical Supply Chain with BRUINchain.” Blockchain in Healthcare Today, 12 Mar. 2020, blockchainhealthcaretoday.com/index.php/journal/article/view/134.
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Schiller, Lowell J. “Pilot Project Program Under the Drug Supply Chain Security Act; Program Announcement.” Federal Register, 8 Feb. 2019, www.federalregister.gov/documents/2019/02/08/2019-01561/pilot-project-program-under-the-drug-supply-chain-security-act-program-announcement.
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