The hardest part of building blockchain in healthcare: Microsoft principal healthcare lead David Houlding shares insights

David Houlding is principal healthcare lead at Microsoft and chair of the Healthcare Information and Management Systems Society's Blockchain in Healthcare Task Force. Here, he discusses blockchain technology and its potential to improve health IT interoperability, fraud prevention and more as well as what to expect in terms of blockchain's increased use in 2019.

Responses have been lightly edited for clarity and length.

Question: Where is blockchain in healthcare now and how will it develop in 2019?

David Houlding: 2019 is going to be really interesting in terms of blockchain pilots wrapping up, case studies being published and obtaining insights from healthcare organizations as to what worked well. It is going to be a watershed moment for blockchain, because as more providers, payers and others stand up and attest to their blockchain use cases, pilots and the business values achieved, more organizations will gravitate towards those use cases, join those consortiums and grow those networks. Blockchain is very much a network technology, so it benefits from the network effect. Therefore, the more organizations that connect, the more value there is. The hard part with blockchain is building the consortiums of healthcare organizations, getting their buy-in, and building their trust to the point where they are willing to connect their enterprise systems to the blockchain and transact. Once this is done with an initial use case it is relatively easy to add additional use cases, further compounding the network effect.

Q: What do you think will be the most significant blockchain applications in healthcare over the next five years?

DH: Keeping in mind that the hard part of blockchain is building the consortium — the network of healthcare organizations willing to use blockchain to collaborate — existing business-to-business networks represent near-term opportunities for blockchain. Existing networks may use antiquated technologies such as faxing right up to centralized hub-and-spoke architectures such as clearinghouses or exchanges. Blockchain can quickly add value to these networks in enabling real-time collaboration, without a central intermediary and the associated delays and costs, on common data in a shared ledger, as well as shared logic in the form of smart contracts. Blockchains also avoid any central point of failure, preventing vulnerabilities in centralized architectures to availability attacks such as distributed denial-of-service attacks. Beyond health information exchanges and clearinghouses, existing B2B networks also include drug and medical device supply chains, provider directory and provider credentialing networks. Blockchain also has major potential in anti-fraud.

Healthcare is burdened with multiple types of fraud, from medical claims fraud to prescription, occupational, financial and other types of fraud. The FBI estimates the annual cost of healthcare fraud in the U.S. at tens of billions of dollars per year. Most types of fraud involve modification or deletion of transactions for fraudulent gain, or the creation of new fraudulent transactions. Blockchain blocks the first two attack vectors because transactions on blockchain are immutable. Blockchain transparency also helps improve the rapid detection of new fraudulent transactions because such transactions are visible across the consortium in real time, versus being buried in a central database silo that only select people have access to, and that is vulnerable to collusion.

Q: What do health IT leaders at hospitals and health systems need to know about blockchain today?

DH: Without interoperable systems, organizations will struggle with blockchain efforts and end up with different data being put on the blockchain in different formats, creating an even more complicated tangled web. To reach its full potential, data on the blockchain must be high quality, accurate, complete, up to date, consistent and readable. Blockchain represents an opportunity and forcing function for health IT interoperability. However, there's no need to reinvent the wheel, and the good news is that blockchain can leverage and build on much of the existing interoperability standards like Integrating the Healthcare Enterprise and maturing standards like, HL7Fast Healthcare Interoperability Resources.

The hardest part about building blockchain is building the consortiums of healthcare organizations: building buy-in, building trust and getting organizations to the point where they're willing to connect their systems and transact on blockchain. Blockchain makes sense in terms of a network of healthcare organizations wanting to collaborate around a target use case, with defined business value and to do that targeted, secure sharing of data. Our recommendation from the [HIMSS Blockchain in Healthcare Task Force] is to target existing B2B networks or consortiums where you already have organizations collaborating. There, with the trust and buy-in — at that point — blockchain can prove itself without hitting the major hurdle that stalls so many blockchain efforts.

Trailblazers that pilot blockchains with existing B2B networks in the near term, and complete those pilots with recognized and respected healthcare organizations that are willing to then attest to the business value of blockchain, will have the early-mover advantage and a solid beach head from which to scale, both in terms of the size of the consortium and the number of use cases on the blockchain. Over time, we'll see the size of blockchains and richness of data they contain expand, paving the way for richer smart-contracts and automation, and — in the longer term — leading to advanced capabilities such as decentralized autonomous organizations.

To participate in future Becker's Q&As, contact Jackie Drees at jdrees@beckershealthcare.com.

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