Readers Write: Does Cryptocurrency Have a Future in Healthcare?
Does Cryptocurrency Have a Future in Healthcare?
By Curtis Bauer
Curtis Bauer is chief product officer of Sphere of Nashville, TN.
Cryptocurrency seems to have found itself used in some capacity in just about every industry. Well, every industry except healthcare.
Healthcare has been hesitant to adopt cryptocurrency, such as the well-known bitcoin, primarily because of cryptocurrency’s various nuances that are not inherent with more traditional forms of electronic payments. Those nuances include volatility, lack of consumer demand, increasing government regulation, and most importantly, challenges with reconciliation.
To understand cryptocurrency and its future in healthcare, you must first understand the underlying technology. Cryptocurrency is built on what is known as blockchain technology. Blockchain can be difficult to understand, in part because blockchain is not a plug-and-play technology, a silver bullet standalone technology solution, or an app that can be easily installed.
Blockchain is a decentralized, distributed, peer-to-peer network. As opposed to a system in which applications are controlled by one entity, a blockchain network enables control to be shared across a group of decentralized computers and networks.
Blockchain is built on distributed ledger technology, which creates a record of transactions over time while allowing for tracking and analysis, documenting the transfer of ownership, and ultimately serving as a means for proving ownership. The advantages of blockchain include the elimination of a need for third-party intermediaries to verify transactions and a high level of security.
As it relates to healthcare, although there are significant challenges that need to be overcome before cryptocurrency will ever become mainstream, there is a strong likelihood that the underlying blockchain technology will become a staple in the world of payments and other business segments that have a need for authenticating transactions and minimizing the risk for fraud.
Blockchain is changing the world in several ways, as there are 300 million estimated global cryptocurrency users, according to a report from the US Department of Health and Human Services’ Office of Information Security. Consider bitcoin, which is itself just one of thousands of cryptocurrencies in existence. Approximately 17% of the US adult population owns bitcoin. It has a global market cap of $775 billion. It is accepted by more than 15,000 businesses for payment globally. Crypto-economics, which is a field of economics based on blockchain technologies, is now a recognized academic field. Non-fungible tokens, which are also built on blockchain, are selling for millions of dollars.
Yet if blockchain and cryptocurrency are so innovative, exciting, and cutting-edge, then why have they been so slow to penetrate the healthcare market? There are several reasons, and they begin with the extreme volatility of cryptocurrency.
The value of cryptocurrency fluctuates wildly in short periods of time, sometimes by the minute. In general, cryptocurrency lacks the stability of traditional government-issued currencies, and that is unlikely to change any time soon.
Similarly, given cryptocurrency’s extreme volatility, exchange rates with other types of currency are constantly in flux. For example, between the time a transaction is agreed upon and the buyer obtains the product, the cryptocurrency-to-dollar exchange rate may have substantially changed.
The next problem is regulation. The federal government views cryptocurrency not as legal tender, but more like a piece of property or even gold from a tax perspective. Every time cryptocurrency is bought or sold, it must be reported to the Internal Revenue Service, so attempting to use cryptocurrency similar to cash or credit cards becomes a tax and accounting nightmare. Healthcare providers who begin to accept cryptocurrency would be subject to the same accounting and income tax implications when they move to convert or exchange the cryptocurrency back into fiat money or government-issued money that is not backed by a physical commodity, such as gold or silver.
Finally, there is the Catch-22 situation of consumer and merchant demand when it comes to cryptocurrency. Consumers are reluctant to embrace it because merchants don’t accept it, and merchants are hesitant to devote time to learning how to accept it because so few consumers use it.
The credit card is likely to remain king well into the future for healthcare transactions, making cryptocurrency unlikely to make much of an impact on healthcare any time soon, and possibly ever. But the blockchain technology that undergirds cryptocurrency is another story. Due to the premium that the technology places on security and transparency, there are two notable use cases for blockchain in healthcare.
- Patient record-sharing. The healthcare industry has traditionally faced substantial barriers in ensuring patient access to all their health records across all service providers in order to have a complete view of medical histories, while ensuring their records are secure. However, blockchain-based medical record systems can be linked into existing medical record software and act as an overarching, single view of a patient’s record without placing patient data on the blockchain. This approach provides patients with a comprehensive, single source for accurate medical records.
- Supply chain transparency. Blockchain is ideal for enhancing the transparency of the healthcare supply chain, particularly for pharmaceuticals. To combat prescription counterfeiting, the industry must be able to track each package’s end-to-end movement from the point of origin, including manufacturers, wholesale, and transportation. Blockchain enables stakeholders throughout the prescription drug supply chain to verify the authenticity of medicines, expiry dates, and other important information.
