Stuart Hanson, CEO of Avaneer Health
Photo: Avaneer Health
Blockchain technology has started getting attention by health IT leaders and holds much promise.
“While blockchain technology is not a panacea for data standardization or system integration challenges, it does offer a promising new distributed framework to amplify and support integration of healthcare information across a range of uses and stakeholders,” consulting firm Deloitte explained. “It addresses several existing pain points and enables a system that is more efficient, disintermediated and secure.”
In January, healthcare blockchain technology and services company Avaneer Health announced new backing from several blue chip healthcare organizations, who are committing $50 million in seed funding to the Avaneer Health network.
The new funding comes from founding network participants including Aetna, Anthem, Cleveland Clinic, Health Care Service Corporation, PNC Financial and Sentara Healthcare. The network, founded by those participants and others in 2021, is built using blockchain technology and uses HL7’s FHIR specification to expand data access across healthcare organizations, with a focus on payer-to-payer data exchange, eligibility and prior authorization.
Healthcare IT News spoke with Stuart Hanson, CEO of Avaneer Health, to talk about healthcare’s hesitancy to adopt blockchain, use cases for blockchain in healthcare, challenges for blockchain in healthcare and what may arise from blockchain in 2022.
Q. What explains the hesitancy by healthcare organizations in adopting blockchain? How can that hesitancy be overcome?
A. I remember when numerous healthcare organizations began to explore the potential of blockchain in 2018 and 2019. Many large tech organizations identified ways to use blockchain and started projects, and innovation teams at health systems and payers built teams to focus on the potential of blockchain.
But many of those initiatives have since been abandoned. It appears to me that, while there were many good ideas and the best of intentions, one challenge in particular may have been very difficult to overcome: blockchain is not a plug-and-play technology.
It’s also not a silver bullet as a stand-alone technology solution or even enabler. Blockchain is not an app that can be easily installed, nor is it a platform that can be added to the tech stack. In order to use blockchain effectively, entire processes have to change, workflows need to evolve, tech stacks need to be adapted to leverage the real strengths of the capability, and mindsets on how to operate the business have to shift dramatically.
This level of change is obviously not easy to achieve across large organizations, especially in an industry with so much existing complexity in both clinical and administrative use cases.
The hesitancy to adopt blockchain can be overcome by organizations that are ready to move beyond experiments by adapting processes and tech stacks to capitalize on the potential of blockchain. Over the past two years, organizations like IBM and PNC Bank have been collaborating with companies that usually compete against each other – Anthem, Aetna, HCSC, Cleveland Clinic and Sentara Healthcare – to design the governance structure needed to create a community and healthcare network that is blockchain-enabled.
Because several organizations are working together toward a common goal, there is an increased likelihood of success. More often in healthcare, we see a single tech company come out with a good idea and try to execute on its own.
But with blockchain, in its core, it is founded in community, togetherness, openness and collaboration. So the industry needs more organizations to commit to changing their overall mindsets to reflect these values in order to scale the adoption of blockchain, which can unlock significant value of underlying technology investments that have been made over the last decade.
Q. What are some common use cases of blockchain in healthcare?
A. At this time, the most common use cases of blockchain in healthcare leverage smart contracts capabilities for medical supply chain, health-credential and vaccination validation, provider credentialing, patient data security, and life sciences clinical study-related data.
These are in most cases simple use cases that can leverage the distributed ledger functionality of blockchain technology to solve problems. I see the industry moving toward more complex use cases beyond what is common today.
There is a significant opportunity for simplifying some of the core and repetitive administrative-related use cases in healthcare like eligibility, prior authorization, coordination of benefits, claims status and a myriad of interoperable interactions between payers, providers and financial institutions.
Furthermore, a blockchain-enabled network could emerge for a trusted ecosystem to enable a marketplace of sorts, on which developers could deploy solutions that benefit from accessing permissioned data or collaborating in the healthcare ecosystem.
Q. What is it specifically about blockchain that makes it so appealing to other industries but challenging for healthcare? Why has it worked so well with cryptocurrency and NFTs but not healthcare?
