How Blockchain Technology Can Transform Healthcare

The Impact of a Rising Healthcare Budget

Developed countries around the world spend an incredible amount of their gross domestic product (GDP) every year on healthcare. The United States is by far and away the biggest spender, with just shy of 17% of its GDP spent on healthcare in 2019. Experts predict that number will rise even higher in the near future, with the Wall Street Journal forecasting that it will hit 20% in the next few years. That amounts to trillions of dollars spent on healthcare in the US every year.

If those kinds of numbers aren’t shocking enough, the healthcare industry continues to struggle with skyrocketing hospital costs, constant data breaches, and inefficient practices. In fact, it’s estimated that at least $760 billion goes to waste every year due to these systemic inefficiencies. The amount of money squandered within the healthcare system on an annual basis is comparable to what the government pays for Medicare each year, exceeds the national military spending budget, and is more than government spending on primary and secondary education combined. That is an absolutely staggering amount of money, and these kinds of problems are spurring calls for innovation and increased efficiency.

Is Blockchain the Answer?

In response to these problems, some healthcare companies have turned to blockchain to enhance the overall customer experience, strengthen security, and improve electronic medical data and record handling. But what exactly are blockchains and how do they function? Essentially, blockchains are a permanent, unchangeable database that keep track of a series of transactions. Each transaction makes up a block on the chain, and each block is held together by cryptographic keys, or “hashes”. Those keys are then stored in ledgers joined by a mesh of nodes, which share and synchronize with each other automatically.

Blockchains are highly tamper-resistant, structurally decentralized, and can provide uniform methods of access to electronic medical information for healthcare providers. Because the entire history of the blockchain is stored in every node along the chain, if someone were to try and maliciously tamper with the blockchain, all other nodes would be able to cross-reference each other’s data and pinpoint the specific node that has been tampered with. If one node has incorrect or missing data, it can use every other node along the chain as a reference point to correct itself. This makes it impossible for one singular node within the network to alter any of the contained information. It also means that the precise history of each transaction within each block on the chain is utterly immutable. Each and every single action and transaction is permanently recorded within the blockchain for absolute transparency and accountability.

Beyond offering highly encrypted exchanges, the application of blockchain within the healthcare industry has several very promising prospects.

The Golden Ticket

Data breach incidents are on the rise, costing Americans hundreds of millions of dollars annually. In 2015 alone, more than 113 million healthcare records were either stolen, exposed, or partially compromised. The blockchain’s innate security features could virtually revolutionize the way electronic medical data is stored and protected. Every individual would have their own public identifier and their own private keys. They can configure their keys to grant access only for specified amounts of time or to permit specific actions. This gives the user or patient ultimate control over who accesses their information and what they are able to do with it. 

Moreover, blockchain would eliminate the possibility of hackers breaching a database on a single occasion and walking away with hundreds of thousands, if not millions, of compromised medical records. The hackers would have to move along the blockchain attacking each patient individually, an extraordinarily inefficient and slow process and a deterrent on its own.

Medical Research

Protected health information (PHI) and personally identifiable information (PII) are extremely sensitive sets of data covered by HIPAA that healthcare providers must go to great lengths to protect. As things currently stand, all electronic health records on any given patient can only be shared within an organization or network of associated organizations. This means that any medical research programs, even ones that don’t require a patient’s PHI or PII, would need special permission directly from the patient in order to access any of the relevant data.

With blockchain, it’s possible to create a layer that contains no PHI or PII, but still has other relevant medical data. This means medical research programs, university labs, and other healthcare organizations would be able to tap into a fresh set of data generated from hundreds of thousands of new patients without infringing on their privacy. It could lead to massive improvements to clinical research and public health in general.

Uniform Access and Seamless Transfers Between Providers

Patients could create a layer on their blockchain where healthcare providers can submit, share, and store data through a secure, uniform system. Privately encrypted links can be stored in this layer for things like medical and radiographic imaging. Smart contracts and authorization protocols using the patient’s unique and private key would greatly enhance both security and connectivity for the patient and provider alike.

With all of the patient’s medical records accessible through the private key, this would also make changing healthcare providers significantly easier. The new provider would be able to see a detailed medical history with images, prescriptions, and treatments without the patient needing to physically gather them from their old provider

Protection Against Fraud

Another sector of the healthcare industry that stands to benefit immensely from the implementation of blockchain is health insurance. Blockchain is uniquely suited to handling and processing health insurance claims due to its innate ability to log medical events and records chronologically as they occurred. Because of the blockchain’s strong encryption, it is virtually impossible to manipulate the data at a later time for the purposes of fraud. In the end, this protects both consumer and company. 

The total cost of insurance fraud in the United States is estimated to be more than $40 billion every year, which ends up costing the average American family between $400 and $700 annually in the form of heightened insurance premiums. Incorporating blockchain into the claims process could reduce fraud, increase accountability, and even lower the cost of healthcare premiums for American households across the board.

Safeguarding Genomic Data

DNA sequencing has become increasingly popular in recent years, with companies such as Ancestry offering a detailed breakdown of user’s ethnicity and ancestral origin. Many people are simply taking DNA tests to gain a better insight into their general health. Genomic sequencing can help healthcare providers get a better understanding of the patient’s predisposition for developing certain diseases such as cancer, Alzheimer’s, or Parkinson’s. Tens of millions of customers have taken DNA tests from companies like Ancestry or 23andMe, and their genomic data is highly prized.

In 2018,DNA testing site MyHeritage was hacked with over 92 million accounts compromised. The hackers were only able to reach encrypted emails and passwords, and were ultimately unsuccessful in stealing the prized genetic data. But if they had succeeded, how would that have actually affected the lives of the people they stole from? It’s hard to say exactly, but there are several possibilities. The hackers could simply demand a ransom for the return of the data, like the hospital in Indiana that had to pay $55,000 for this very reason. Other possibilities are more sinister and damaging in the long run. Their data could be monetized and sold on the black market to insurance companies. Imagine one day they need to apply for a long-term loan, only to be rejected because buried deep in the corporate system is a genomic data profile indicating they have a high likelihood of developing Alzheimer’s and dying before they would be able to pay it off. It’s a scary, dystopian thought. 

Blockchain can potentially eliminate the possibility of this happening. Theoretically, users could potentially even establish a marketplace where scientists and research labs could purchase the genetic data directly from consenting patients. Not only would this promote research and a safe, secure selling environment, it would also cut out expensive middlemen. 


While blockchain is still a new introduction to the field of healthcare and its related industries, it’s not difficult to see its potential impacts in the coming years. It is extremely secure, highly configurable yet uniform in nature, utterly transparent, and is synchronized across all users. Overall, blockchain could transform how the industry functions on a base level while benefiting both patients and providers alike.

Jonathan Baker Image

At Lithios we value outside opinions. This blog was written by one of our guest bloggers, Jonathan Baker, with feedback from the Lithios team.

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