For healthcare transactions, the credit card is likely to remain king for some time. In that regard, one concrete step providers can take now is to steal a page from retail and focus on minimizing shopping cart abandonment. In other words, providers must ensure a convenient and easy buying experience that enables patients to quickly submit payment. To this end, providers should store payment information electronically for patients, so payment is fast and seamless when they log into patient portals and practice websites.
Though cryptocurrency will likely continue to grow in popularity across many sectors, it’s unlikely that healthcare will embrace it as a mainstream payment option any time soon.
There are many words I would use to describe the blockchain and cryptocurrency, “innovative” “exciting” and “cutting edge” are definitely not any of them.
Bitcoin and Etherium both dropped by 10% yesterday I highly doubt any reasonable organization not infected with web3 groupthink would want to accept such a wildly volatile form of payment.
The only way in which cryptocurrency has “found itself used in some capacity in just about every industry” is via ransomware. A slightly more intelligent argument would be to say that ‘blockchain’ has managed to be used in many industries, but even that is a fraught statement, as almost all so-called “use-cases” of blockchain have ended up being vaporware, powered by investors eager to make a quick buck and scammers looking to find their next sucker.
Anyone who recommends putting patient records on a blockchain that is (by design) public facing is someone I have a lot of doubts about, especially if they wave this away as a “comprehensive, single source for accurate medical records” without getting into any of the reasons of why interoperability is so hard from both a technical and political perspective. The blockchain is just an append-only database; there’s no magic here that is going to make interoperability easier.
About every two months, we get someone spouting the same, tired, incorrect talking points about blockchain in healthcare.
I don’t want to repeat Brother of Mercy’s points, only to say – can anyone touting blockchain in the future at least be asked to answer these quite fundamental questions/roadblocks?
Can we require future ‘blockchain in healthcare’ articles contain a real example of it solving a healthcare problem? Talking about the theory is no longer insightful.
Cryptocurrency is a solution in search of a problem. There are only two relatively stable currencies that aren’t pegged to the dollar, and both of those have lost more than half of their value in the last 6 months. The “market cap” (weird term to use) quoted above is based on where it was in April. Today, the total value of circulating Bitcoin is about $365B. That could just as easily cut in half again in the next 6 months. Even the currencies pegged to the dollar are far from stable, as we saw with the collapse of TerraUSD earlier this year. The few places that accept Cryptocurrencies always still price everything in what blockchain folks like to call “fiat” currencies. Cryptocurrency is less a true currency as it is a protocol for transferring value from one person to another. The only reason to hold on to a cryptocurrency beyond a transaction would be purely speculative. But to his credit, the writer makes the volatility argument, maybe the mis-quoting of the total value of Bitcoin was an honest mistake.
While it’s tempting to say that a blockchain could help with healthcare, blockchains typically work when there is a value-bearing asset attached to them. Blockchains require validators, which in most cases is either converting electricity into crypto tokens at huge environmental cost (mining/Proof of Work) or by staking their ownership of assets to ensure their reliability as a validator (Proof of stake). Neither of these methods work without having a token of value that can be used to compensate miners and validators. So you would need to prop up a token on the theoretical healthcare blockchain that carries some sort of speculative value, or you would need to put the healthcare data out on one of the existing chains, like an ERC721 or ERC1155 token on Ethereum or Polygon or somesuch. Barring that, you could conceivably have a centralized validation structure, with a company or nonprofit that provides validation services for the chain, but then it’s no longer decentralized, and you might as well just use the existing methods of data sharing. And all of this would need to be done much faster than a typical blockchain transaction today, which can take minutes to hours to be executed, depending on loads.
Even if you can address the problems of volatility and validation, what problem does it really solve? If you have EHR pointers on the blockchain, they still need to point to a secure database somewhere to query. That requires EHR vendors, Healthcare providers, the government, and insurers all to get on board to allow a patient record to be pulled. Much of that can be done with existing interoperability infrastructure, but the fact that it’s not always done as well as it should be is a testament to the resistance of all parties to get on board. A blockchain won’t magically solve the politics of healthcare data. Patients could always choose to put their own data into a third party database, I suppose, but that would be far from universal, so it’s usefulness would be marginal at best.
Blockchain technology is interesting, and there are good people out there trying to address its problems and shortcomings. I think there are probably a number of valid applications for it. I’m just not sure that healthcare is one of those.
Ask anyone in Healthcare or Healthcare IT if having a “ledger” for a health record will solve any problem they’re having today or in 10 years and I am confident they will say they’re too busy and get back to them in 10 years.
There are far more reliable and tested technologies that can solve problems Blockchain companies want to solve/invent.
These companies don’t work in healthcare IT, but see the $$$ and begin to drool over the opportunity to sell anything, regardless of viability. Blockchain isn’t going to improve interoperability, lower costs, increase patient satisfaction, improve caregiver satisfaction, decrease complex technology stacks, or anything else positive.
Just say no to Blockchain, especially as it relates to Healthcare.