A. With its decentralized and “zero trust” nature, blockchain technology offers benefits to a variety of businesses across several industries. Perhaps one of blockchain’s greatest characteristics is that it provides an unprecedented level of transparency and openness, so that each participant is held accountable and independently responsible to act with integrity toward its community and customers.
Blockchain technology also increases efficiency by removing the need for a middleman or single arbiter of trust. For example, in certain industries such as financial services, blockchain facilitates faster transactions by allowing P2P cross-border transfers with a digital currency. In real estate, property management processes are made more efficient with a unified system of ownership records and smart contracts that automate tenant-landlord agreements.
Blockchain also is far more secure than other record-keeping systems, because each new transaction is encrypted and linked to the previous transaction, providing a level of permanency. Once a transaction is committed to the chain, it cannot be deleted.
You can only add to the chain via a new block. Therefore, blockchains create a historical, linear record of events or transactions that cannot be later altered. This immutable and incorruptible nature of blockchain makes it safe from falsified information and hacks, ultimately making it appealing to several industries.
In addition, many people continue to conflate blockchain with cryptocurrencies. There are significant differences between the potential applicability of blockchain in healthcare than the early adoption in areas like NFTs and crypto.
First, NFTs and crypto started much earlier, and the first use case was Bitcoin and later Ethereum. It took Bitcoin and Ethereum many years to get where they are today. Second, these ecosystems were created from scratch. We can’t just hit the reset button in healthcare and create new tech stacks. We need to help adopt the new technology capabilities in a way that helps both unlock the technology investments that have been made – like in EHR systems – and also helps the industry transform to a more fluid ecosystem.
Greenfield or “clean slate” creation often is much easier than reimagining existing systems – especially at scale – for core business processes. The processes need to continue running while the new ones are created, which is much more expensive for the innovators and takes a lot of courage and commitment to the vision of helping people from the early adopter organizations.
Third, healthcare requires a hybrid technology stack, because not every aspect of core processes lends itself to smart contracts. In fact, there are significant data barriers, smart data protection barriers in healthcare, to protect confidential and sensitive healthcare data. This data can’t – and shouldn’t – be propagated and distributed broadly across various blockchain nodes.
Instead, this technology can be used to help index the complex industry sources of data across a network and make this data more fluid and, therefore, valuable. In other words, we need to figure out a delicate balance between blockchain and other technology components within the stack in order to preserve the key value added from blockchain while making the entire system robust and optimized for the healthcare use cases.
The barrier to widespread adoption in healthcare is actually the same barrier that originally slowed adoption with cryptocurrency and NFTs. We need to shift our mindset and change our processes.
Once stakeholders in healthcare are willing to think differently about how healthcare connects and identify ways to work together to create new processes that work for all involved, while creating trust, then adoption will increase, just as it has in other industries due to the aforementioned reasons.
Q. Is the blockchain industry working on anything that may boost adoption in healthcare this year?
A. I know that the healthcare industry is working toward ways to really leverage blockchain as a technology, much like financial services and fintechs have been doing for the past handful of years. So, I wholeheartedly believe that healthcare is poised to begin adopting blockchain much more meaningfully over the next one to three years.
As an example, our nationwide blockchain-enabled healthcare network is launching. It aims to eliminate the need for point-to-point connectivity by creating an environment of “connect once to many.” Also, this blockchain-enabled network is planned to function as a verifiable trust layer for joint processes between participants on the network.
Because of that agreed, verifiable trust function, counter-party risk of data sharing should be significantly reduced. Each participant on the blockchain will “know,” with a certified verification, that the other participants are “good actors” and agree to interact with each other using automatically enforced standards.
No other middleman data-processing entity is needed to guarantee the integrity of the data or transaction. In addition, the data that moves across this new network will not be manipulated or stored centrally.
The data will simply move and be visible or accessible across this network of trust, enabling new insights, transparency and consumer-friendly access. Only once all the participants can verify trust against the others in how, why and when they will interact does truly continuous dynamic data updates and sharing become possible. This is the vision for the future state I envision for all healthcare organizations.
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Stuart Hanson, CEO of Avaneer Health