Blockchain in the healthcare industry has the potential to save billions of dollars in the U.S.

–By Debra Prentice, Research & Market Development Manager

Blockchain is most recognized as the technology that drives cryptocurrencies like bitcoin; however, blockchain has the potential to disruptively change the healthcare industry saving billions of dollars and positively affect healthcare outcomes.

So far Microsoft, IBM, and venture capitalists have invested over $1billion in blockchain technology.  Blockchain is so important to the future of technology and business, IBM is a founding member of the Hyperledger Project (managed by The Linux Foundation) which is creating an open source to build the foundations of blockchain for use by other companies at the enterprise level.

IBM CEO Ginny Rometty states, “What the internet did for communications, I think blockchain will do for trusted transactions”. Blockchain is considered the “internet of value” and Rometty explains that a secure and shared ledger can save businesses time and money. For example, “On a cargo ship, the paperwork costs more than just even the goods inside of it,” Rometty states.  Instead of every entity in the shipping process: manufacturer, shipper, buyer, and others relying on their individual paperwork, and trusting the integrity of that paperwork during hand-off;blockchain would allow all parties involved to see an open ledger and who made changes. While blockchain is still new, it will still only be useful if more companies adopt it which is why IBM is open-sourcing many of its advancements in blockchain. Rometty states, “greatness isn’t having a technology, but the know-how to do something with it.”

IBM advises that the current system of multiple ledgers can “be a recipe for error, fraud, and inefficiency”, but because “members on a blockchain share a common view of the truth, it’s now possible to see all details of a transaction end-to-end, reducing those vulnerabilities.”



Blockchain Explained:

According to Reuters, “A blockchain is a database that is shared across a network of computers. Once the record has been added to the chain it is very difficult to change. To ensure all the copies of the database are the same, the network makes constant checks”.



Source: Reuters Graphics 

Reuters Graphics Explains the Steps of a blockchain:

  1. Information is recorded.
  2. The record is check by the network and each computer (called a node) in the network checks the details of the record to ensure it is valid.
  3. After the nodes within the network accept the validity of the record, the record is added to a block. Each block contains a unique code called a hash, which also contains the hash of the previous block in the chain.
  4. The block is then added to the blockchain, and the hash codes connect the blocks together is a specific order.


A blockchain can also be thought of as a real-time ledger where anything can be recorded. Everyone within the chain can see the details of each record and who has made additions or changes to the ledger. Only the owner of a block can edit information with a private key.  The major advantage to blockchain is that all the information is updated and synced in real time.


While blockchain is a somewhat new form of a decentralized database, it has uses in many industries beyond bitcoin and financial institutions. Different types of blockchain are centralized, decentralized, public, private, hybrid, and permissioned. Because blockchain establishes a peer-to-peer network within a system that is transparent and updated real-time, it saves time and money by eliminating lost records and eliminating time and errors in ‘handing off’ transactions to another entity. While blockchain is not entirely hackproof, it is more secure than what we use today, and blockchain ensures transparency of data because all participants can see changes to a ledger.


Blockchain Facts, according to Forbes:

  • Blockchain can be made public or private.
  • Blockchain is the beginning stages of development – currently only 0.5% of the world uses blockchain.
  • IBM and Microsoft are hugely invested in blockchain, and blockchain is so important to future business, IBM and Microsoft are structuring their blockchain solutions as open source.
  • The global blockchain market is expected to be worth $20 billion by 2024.
  • 90% of banks are exploring the uses of blockchain.
  • Blockchain is most vulnerable to a breach when it first comes online.
  • Blockchain will first positively disrupt banking and financial industry, and banks could save $8-12 billion annually if they used it.


Benefits of Blockchain to Healthcare IoT (HIoT)

One of the goals of the Federal Health IT Strategic plan is to “Inspire Confidence and Trust in Health IT” and to “Improve Care, Improve Population Health, and Reduce Health Care Costs through the Use of Health IT”.  Blockchain could help achieve these federal health IT goals.


Since blockchain is a distributed ledger that is updated and synced real-time, it creates an “immutable, decentralized, and transparent record of all transactions through a peer network”.  According to Forbes, blockchain can securely and privately track patient health records. Currently, a patient’s medical history is dispersed between differing EMRs (electronic medical records) by multiple providers and organizations, most of which is not accessible by the patient.


Blockchain has the potential to bring all these records together in one source that is a complete and current record which shows any changes made and by who.  More importantly, blockchain could empower patients with complete information about their own healthcare. “This immutable distributed ledger can better ensure the resilience and provenance, traceability, and management of healthcare data.”


Advantages of using Blockchain in the Healthcare Industry:

  • All information is kept in one place, that is updated real-time.
  • Blockchain addresses integrity-based attacks. Data cannot be easily modified unless by the owner of the piece of data.  The data is transparent to everyone in the chain and shows who added or modified data, which increases patient trust. 


Robert Barkovich, CEO of Health Linkages refers to the National Institute of Standards and Technology which states, “Blockchain lets us agree on history, even if we don’t all agree or trust each other. There’s no need for a trusted third party – it’s all there in the chain.  By its very nature, blockchain is well positioned to be part of a solution to many problems in healthcare. How do you actually guarantee that you know where that data has been throughout its lifetime, and who has touched it? Manipulation and falsification of data will not be possible because the hashes will not match – you mathematically prove the integrity of the data”.


