LIVE NOW
The Finder app is here! 🥳

Get your savings sorted.

Blockchain in healthcare administration: Billions of lives, trillions of dollars

Posted: 13 December 2019 5:53 pm
News

Picture not described

Blockchain is seeing live use in healthcare administration with promising, potentially world changing, results.

In 2010, the US spent 17.6% of its GDP on healthcare. It's a bit of an outlier in that respect, with most equivalent OECD countries spending a still-enormous 10% to 12% of their GDP on healthcare.

Similarly, it's known that the US also puts a disproportionately large amount of this total spend towards administrative tasks. But no one is 100% sure how much, because it varies from state to state, between hospitals, for different types of healthcare and different patients in different circumstances, and is constantly changing.

It's widely speculated that this difference in administrative costs is due to the US' complex multi-payer healthcare system, but this is confounded by studies which find that administrative costs vary by state, and some have managed to achieve administrative efficiency on par with Northern European nations, while others are lagging well behind.

As such, current research doesn't point to any one factor. It simply suggests that as things stand, extreme administrative costs are just a large and growing part of the total cost of healthcare.

Still, with trillions of dollars poured into administration alone each year, an aging population and total healthcare spending set to explode, a meaningful solution to healthcare administration costs is guaranteed to save lives.

What's the actual problem?

One of the reasons healthcare administrative costs have been so tough to tackle is because it's a three-headed hydra of a problem, explains healthcare administration expert Pradeep Goel, and we currently spend billions of dollars each year trying to cut off the heads, rather than slaying the beast.

And you know how when you cut off a hydra's head, two grow back?

Picture not described

The three monstrous heads which collectively make up the amorphous beast of healthcare administration are named Benefit Coordination, Care Coordination and Billing.

  • Benefit Coordination: "It's a staggeringly large expense."

This is the coordination of benefits between the patient, the doctor and the insurance, employer, government or whatever other party is paying for it, Goel explains.

"There's always this triangle between the doctor the patient and the payer, because there's always going to be an administrative entity involved in managing the payment."

This triangle remains regardless of who's footing the bill, whether it's an insurance company, the employer sponsoring the healthcare, a government or the hospital itself bearing the cost of a procedure, Goel says.

There are a lot of costs and efforts involved in administering this triangle between patient, doctor and payer, but someone has to do it, and someone has to pay the cost of doing it.

"In the US it falls upon insurance companies, in the UK it falls upon the National Health Service, in Australia there is a similar agency that manages and coordinates these benefits of millions of Australians," Goel says.

"So that entity, and their relationship with physicians and patients is a quite complex and expensive, and also frustrating, journey for everyone."

"Dysfunction of coordination of benefits can cost anywhere between five to fifteen percent of the overall health care cost which, given that you're talking about almost seven plus trillion dollars spent on healthcare, you can imagine over a trillion dollars a year spent on just that piece of healthcare worldwide."

"It's a staggeringly large expense... and it's also the most frustrating thing for patients and doctors to deal with because it's not related to their care. It's related to the administration that no one likes to deal with. No one enjoys the bureaucracy or the perceived unnecessary impediment that it becomes."

"There are many, many big healthcare companies just working to solve that problem. But it doesn't make sense to solve this problem, because already people don't think of healthcare as an administrative necessity. They want healthcare to take care of their clinical needs - their actual disease condition."

Which brings us to the next head of the hydra.

  • Care Coordination: "Literally trillions of dollars are spent in this area each year."

"Am I getting the right care? Am I getting the best care? Is the physician doing the right thing when they leave the office? Are they going to see the right specialist? Is there a proper consultation between doctor and specialist? Is the patient following through on their self-care regimen?"

"When do we know how to bring them back to the hospital if they're not doing well? How do we avoid relapse and recurrence? And are we applying the best clinical guidelines for, say, diabetes or cancer or trauma or heart disease? And is there a big difference in quality between how a patient receives care in Sydney versus Senegal? And why is that different? Why aren't people treated according to the best clinical guidelines everywhere?"

"Those are all clinical questions," Goel explains. "And that's a very complex process. There are many, many companies who are focused on disease management and case management, and they are, again, all solving a piece of the problem."

"But if I happen to have three different diseases that I'm dealing with – one episodic, two chronic – there will be multiple, multiple systems involved in my care behind the scenes, and that becomes really difficult and expensive to do."

