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Hospital Operations Benefits from Blockchain


"The U.S. has the most dysfunctional healthcare system in the industrial world, has about twice the per capita costs, and some of the worst outcomes. It's also the only privatized system."- Noam Chomsky

When one of the greatest minds of the our modern times - Noam Chomsky - rings the alarm bells to raise awareness, it’s often than none a serious issue that needs full measures. Healthcare is highly politicized subject which makes most prevailing ideas nuanced and far from being objective. But the facts are clear as noonday: The Commonwealth Fund’s publication  “International Profiles of Healthcare Systems” ranked the USA last in quality care among 11 Western nations.

However the percentage of GDP spent on healthcare in the USA comes first though, by far ahead of every other nation. In 2016, it was 17.8% of GDP as compared to 9.6% in Australia and 12.4% in Switzerland.

To introduce to the subject, we will start by analyzing the reasons behind such a ranking starting with the high prices Americans pay to get medical care.

Why Is Healthcare Spending Skyrocketing in the USA?

The first reason is pricing. The U.S. has much higher prices and our medical stuff from specialists, nurses and primary care doctors all earn significantly more than in other Western nations. In 2016, the average salary for a general practice physician in the U.S. was $218 173, while in other countries the salary range was $86 607 (Sweden) to $154 126 (Germany) as reported by a 2018 study by the Journal of the American Medical Association.

 The second reason is administrative costs, accounting for 8% of the total healthcare spending in the U.S in 2016 according to the same source. (Control group Western countries reported results between 1% and 3%). This creates an administrative burden on healthcare providers reportedly losing to issues surrounding insurance claims and reporting clinical data more often in the USA.

Third comes the drug market with another shockingly high statsistic of 1443 USD per capita spent on pharmaceuticals in 2016 by the average US citizen - compared to an average of 750 USD in the western world.

Last but not least, healthcare services are costly in the USA. For instance, an MRI costs 1145 USD on average compared to 279 USD in the Netherlands and 500 USD in Australia. The difference is even higher in surgical procedures.

All that being said, spending makes sense in some areas like pharmaceuticals: a great amount of money is invested in research and yielding jaw-dropping results: In 2016, 57% of new drug entities produced worldwide happen to be in the USA.

The healthcare will most probably remain at the heart of debate in the USA for a long time, but today, we have innovative technology in one hand, and a strong will of change in the other. Let’s not forget the basics for a second: healthcare should first and foremost be evaluated based on its results. It’s a matter of life and death and there is a lot at stake. Unlike other industries, everyone in the healthcare sphere is accountable and considerably affects the final outcome.

Finally, I’ll cite a great quote by Alexandra Robbins:

When Department of Health and Human Services administrators decided to base 30 percent of hospitals' Medicare reimbursement on patient satisfaction survey scores, they likely figured that transparency and accountability would improve healthcare.

A Glimmer of Light at the End of the Tunnel

When it comes to transparency and accountability, Blockchain technology draws the lines that link data, procedures and contracting, a wide variety of stakeholders, and a complex supply chain. Here’s how.

  • Data in Hospital Operations

As discussed in our previous articles, hospitals are increasingly investing considerable money in data and operations management systems for HER (Electronic Health Records. As it turns out, Blockchain is set to be the perfect ledger (or database skeleton) for a secure HER interoperability. In fact, Blockchain’s encryption capabilities ensure data integrity and security, setting solid foundations for mutual trust between payers and providers and accountability among all stakeholders.

It works like this: each Blockchain member has a unique personal secure private key, as well as a public key (acting like an ID). No central authority, not even system admins have rights to alter or consult data without the owner’s consent. Nodes connected to the Blockchain verify announces (access attempts, transaction, downloads, etc.), append and synchronize the ledger. (A hacker will then have to attack all millions of nodes in the same time to take control over a Blockchain, which is virtually impossible).



Verifying access rights to a patient’s EHR using Blockchain

Because of these permission layers, patients can limit data access and share only the relevant parts of their medical records with their caregivers or other clinicians.

  • Smart-Contracts for Automated Hospital Process

One of the most exciting innovations of Blockchain technology is the smart-contracts capability. It’s an easy way to fully automate manual lengthy processes in a flexible and secure way. These contracts are called smart for having the ability to self execute given some conditions that are coded and tested beforehand.

Obviously, hospitals supply chains will be the first to reap the benefits of Blockchain smart-contracts to enhance planning, purchasing, and inventory management (for both medical supplies and drugs).

Blockchain will be used to clearly identify accountabilities in cases of delays or damages occurring in the supply chain by :

  • Automating all sorts of manual process (real applications are yet to immerge).

  • Providing immutable and detailed log of the operations being carried

  • Listing the different participants in the supply chain (purchasers, retailers, wholesalers, distributors, drug manufacturers, transporters, and inventory responsible).

Furthermore, Blockchain provides a great tool for the hospital’s revenue cycle.  This is actually one of the weakest spots in the current hospital’s value chain: billing and payment errors are as common as false insurance claims. It’s what partially explains the distrust between patients and professionals one can easily feel in the US Healthcare system.

Combined with IoT, Blockchain will greatly improve the billing process by automating most of it, preventing double spending and requiring consensus before proceeding with payments.

In fact, Blockchain’s automated payments require the amounts (or value) to be “escrowed” before being released through a smart-contract when a set of “conditions” is completely fulfilled. It’s the reason why IT jargon calls this a “trustless” architecture.

Maybe trustless consensus is what the US healthcare needs to reach in order to reestablish trust and soar higher than its spending. While no one holds a clear answer, it’s fair to speculate that immerging technologies will have a say.


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