Data, Security, Insurance: How Blockchain Is Disrupting The Health Industry

The health industry’s potential for Blockchain has been outlined numerous times, and new startups continue to emerge in 2018. On Monday, April 9 it was announced that a German consulting firm developed a Blockchain-based solution for the management of sensitive medical data, while a week prior to that an important industry player in the US stepped up with a foray into Blockchain as well.

What exactly can Blockchain startups bring to the table? Well, a lot: improved security, effective distribution of information among involved parties, anonymized data pools for research companies and new ways to fight counterfeit drugs.


Dealing with fragmentation

Healthcare is an industry where patients’ information could be processed by numerous institutions –  for example, private or public hospitals and clinics, general practitioners and analysis labs. Therefore, the ultimate goal is to provide both easy and safe access to that information.


In 2016, John Halamka, chief information officer at Beth Israel Deaconess Medical Center in Boston collaborated with a group of scientists at MIT to come up with a Blockchain-based project for convenient storage of patients’ information. The project was named MedRec.

MedRec is based on Ethereum’s smart contracts and links healthcare providers together, allowing them to share their data. Only the patients can cryptographically sign smart contracts on the Blockchain, ensuring that they’re in control of where their medical history goes.

“Our system gives patients a comprehensive, immutable log and easy access to their medical information across providers and treatment sites,” states the project’s white paper.

Therefore MedRec grants the healthcare provider access to patient’s data, but only when the Blockchain is instructed to give it. Further, it executes the patient’s instructions, sending information to a pharmacy or a specialist for referral, only with the patient’s consent.


In a similar fashion, the London-based Medicalchain startup implements Blockchain to improve health record storage. Different institutions such as doctors, hospitals, laboratories, research and health insurers are able to request permission to access a patient’s record so they can provide their services and record transactions on the built-in ledger.

With Medicalchain, doctors are able to enlist themselves to care for patients by using the integrated application. That ensures a secure and reliable way of finding doctors because they need to be verified and their license has to be checked. Mo Tayeb, co-founder at Medicalchain told Cointelegraph:

“Blockchain technology is set to change the way healthcare is managed forever. Blockchain allows for clinicians and patients alike to be confident that the medical records are accurate and up-to-date as the distributed ledger guarantees an incorruptible, trustless version of the data which can be depended upon at any given time. An indisputable single version of the truth is not achievable with today’s current systems and infrastructure.”

Similarly to MedRec, Medicalchain employs a permissioned Blockchain to ensure extra levels of protection for patients’ data. Tayeb explains: “Using Hyperledger, Medicalchain will allow patients to control permissions to their health records – who gets access to them, what information they get access to and for how long.  It also allows for health staff to trust the integrity of the medical records as patients will only have ‘read only’ access whereas certified and verified clinicians will be given ‘read and write’ permission.”

UnitedHealth Group

In April 2018, US healthcare giant UnitedHealth Group (currently ranking sixth in the country on the Fortune 500) announced the partnership with other industry players in using Blockchain to keep records up to date via its Optum subsidiary. According to the US government, about 50 percent of doctor directories in the country contain incorrect information. As joint statement goes:

“Industry estimates indicate that $2.1 bln is spent annually across the health care system chasing and maintaining provider data. The pilot will examine how sharing data across health care organizations on Blockchain technology can improve data accuracy, streamline administration and improve access to care.”

“This is likely one of the very first nationwide healthcare Blockchain alliances,” Optum senior distinguished engineer Mike Jacobs commented the move. “Healthcare in general is just getting started on understanding what the appropriate uses are of this technology.”

Camelot Consulting Group

Similarly, Germany-based Camelot Consulting Group developed a Blockchain-based solution for the management of sensitive medical data in April.

With its Hypertrust X-Chain data management system, the company aims to offer the healthcare industry a secure digital platform for the exchange of patient data. The goal is to provide all actors that are authorized to participate in the therapy process with decentralized data storage based on Blockchain.

All data transactions are encrypted and stored on an immutable Blockchain and will be carried out directly between the authorized participants, the company says. It will also allow the “integration of partner systems” and “real-time temperature, location and quality control as well as reliable proof of origin”.

To illustrate the advantages of the new system compared to conventional methods, the Camelot Consulting Group uses the example of extracorporeal cell therapies in which patient’s cells are removed and processed in a complex, multistage process.

“Many different actors are involved in this process, such as the treating clinic, the cell removal center, logistics service providers and pharmaceutical companies. Today, most important data is still transmitted by analog means in order to be recorded again in the course of the further process. The risk of erroneous data and data misuse is therefore immensely high.”

Providing data for research

MedRec’s Blockchain system is sustained by miners. But MedRec doesn’t run cryptocurrency transactions, and, therefore, miners who offer their computing power to verify data are not given a monetary reward.

Instead, they get access to aggregated and anonymized data from consenting patients, which is an important resource for research companies developing new drugs and treatments — having access to a pool of genetic data can significantly speed up their operations.

Speeding up insurance claim payments

Health providers might have to wait a long time to get paid by insurance companies. In 2016, US bank holding Capital One aimed to tackle that issue by collaborating with LA-based Blockchain company Gem.

“Blockchain technology connects the ecosystem to universal infrastructure, and shared infrastructure allows global standards that do not compromise privacy and security,” pointed Capital One in its press release.

Gem operates via GemOS, a system that serves as a platform for managing data, identities and rules on a safe Distributed Ledger Technology (DLT). It stores patient’s credentials as well, used for signing transactions and swift exchange of information among the parties involved in the insurance contract.