"That's why the cost of healthcare keeps going up, and people are never really satisfied with the quality," Goel says. "So that care coordination is a really complex piece, and it requires a team of people to work together; doctor, nurse, office administrator, patient, family member and the specialist and pharmacist and so on."

"And it's not just about medical records, by the way. It's about evidence, clinical guidelines, compliance and adherence, not just about getting my records seen. That's good and necessary, but that really doesn't address anything in terms of overall quality of care."

"So that's a huge area. Again, literally trillions of dollars are spent in this area each year, and with not necessarily as good a result as could be had."

  • Billing: "Another massive area."

"The third track that we see everybody trying to address is around billing, payment, pricing, adjudication, repricing, reconciliation of the cost of care," Goel says.

"Typically health care is not paid by a single party. The patient pays a part, the third party insurer, government or employer pays a part... There's always 'deliver the service first and then figure out how much to charge for it.' And then bill and collect and reconcile. And there's always the question of fraud and waste, and overbilling and overutilisation."

"So this area is another massive area. Again, there are many companies that do just that. And again, the problem is that billing doesn't live in isolation of care, and care doesn't live in isolation of benefits."

If at first you don't succeed

If we know that healthcare administration is a three-headed multi-trillion-dollar hydra of a problem, why do we keep trying to cut off one head at a time?

It's partly because everyone who's investing in the space is busy fighting their own separate hydra head. Most people only see one head at a time, and most investment is consequently going towards finding more efficient ways of cutting off one particular hydra head.

As Goel says, he spent decades fighting the hydra heads one by one through a wide career in healthcare administration before realising that it's all the same monster. So as things stand, we're pouring billions into cutting off hydra heads, but almost no one is taking up the literally herculean task of slaying the beast.

That's where Solve.Care comes in.

Solve.Care is a company, of which Goel is CEO, that aims to use blockchain as a way of actually slaying the hydra rather than cutting off its head. It's built on Ethereum for Enterprise.

"Over the years I've built four other health tech companies and tried to focus on administration, or coordination of care, or payments," he said. "Solve.Care is the first company where all of these three fundamental pillars of health care are actually all together in one solution... the natural evolution of a 30 year journey, doing various things, and trying to do them in different ways to make a difference. And then realising that there is a way to actually bring all those tracks together in a way that has never been done before."

"Solve.Care is doing what I tried to do in pieces over the last three decades."

How to slay a hydra

According to the main version of the Greek myth, the Hydra was eventually slain when Hercules drove it from its lair with flaming arrows, fought it to a standstill and then cauterised each neck stump to prevent the heads from growing back.

That's not what Solve.Care does. Instead, it re-envisions the healthcare system as a series of relationships between the parties involved in healthcare administration, rather than as a lot of separate processes to be completed.

"Since you're looking at each of these processes and building a system for them, best build a relationship model that handles all three processes," Goel says. "So we basically flip the equation upside down."

"Instead of thinking of process-oriented systems, in which I'm supposed to join System A, System B, System C, let me have a relationship with you as a physician-patient, and let's divide all processes between us according to well-designed contracts that drive benefit coordination, care coordination and financial coordination."

"Then other parties in the chain can view their relationship and take their role on the chain as well... Now you can actually engage the patient, because now they see the complete picture."

By defining the process of healthcare as a series of relationships rather than processes, you have a flexible and always-applicable language that can speak to all heads of the hydra anywhere they are, and encompass any combination of participants.

And because the required processes are defined by the relationships between parties, a sufficiently reliable framework for defining and communicating those relationships creates an enormously powerful system for automating those processes.

"It completely flips the model," Goel says. "Inverting the focus away from process model to relationship model... that's been our greatest innovation."

Where the idea came from

This particular design was built around two realisations that Goel had picked up over the years.

The first is that interoperability wasn't going to happen as long as everyone remained focused on trying to complete healthcare administration processes rather than actually slay the hydra, so the solution would have to be an all-in-one that can satisfy all three tracks of healthcare administration.

"Over the years, the realisation had set in that a lot of the existing technology and solutions in health care, if not all of them, tend to be in themselves a silo, and they tend to not work well with other systems," Goel says. They're "typically built by completely different vendors for a completely different set of assumptions and for completely different stakeholders... everybody keeps waiting for interoperability to happen, but it never does."

Everybody keeps waiting for interoperability to happen, but it never does."

