Block Chain’s Missing Link

The new IT concept that you hear most about today is block chain systems design and technology.
If you have not, you will very soon. It’s a concept that relies heavily on core internet communication
tools and shared information. When you mention block chain some people automatically think of
Bit Coin but Bit Coin is just one application of the block chain concepts and tools, it is not block
chain proper. HISTalk posted a very good
synopsis of block chain last year.

Block chain in its simplest form is a ‘virtual ledger’. A ledger that is available to all on an
instantaneous basis via the internet. Let’s look at an example. Say I borrow $100 from my office
buddy Joe. If it’s just the two of us involved and no one else cares, then he notes on his paper
ledger an asset of $100, with an offsetting entry of his cash decreasing by $100. On my ledger I
note an increase in my cash balance of $100, and a liability to Joe of $100. If an auditor were to
check our ledgers she would see all four entries and all things would be “kosher’”, or in accounting
terminology in balance.

Now assume everyone in our office cares and we all have electronic ledgers and all our ledgers
communicate with one another via the internet thereby creating one big virtual ledger. Every time
one ledger changes they all change instantaneously. Everyone in our office would see I owe Joe
$100. As I make payments on the loan (or fail to) all ledgers would reflect the subsequent activity.
Block chain software maintains a ‘universal virtual ledger’ by maintaining constant communication
among all participants. All updates and transactions whether add, change, or delete are stored
forever. Hence the full provenance of any activity is easily viewable. The number of participants is
not limited and could be in the billions, limited only by agreed to privacy and security constraints.

The implications of block chain technology are enormous. For example; since the block chain is
always in balance (no single entity entries allowed) …goodbye auditors; bookkeepers,
accountants, financial intermediaries, clearinghouses, many regulators…and so on.
Some industry pundits are predicting that block chain will transform health care and make the
interoperability mountain into a mole hill. A deeper understanding of the health care landscape
with its many non-technical issues makes me a skeptic.

On the business side of health care the impact should be pretty much the same as in commercial
business. You can expect a big impact on finance and supply chain management. Operations such
as scheduling and resource management will see significant impacts, many will happen within the
next decade. Legacy systems will have a tough time adapting, more so than their adaptation to the
internet, but slowly they will adjust.

On the clinical /medical side I predict a much longer runway before we see any real impact. There
are two reasons why.

First, block chain is highly dependent on definition and structure. Terminology must be consistent
and procedures must be standardized. Generally Accepted Accounting Standards (GAAP) have
been in place for centuries and as they have changed over the decades multiple oversight groups
have hashed out agreed to changes. On the supply side UPC codes have been around for almost
fifty years and go down to almost the molecular level.

Not so in medicine. A practitioners understanding and use of terminology and protocols is highly
dependent upon where they went to medical school and who they trained under. Studies have
shown that even today, after the federal government has paid out over $30 billion in EHR
incentives, still over 70% of a patient’s medical record is entered into the EHR as free text.

The second reason is block chain cannot work without absolute accurate identification about the
transaction initiator and the information target. Identifying the initiator is easy, while the target is
the person/patient, and that’s another matter. Still today after decades and trillions of dollars spent
on healthcare IT we do not have a unique person /patient identifier. As I have noted in my past
writings on HISTalk, and other blogs, this is not a technology problem, but a political one. If block
chain is to be the savior of health care interoperability, as the technocrats suggest, then it’s
Congress that will have to forge the most critical first link in the chain. My prediction is systems
developers will continue to jury-rig solutions around this missing link, and providers would do well
to remember a chain is only as strong as its weakest link.

Frank Poggio
The Kelzon Group
May 10, 2017

All rights reserved, 2017

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