Improving security

Blockchain-based systems don’t have a single place to attack due to the technology’s basic principles, where each block is immutable and cryptographic. That seems to be particularly important for healthcare industry, prone to hackers’ attacks. For instance, last year, the UK’s National Audit Office said the country’s health service failed to “follow best practices” to prevent the WannaCry cyberattack that partly paralyzed the UK’s National Health Service.

Few months after the said attack, a UK university partnered with an Indian tech institute to examine Blockchain protection against future cyberattacks. It was announced that City University London and Indian Institute of Technology Kharagpur would work together via a consortium which will focus specifically on arming health care entities and Internet of Things (IoT) components against the effects of international cybercrime:

“Our consortium will be exploring the use of a privacy-preserving Blockchain architecture for IoT applications in healthcare data-sharing, using attribute-based encryption (ABE) to provide greater security for the devices.”

Similar problems were experienced in the US, where The Office of the National Coordinator for Health Information Technology (ONC) published a research paper on the applicability of Blockchain technology in securing and recording medical record components last year. It was noted that each year, a large number of healthcare companies are exploited by hackers and security breaches. The acquired databases of stolen data of patients and other protected health information – which are regulated under US law – are usually sold on the dark web.

In a research paper entitled “Blockchain For Health Data and Its Potential Use in Health IT and Health Care Related Research” authored by Laure Linn, the ONC stated:

“Blockchain technology has the potential to address the interoperability challenges currently present in health IT systems and to be the technical standard that enables individuals, health care providers, health care entities and medical researchers to securely share electronic health data.”

Allowing for payments in cryptocurrencies

Some medical startups offer to pay for medical services using cryptocurrencies. Medicalchain announced a partnership with the London-based Groves Medical Group for a pilot program giving patients access to telemedicine and the ability to pay in cryptocurrencies. The project will use the Hyperledger Blockchain technology and is expected to be launched in July 2018.

According to the Medium post announcing the collaboration, this partnership makes The Groves the first UK medical practice to use Blockchain and accept cryptocurrency payments for healthcare services.

Some startups even offer their own cryptocurrencies. Patientory, a free-to-use Blockchain-based app launched in 2017 where users can create a profile to keep track of their medical history, employs their own cryptocurrency called PTOY to provide some extra options for both doctors and patients. Doctors get private health information through the infrastructure on the Ethereum Blockchain, whilst the patients can buy extra storage space in the app.


Fighting counterfeit drugs

Counterfeit drugs is one of healthcare industry’s biggest headaches. For instance, the US Food and Drug Administration (FDA) wrote in 2013 that “more than a third of anti-malaria drugs available in Sub-Saharan Africa and Southeast Asia are counterfeit or substandard.” Fake malaria and tuberculosis drugs cause about 700,000 deaths per year, according to International Policy Network.

Block Verify is a startup that offered a solution. Pavlo Tanasyuk, its founder, told Cointelegraph in 2015:


“We decided to start with pharma [sic] as it is one of the sectors where people are directly affected by using counterfeit products. That can lead to various complications and even death of the consumer. It is also one of the most challenging environments.”


The Block Verify team uses a private DLT simultaneously with the Bitcoin Blockchain, which they use as “a ledger to hash certain data to secure [their] own chain. Essentially, they give every product its own permanent record on their DLT, making manipulation of private keys impossible, claims Tanasyuk. The system is designed to protect everyone at each point in the supply chain, creating a “trustless system of transparency”. That way, a counterfeit product should be detected by a simple QR-scan.


Revolutionizing public health

The potential effectiveness of Blockchain-based technologies has not gone unnoticed by governmental organizations, presenting crucial opportunities for public health.


In 2016, it was announced that a software company Guardtime partnered with the Estonian Government’s e-Health Foundation to accelerate Blockchain-based management of patient healthcare records.

By mid 2017, the system was implemented on the national level, and the public health records of Estonia’s 1.3 mln citizens were secured inside a system based on Guardtime’s KSI technology.

Estonia claims to be the first government in the world that have embraced the DLT in its live production systems for ensuring the integrity of the records, logs and systems. Guardtime’s KSI Blockchain has been continuously running since April 2008, and is purpose-built for massive-scale integrity instrumentation of any type of data at rest.


In 2017, a trade giant Alibaba announced the collaboration with Chinese authorities to launch the country’s first application of Blockchain technology in the medical sector. Ali Health was set to work with local government in the city of Changzhou first.

“It is cost effective and safe. With Blockchain, health centers and district hospitals are interconnected so that the people can enjoy convenient medical services.” Zhang Zhihong, director at Zhenglu Town Health Center in Changzhou told local news resource Yicai Global.

While full details of the scheme have not been disclosed, the Ali Health’s project will supposedly involve creation of “a number of data security nets” and storage of data in ciphertext with “strict access controls and operational privileges.”


In August 2017, it was reported that Russia’s Ministry of Health partnered with state-owned bank Vnesheconombank (VEB) for the development of a Blockchain technology-based system to be used in exchanging patient history in the healthcare industry.

There are no specific details regarding the project at the moment. The partnership could be part of the mandate by the Russian government for the creation of a new interagency data-sharing system.


Although there have been no federal project announcements, in July 2017, the American Research and Policy Institute is

sued research arguing that public health programs such as the U.S. Medicaid program could benefit from the use of a Blockchain based distributed ledger and smart contracts. In 2016, Medicare fraud caused more than $30 mln in losses in the United States, prompting various agents to argue that Blockchain-based systems could help minimize it.