The second realisation was that patients and practitioners are what healthcare is all about, but none of the existing tools are designed for them. Beyond the incredible medical (and financial) benefits of more engaged patients, there's the simple fact that a tool is no good if people don't use it.

"Also, the realisation occurred over the years, that in none of these three systems, the patient is at the heart of it. These systems are designed as process systems that are owned by either the hospital or the insurance company or the government."

"We are consumers and we need to access the systems and their capabilities, but they're typically not designed directly for our needs. They're designed to serve the needs of the enterprise. So as a result, the patient or the doctor is always an outsider peeking in through a portal or an app."

"That realisation had set in even ten years before Solve.Care was founded, but we were looking to solve these problems by building more portals, more apps, and trying to get the consumer more engaged."

"I started to question, 'you know, we've literally spent billions of dollars to build these systems, and nobody uses them.' Why is that?"

We've literally spent billions of dollars to build these systems, and nobody uses them."

"And the realisation came that it's because they don't add value to me. They don't add value to me as a patient, or to my children or to my parents," Goel says. "They only serve an enterprise need to automate processes. They don't really empower me in any way."

"I was looking for a new way to think about this whole massive continuous investment and significant waste, and was searching for a way to solve this problem of patient-doctor relationships, patient-insurance relationships, employee-employer relationships and then the relationships between these parties that never works."

Enter the blockchain

"I was searching for a solution and was looking for various architectural models, and in that research we came across blockchain – me and my team – and started to explore its potential as a distributed ledger that would actually coordinate people and their relationships, rather than just currency or digital assets," Goel says.

"The thought was that if you can coordinate transactions, then what if we could build a platform that could coordinate relationships and trust, and interact transactions between people, rather than just in the context of crypto."

"So we weren't too fascinated or enamored by the financial transaction use case, which is of course the most prominent and well-understood use case. That's okay, but that's not really what we're trying to solve for."

"We started to look at [blockchain] as a verifiable, auditable, immutable ledger of relationships and trust, and defining relationship pairs which would then be enforced according to specific guidelines, like clinical guidelines, insurance guidelines or regulatory guidelines."

"That research led us to our model of using blockchain as a relationship management framework and coordination fabric. And once we broke through that, and understood that it can and will work, it was just a matter of thinking through all the needs of healthcare participants and building an architecture that meets their needs."

"That led to the Solve.Care journey, which has been now almost three years, and remarkable in what we have been able to do. I think we are doing more in Solve.Care in three years than most of the systems I've built over the previous thirty years. So it's been quite an enjoyable ride, to put it mildly."

Why blockchain?

Solve.Care doesn't have to use blockchain, Goel says. Blockchain just makes it much cheaper, much faster and much more global.

As a blockchain it's auditable, immutable and transparent. That obviously doesn't mean all the information on-chain is hanging out for the whole world to see. Rather, people can see information as is appropriate for the relationships they have on-chain.

"So everybody is accountable to each other, and there is no one who has a strategic advantage or disadvantage. It allows parties that typically have some degree of mutual distrust to trust each other, and to coordinate around the actual goal of making you feel better, and get, clinically, the best possible care," Goel says. "So it establishes clustering parties that typically tend to have orthogonal interests."

"It allows coordination of all the events between parties, and allow the elimination of literally billions of email messages, phone calls, letters and transactions that then have to, somehow, work together. And then it also allows for auditable proof of what happened."

"If somebody's disagreeing with the results or the process, there is an immutable audit trail of who coordinated the benefits, and care. What was the protocol that drove the clinical decisions? What was the payment protocol that drove the payments?"

"Multi party healthcare is complex, by definition, because multiple parties need to be involved," Goel says. "Parties can have appropriate visibility into what, why and when something happened, and they don't have to rely on me as an insurance company, or you as a hospital system, to share the information to determine whether the right thing happened for the right person at the right time."

"That auditability, with the parties with the authority to see the chain, makes it very powerful. It creates trust through transparency, but also creates trust through well-defined relationships, and those are the fundamental strengths of blockchain that we are leveraging."

Cause and effect

These features of trust, transparency, immutability and auditability result in a range of practical benefits.

The biggest is that it enables the whole Solve.Care model. It creates this system where entities can join and leave relationships, picking up clearly defined rights and responsibilities when they do.

In typical blockchain fashion, this opens the door to some cumulative advantages.

Any parties which are part of the healthcare process, and which are responsible for a disproportionate amount of the total cost without providing commensurate value, will stand out like a sore thumb. Their inefficiency (or outright corruption as the case may be) will be very apparent to other parties in the relationship, as well as the patients themselves.