Shocking Healthcare Statistics that Blockchain Could Resolve: 

According to, the following are shocking statistics today in the healthcare industry:

  • It costs nearly $250 billion to process 30 billion healthcare transactions per year, 15 billion of which are faxes.
  • 63% of physicians are dissatisfied with the timeliness of information or inadequate information in referral letters.
  • 86% of mistakes made in the healthcare industry are administrative, and results in the death of 400,000 people per year. 80% of all serious medial errors involve miscommunication during transitions to different care settings.
  • 3 of every 10 tests are reordered because the results cannot be found, and patient charts cannot be found on 30% of visits
  • Providers need to fill out an average of 20,000 forms per year with the average organization spending $20 in labor to file each document
  • 20% of malpractice claims involve missed or delayed diagnoses due to errors in hand-offs between providers
  • Roughly 25% of all U.S. hospital spending consists of administrative costs


Blockchain naturally reduces the complexity of having multiple entities handling different patient records and interaction. Although most healthcare organizations have EHRs, information is still scattered between multiple organizations. Blockchain would resolve by sharing one, tamper-evident ledger that cannot be altered which will eliminate or reduce paper and increase efficiencies.


Simply stated, blockchain in the healthcare industry will speed up transaction processes, lower the transaction or administrative costs, and provide security and trust of data integrity.


Uses for Blockchain in the healthcare industry:

 “The ability to have insurance companies, hospital billing departments, lenders, and patients using one blockchain to manage payments could reduce redundancies across the entire industry.” – Gem CEO, Micha Winkelspecht


According to a report by Deloitte, “blockchain technology has the potential to transform healthcare, placing the patient at the center of the health ecosystem and increasing the security, privacy, and interoperability of health data.”  According to National Law Review, some future applications include patient-centric health care records, provider licensure and credentialing, and supply chain management (with predictive analytics).






Further, a recent whitepaper by Freed Associates show the potential uses of blockchain for the health care industry:

  • Longitudinal Health Care Records – securely link information between health care provider organizations and provide a complete patient health care record which are accessible by the patient.
  • Automated Health Claims Adjudication and Smart Contract Structure – this will enable each node to execute a transaction for the contract. According to Forbes, an estimated 5%-10% of healthcare claims are fraudulent, and Medicare alone cost $30 million in fraud losses in 2016.
  • Interoperability – gather large amounts of patient data to study health initiatives across a population.
  • Supply Chain Management – using blockchain to significantly reduce administrative costs by providing drug supply chain integrity and provenance. According to Forbes, pharmaceutical companies globally lose $200 billion annually due to counterfeit drugs.
  • Pharma Clinical Trials and Population Health Research – Forbes reports that 50% of clinical trials are unreported and that investigators of the trials fail to share their study results 90% of the time ( Blockchain records of clinical trials could ensure that any data collected in a clinical trial is recorded real-time, and this would assist in more comprehensive and accurate data for population health research. Further, blockchain can more easily enable patient matching and monitoring (by matching with EHRs) and validate data or allow for e-consent.
  • Medical Device IoT Security – blockchain can allow smart “contracts” for maintenance and ensuring tamper-proof device logs.


First place winner of Qualcomm Tricorder XPrize: Final Frontier Medical Devices created DxtER – a group of non-invasive sensors designed to collect data about vital signs, body chemistry, and biological functions. Information is synthesized in the device’s diagnostic engine to make a quick and accurate assessment.


“If a blockchain can be used to manage the lifecycle of a hospital bill, it could be used to manage the lifecycle of a patient’s medical record. Blockchains allow organizations to share access to their network without compromising data security and integrity. Patient records can be created, shared, and appended by multiple parties, introducing efficiency and transparency to a heavily siloed industry.” – Micah Winkelspecht, CEO of Gem.



Current Limitations of Blockchain in healthcare:


“It sometimes seems like challenges of implementing blockchain outweigh the benefits and ROI” – Maria Palombini, director of communities and initiatives development for emerging technology at IEEE Standards Association.

Today’s challenge in cybersecurity may not be completely met by blockchain technology, and the current investment in blockchain may be too much for many healthcare organizations which is why computer giants like Microsoft and IBM are working to make blockchain structures that are open sourced.






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Choosing the right HIT strategy with blockchain for the future:

According to Healthcare IT news, “trial and error can be valuable when exploring new projects, especially if still working on HIT strategy”; and Health Linkages CEO Robert Barkovich states, “My advice would be to figure out what your problem is, figure out what you want to solve. What blockchains are available to you? Know the strengths and limitations of these frameworks. If something doesn’t work well or doesn’t fit, it’s best to find something that does fit rather than trying to fit a square peg in a round hole.”

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However, the trial and error method can be costly, especially in healthcare where finding room in the budget for an overall HIT strategy is limited.  Finding the right expert in client focused services to coordinate strategies for HIT projects can save time and money.





Beckers Hospital Review: 


Business Insider: 


Culver White Paper:

Culver, K. (2016). Blockchain Technologies: A Whitepaper Discussing How the Claims Process Can Be Improved.  Retrieved from 


Healthcare IT news: 




National Law Review: