A point-of-view on how emerging technology is transforming an industry

Health care is expensive, accounting for a whopping +10% of GDP spend across the globe. And with the multi-faceted challenges of ageing populations, proliferating chronic diseases and rapidly evolving technology, the Economist Intelligence Unit (EIU) projects global health care spend will increase more than 4% a year from 2015 – 19, roughly double the rate of global inflation.

As global budgets strain to accommodate these large increases, there will inevitably be proportional pressure on the health care industry to contain costs and reduce prices.

Given the complexity and distributed nature of the topic, there are no silver bullets. Indeed, the full solution will need to incorporate public policy, private innovation and a confluence of complimentary advancements.

Intriguingly, while many of the required advancements will certainly come from the medical community, a key piece of the puzzle may come from a technology that came to prominence to secure Bitcoin transactions: Blockchain.

Challenges Facing Health Care

Before we explore the links between Blockchain technology and health care, it’s helpful to first examine the composition and drivers of health care costs.

Just as our time spent managing resources in the workplace seems to coalesce around a few members of our team, health care costs are concentrated on a minority of patients.

Specifically, it is generally recognized that 15% of members incur 75% of the costs that insurance companies cover for healthcare services. Untangling the cost drivers within these high-cost patient pools – and understanding the legitimacy of the charges – is fundamental to controlling costs.

Beyond the concentration of costs within an expensive minority of patients, the health care industry struggles with an onerous billing value chain. The number of entities responsible for processing payments – known in the industry as Payors – has become incredibly bloated as the complexity of the ecosystem has increased. In fact, some estimates suggest that over 300 people are involved in the care delivery value chain for a medical event.

Compounding these challenges is security, a topic that seems to surface everywhere these days. Despite efforts to secure the health care value chain, several forms of fraud have taken hold, massively driving up operating costs, undermining the value of health care patents and costing insurance companies huge amounts of money via phony claims.

Several Opportunities for Blockchain to Add Value

So how, exactly, can Blockchain technology play a role in confronting these challenges? As we’ll explore in the coming pages, there are five general areas where advances are possible:

  • Improved security
  • Reduced complexity
  • Increased accuracy
  • Expanded contextual information
  • Enablement of new business models

Securing the Health Care Value Chain

For the health care Payor network to function, member activities and historical health records need to be securely accessed and shared. First and foremost, Blockchain guarantees the “provenance” and security of electronic transactions across the value chain, providing a credible foundation to base the exchange of funds and delivery of care. And by securing the patient record as a universal source of truth, Blockchain eliminates many intermediators while enabling compliance with HIPPA privacy and security rules. Given the regulatory forces driving the protection of their personal info in the new digital paradigm, breaches can range from costly to deadly for health insurance companies.

Additionally, because Blockchain is a transparent, public, distributed ledger that tracks products from their origin through all transactions, if a duplicate product or unauthorized transaction should appear, it can immediately be flagged as counterfeit, saving insurance companies significant amounts of money.

Drug profiles and controlled substances can be secured in a similar manner. By initially activating and then tracking drugs through the system, if a drug profile is manipulated by hackers, it can be easily traced via any subsequent transaction, enabling pharmacies to control and report theft of controlled substances at a much faster rate.

Beyond the modification of legitimate drug profiles, the counterfeiting of drugs is also a significant issue. In fact, it is estimated that 10-30% of medicines sold in developing nations are counterfeit. Blockchain can enable patients to ensure that the drugs they receive are authentic by verifying and certifying them directly with manufacturers. This level of verification and certification in the digital ledger also allows stolen drugs to be easily located, and the technology overall reduces any likelihood of fraudulent products making their way to market.

Pharmaceutical companies additionally stand to benefit through IP and rights management. Blockchain-enabled platforms, such as those for drug discovery and clinical trials, can protect drug IP with permanent, immutable links between drug scientists and their potential chemical composition for a disease. This data can be registered in the Blockchain along with its metadata, including the chemical properties, rights management and permissions to sell the rights.

Fraudulent health care claims also cost the insurance companies billions of dollars each year. By requiring all parties to confirm transactions, Blockchain acts like an escrow account, protecting buyers and sellers by holding funds until all parties can verify, which can be executed via smart contracts, eliminating the need for third parties.

Reduced Complexity & Increased Accuracy Through Seamless Integration

Building on a newly secure foundation, Blockchain is additionally able to aid health care by reducing the number of steps required to deliver care and enable the flow of capital.
The Blockchain ledger enables the rapid retrieval of member information, enabling transactions to begin. From there, Blockchain confronts the historically silo’d worlds of Payors, Provides and Pharmacies by offering a unified IT backbone that aggregates data from multiple sources, such as different EMR’s and mobile applications, allowing for inter-operability of transactions, greatly reducing costs to reconcile claims for inbound and outbound transactions.

Once these worlds are systematically connected, accuracy additionally increases as all parties become confident they are exchanging the correct information.

Expanded Contextual Information Leading to Increased Service

An example of how a shared data backbone creates value can be seen in the pharmaceutical industry. Blockchain assists pharmaceutical care by instantly recording and sharing every transaction involved in care. Payers can then have a more responsive role in managing the course and cost of medicine applied and proactively support providers in the decision-making process.

Taking the concept forward, Blockchain can effectively enable a new “Supply Chain Operating System”. Due to its decentralized architecture, Blockchain has the potential to reduce the second largest expense in health care by tracking movement of important devices and drugs through the supply chain.

Enablement of New Business Models

New marketplaces incremental to those currently owned by companies and organizations are sure to emerge that enable peer-to-peer trade between Payors and Providers without the need for any central authority.

One potential application is the medical drugs second-hand market. Though currently a small market, Blockchain creates a novel opportunity to sell drugs close to their expiration date at reduced cost. To enable this, Blockchain can provide the missing link by accurately tracking of the expiration of drugs, which can be verified by their cryptographically-signed digital asset, issued, and certified by the original drug manufacturer. Counterfeit and fraudulent goods would be reduced and a thriving and profitable second-hand market could evolve due to increased patient trust in the authenticity of drugs.


Blockchain technology stands to significantly impact health care by building in permanent, immutable records of the entire product journey, eliminating the need for third party intermediaries, retroactive authentication and conflict resolution. In the future, we expect to see the health care sector leverage the technology to create efficiencies, reduce waste and deliver on member demand for transparency, authenticity, and trust. In aggregate, these positive contributions will concurrently drive down cost and increase customer service.

Many health care companies are asking, “How can Blockchain technology benefit my business and strengthen my relationship to my providers and customers?” These firms are looking for ways to reduce cost without reducing the security strength of business transactions. As consumers become familiar and comfortable with the technology, Payors and Providers are likely to see shifting customer expectations as Blockchain-based transactions provide the transparency, authenticity, and trust that are the table stakes for innovation.

Sandeep Savla

Sandeep Savla

Senior Principal, Health Care

Sandeep Savla is Senior Principal with Infosys Consulting and has wide experience in strategy, implementation and operations for health care clients. He has enabled innovation frameworks integrated with operations to derive business value for his clients. He specializes in reviewing emerging technologies and assessing the impact to health care specific use cases and strategies.  He can be contacted at sandeepvsavla@infosys.com.

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