Eliminate the Double Penalty for Complication Expenses in Bundled Payment Programs


Blockchain is the technology behind Bitcoin, as well as countless other cryptocurrencies that have been the center of much attention in the investment world lately.  Many argue that the cryptocurrency craze is just the next bubble that is bound to burst. Regardless of which blockchain-backed currencies come out as winners or losers though, the technology – just like the Internet – will endure.  Blockchain has the potential to revolutionize many industries.  In healthcare, blockchain promises to solve two fundamental puzzles.  Understanding how can help guide professionals to invest their resources prudently, while preparing for the impending technological revolution.

Problem 1: Interoperability

When the US government pushed to make patient health information digital, there was tremendous pressure put on healthcare providers to adopt electronic health records (EHRs).  Unfortunately, the need to comply with myriad requirements took priority over the fundamental goal of EHRs – interoperability.

Countless EHR companies pressured providers to enter into contracts that restricted “ownership” of the data.  Many others simply sold systems that could not communicate with each other.   Circumventing these barriers is possible, but often resource-intensive.  For example, an “HL-7” can be built to facilitate data transfer from one EHR system to another.  However, a new HL-7 must be built for each discrete system to communicate with each other discrete system.

And even though technological solutions exist to facilitate the transfer of healthcare data, controlling and monitoring the flow of the endless data in a universal, HIPAA-compliant way presents a problem or a “use case” that blockchain technology can solve.

Blockchain contains a decentralized, immutable ledger that can have built-in “permissioned” access via smart contracts.  The technology can ensure that patient data is shared responsibly thanks to digital gatekeepers (“user nodes”).  It can also manage and track where the data goes to prevent – or create accountability for – inappropriate sharing.  This is made possible by the immutable ledger, which prevents parties from editing the transaction history – allowing accountable data-sharing.

The “Blockchain” Solution

A common misnomer about blockchain technology is that the blockchain itself can efficiently store and share data.  It cannot.  What blockchain can do though, is serve the function of permitting the exchange of data when appropriate, and tracking those who access it.

(Note: Emerging decentralized data systems, such as distributed hash tables (DHTs) can store data.)

Problem 2: Payor Data Lag:

Due to non-communicative systems and an opaque reimbursement system, providers struggle to obtain actionable intelligence in “real time.”  Indeed, even provider groups that participate in “value-based care” programs heavily focused on coordinating efficient care can wait months before receiving data on their own patients’ healthcare utilization.

The Blockchain Solution: 

Existing technology can once again solve the problem of this data lag, but either in an unsecure or exceedingly expensive way. By incorporating blockchain technology and its permissioned system, data can flow freely, yet only to those legally entitled to use the information for the purpose intended. Blockchain brings transparency and accountability to data exchange through its audit trail.

Capitalizing on Blockchain

Healthcare organizations should embrace blockchain technology, but current practical and regulatory challenges warrant a strategic approach.  Savvy organizations have already begun building infrastructure to position themselves at the center of the “decentralized” ecosystem of health information.

Unlike EHRs, which need HL-7s to communicate between them, organizations can build master data portals that obviate the need for added and expensive data “translators.”  Thanks to the permissioned system that blockchain can support, the data can run on a universal language accessible to anyone who has a well-justified reason to view it.


Healthcare entities that possess the vision to see how blockchain technology can transform healthcare, and the leadership to adapt, can stay ahead of this highly-disruptive technology. While blockchain’s full potential will be unleashed over time, steps can be taken today to prepare.

Brian S. Kern, JD, is the Founder of Toro Risk Consulting Group, LLC.  He is also on the Advisory Counsel of SimplyVital Health, a bundled payment analytics company built using blockchain technology.   His contact information is listed below.

Lucas P. Hendren, Software Engineer at Verily Life Sciences.  He is also an Advisor of Bitclave.

Brian S. Kern, Esq., Partner, Acadia Professional. 

bkern@acadia.pro | View Bio

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