Will blockchain save the healthcare system?

Blockchain 101

Blockchain is a log of activity that is time-stamped, tamper-proof and shared across a network of computers.

Originally dreamed up in 2009 by an unknown person or group—it’s not known for sure which—called Satoshi Nakamoto as a means to move the digital currency bitcoin, its uses have since been broadened to exchange other types of digital assets, such as data, in private, permissioned networks suitable for businesses.

Each transaction that goes into the log of activity is enclosed in a block and linked together in chronological order to form a chain, giving it the name blockchain.

Blockchain is gaining traction as a tool that could help solve some of the healthcare industry’s age-old problems that have resulted in wasteful spending and higher costs for providers, insurers and patients. Once-reluctant competitors are joining forces to find out just what the technology can do and in the process are developing new transparent business models. 

A senior distinguished engineer at the healthcare services company Optum, had been experimenting with how to solve healthcare industry problems with that emerging, exciting, little understood technology called blockchain. He had heard rumors that health insurer Humana, like Optum, had been testing blockchain’s applications.

So during lunch at the Distributed Health conference in September 2017, Jacobs and Humana Lead Enterprise Architect Kyle Culver described their projects in careful terms (there was no nondisclosure agreement in place) and learned that both companies were attempting to use blockchain to improve the accuracy of healthcare provider directories—a perennial, costly issue for the insurance industry. Their experiments had revealed that blockchain works best when multiple partners are involved.

Just two months later, Optum, Humana and three others—MultiPlan, Quest Diagnostics and Optum’s corporate sibling UnitedHealthcare—had solidified an agreement to form the Synaptic Health Alliance, which in June 2018 piloted the use of blockchain to fix errors in provider directories and lower the cost of keeping that information up to date by sharing the data and workload. Aetna and health system Ascension have since joined the group. With “multiple people looking at the same information, the quality of that information should go up and operational costs for the provider and the payers should go down because there’s less-frequent contact being done between those two stakeholders. And because the quality goes up there should be a better experience for the patient,” Jacobs said.

It’s early, but the companies have already found they are able to locate inaccurate information faster than they would on their own while also protecting information from cyberattacks. The goal is to scale the tool to a national level. But fixing provider directories is an initial foray. “We have a general agreement that, boy, if we can get this to work, this is just the first area of focus,” Jacobs said.

They anticipate that blockchain will be the key that unlocks barriers to healthcare data-sharing and ultimately enables an industrywide shift to value-based care.

“When we talk about healthcare today, we talk about the silos a lot—the silos of data and the barrier for exchanging information,” Humana’s Culver explained. “The hope is that blockchain allows us to connect those silos and … enable new capabilities (so that) access to information no longer is where we compete, but we compete much more on the value-added service and the trust and transparency of the companies that are providing those things.” 

In the simplest terms, blockchain is a shared record of transactions. It enables participants in a group to securely share data with each other without a middleman and keep track of what was exchanged and when. Instead of that record being located on a single, hackable computer, it is maintained across multiple computers, which makes the information extremely difficult to tamper with or delete. That tamper-proof characteristic, along with a process that ensures any information put into the blockchain is valid, enables trust between the group participants.

So in the case of the blockchain-enabled provider directory, if one insurance company in the alliance calls a doctor’s office to verify an address and updates that information in the record, all members of the alliance would see the change. That means less work for the rest of the insurers and the doctor’s office.

Unnecessary ED visits from chronically ill patients cost $8.3 billion

About 30% of emergency department visits among patients with common chronic conditions are potentially unnecessary, leading to $8.3 billion in additional costs for the industry, according to a new analysis.

The report, released Thursday by Premier, found that six common chronic conditions accounted for 60% of 24 million ED visits in 2017; out of that 60%, about a third of those visits—or 4.3 million—were likely preventable and could be treated in a less expensive outpatient setting.

The frequency of unnecessary ED visits from the chronically ill is unsurprising given the fee-for-service payment environment the majority of providers remain in, said Joe Damore, senior vice president of population health consulting at Premier. On average, only 10% of providers’ payment models are tied to value-based models, he said, so providers don’t have an incentive to effectively manage patients to prevent disease progression and promote wellness.

Premier’s findings are in line with other research on patients with chronic diseases, finding they are more likely to use the ED and get admitted to hospitals because they experience poor care coordination. 

“Value-based care is managing a chronically ill patient in a coordinated way, and the traditional payment model hasn’t rewarded that. It’s episodic,” Damore said. 

The six chronic conditions used in the analysis are asthma, chronic obstructive pulmonary disease, diabetes, heart failure, hypertension and behavioral health conditions, such as mental health or substance abuse issues. They were selected because they are often cited in the academic literature as the most common and costly conditions in the healthcare system, Premier said. 

The data from the 24 million ED visits at 747 hospitals comes from Premier’s database, which has information on 45% of U.S. patient discharges, according to Premier. To get the results, Premier identified hospitals with the lowest quartile visit rate, or those that had the lowest ED admission rates by condition, and calculated how many visits at the remaining hospitals could be prevented if all hospitals achieved those rates for the six chronic conditions. 

And then to arrive at the $8.3 billion in costs, Premier used the average cost for an ED visit estimated by the Health Care Cost Institute, which is $1,917. 

Damore said that although the industry is “mostly fee-for-service at this time,” he expects an eventual transition to value. “More and more providers are convinced that the future is going to be value-based payment,” he said.