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Bitcoin for Care: Healthcare Hopping on the Blockchain

By Jade Kelly, Partner, Arent Fox LLP
By John Malone, Associate, Arent Fox LLP
By Eva Pulliam, Associate, Arent Fox LLP

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Original Publish Date: July 11, 2017

Earlier this year, Abid Hospital in Pakistan began accepting PakCoin (a cryptocurrency similar to Bitcoin) as payment for healthcare services, paving the way for innovative medical payment solutions in Asia. Only a handful of other healthcare providers around the world accept Bitcoin, including a private hospital in Poland and several forward thinking medical practices here in the United States. Aside from using Bitcoin or other blockchain technology for payment, there are a number of cutting edge ideas emerging for use of blockchain in the healthcare industry.

Blockchain is a Distributed Ledger that Verifies Authenticity

Blockchain technology is in its infancy, having emerged from the 2008 financial crisis. In basic terms, blockchain is a distributed database (ledger) full of transaction information blocks (blocks). Each new block depends on a link to the previous block (chain) to verify its authenticity. The chain is part of what makes the records more secure. If a past block is altered, then the whole link is flagged as incorrect back to the point of the change. This information protection removes the need for a single repository with centralized verification. The blockchain system allows chains to be shared among a network. The network has a system to verify transactions and then the ledger is updated for all members on the network. No one person has the sole copy, so all updated records are verified against the most recent distributed ledger, ensuring authenticity. The network can be as vast as the entire public or a controlled group with certain access rights.

Blockchain Innovations Could Transform Traditional Healthcare Models

Although there is a lot of media hype surrounding blockchain, and a fair number of skeptics questioning its value beyond cryptocurrency, there are many innovators toying with creative ways to disrupt traditional healthcare business models through blockchain technology. And a recent survey of life science and healthcare executives found that 35% of those organizations are planning to implement some type of blockchain system in 2017.

Innovators are developing blockchain platforms for, among other things, wellness applications, electronic health records, patient identification software, medical inventory management, supply chain tracking, and precision medicine. For example, MedRec is being developed in conjunction with MIT and is described as “a novel, decentralized record management system for EMRs that uses blockchain technology to manage authentication, confidentiality, accountability, and data sharing (data such as blood work records, vaccination history, prescriptions, and other therapeutic treatments).” And the Office of the National Coordinator for Health Information Technology, or ONC, recently held a “Blockchain in Healthcare Code-A-Thon” to foster innovation in this area.

Blockchain May Need to be Refined to Address Requirements under HIPAA

From a general data privacy standpoint, one of the primary benefits touted about blockchain technology is its ability to keep information both confidential and secure, which could significantly advance cybersecurity. However, any blockchain applications handling protected health information will need to have appropriate physical, technical, and administrative safeguards to comply with HIPAA. Current blockchain technologies may need to be refined to address the unique challenges posed by HIPAA and other health information privacy laws. For example, some experts have observed that blockchain ledger verification is accomplished using mathematically derived pseudonyms, which may raise issues under HIPAA because such pseudonyms create the potential for re-identification of protected health information. Access to information in the distributed ledger would also need to be appropriately limited to meet HIPAA’s minimum necessary requirements, as applicable, and to protect substance use disorder and other sensitive health information in accordance with applicable state and federal law. These issues have to be further addressed for the blockchain to provide the type of privacy and security necessary to make it a more widely used option in the healthcare industry.

Collaboration Needed to Foster Creative Blockchain Solutions for Healthcare

To make advancements in this area, healthcare providers and tech companies will need to collaborate on ways to harness blockchain technology to streamline healthcare operations, for cost savings, to improve patient care, and gain a competitive advantage. Although blockchain technology may need to be enhanced to meet the healthcare industry’s needs, particularly with respect to health information privacy, blockchain has potential for modernizing antiquated healthcare practices and technology; improving patient care; saving time and money.

To learn more about Arent Fox LLP visit www.arentfox.com.