With the patients and the bill-payers getting a closer look at where the money goes, this system also makes it much easier for market pressures to drive improvement. Instead of facing a labyrinth of healthcare administration processes, patients will be able to see where the money's going and will be in a better position to demand better value.

It also puts patients back at the heart of treatments. By getting a clear look at how all three hydra heads – Benefit Administration, Care Coordination and Billing – are playing a role in their treatments, patients can be much more engaged and empowered, resulting in further cost savings and significantly better medical outcomes.

Down the line, the auditability and immutability can also provide an enormous amount of suitably anonymised data. Imagine being able to access perfect information on all the medical treatments and care coordination factors that went into treating millions of patients in thousands of hospitals all around the world, next to the clinical outcomes.

With these snowballing benefits, improved healthcare administration with blockchain has the potential to extend billions of lives, save trillions of dollars and distinctly change the world for the better.

Neat!

Of course, enjoying these advantages is contingent on everything going according to plan.

But as Goel tells it, things are.

"Our clients are using [Solve.Care] today in significant scale, in real life and in large ecosystems... and we are signing very significant meta-enterprise contracts all over the world. We are what you would consider a fairly advanced state, in terms of product."

"We are not overly concerned about people not adopting our platform," he adds. "I am not seeing any barriers that make me feel like we need to rethink our approach. I'm simply looking at it as a necessary education, execution and proof model, and we have enough of that already under our belt to be able to confidently predict that we'll be able to serve clients around the planet. And we're already seeing that."

Solve.Care is already seeing interest and signing contracts with clients around the world, because the relationship-based rather than process-based system is naturally able to mesh with any healthcare system in any country in the world, he points out.

"For a young company, this early in our lifecycle, with the impact we are already having and the interest we have seen, I am not concerned about barriers to adoption," Goel says.

"But I will also say this, I envision this journey to build and enhance the product, the platform, and to build more care networks, to be a lifelong journey... In many ways, we will never stop building this platform to be more valuable to patients and physicians and administrators."

"I like to tell my team this all the time: This journey is a multi generation journey."

The benefits of hindsight

Goel built Solve.Care to very deliberately put the patient at the centre of everything.

But practically, that's more of an ideology than a technical reality. The real centrepiece of this network is Solve.Care itself, as a commercial healthcare technology company.

Could it become a greedy, entrenched middleman on the network? Is there a chance it will lose its original purpose somewhere along this multi-generation journey, either before or after Goel steps away from it?

Yes, Goel says. "Of course it can happen."

"But I don't see that to be a great risk, because if you build a company on sound principles, then you are built to last."

"We're building Solve.Care, from day one, as a company that will improve the lives of people, patients, parents, children, and will do so in a meaningfully impactful way, and it will do so where it's economically viable for our clients, for consumers and for us. There is a lot of focus on sustainability and principled execution. So I'm not overly concerned."

"That is why we are building a very strict value-based culture," he says. "Ultimately at Solve.Care, we're a technology company, but we are driven by our values and principles and I am trying to engineer that into the fabric of the company."

"I'm also making sure that everyone who joins us understands that we are driven by this mission, and they should join us not as a job, but as a journey."

"And that's part of the reason why we have been very cautious in who we bring in onto our board, whether we accept financial investors or not, because those are the factors that take companies overboard, you know? When the principles and visions on which a company was founded are not in alignment with the board's experience and expertise, or the investors are looking for a quick exit, that's where companies go off track."

"But we have taken great care to align our financial model, our equity model, our management structure, our board structure to the vision."

"I have enough experience to anticipate those risks and manage them, the day we founded the company," Goel says.

Is that enough? Only time will tell.

It's worth noting that Solve.Care was a product of the ICO boom, raising $20 million with the sale of an ERC20 utility token. You'll have to do your own mental arithmetic to calculate how well that squares with a cautious approach to outside investment.

Plus, the story of the idealistic tech company that swallows half the world, goes public and then drops idealism for profitability is one of the hottest tropes of the 2010-2020 decade, so it will be interesting to see how well Goel's optimism holds up as Solve.Care expands.

Maybe someday, years from now, you'll be able to look back, and see for yourself how well, or how poorly, Goel's sentiments have aged.



Also watch


Disclosure: The author holds BNB, BTC at the time of writing.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Latest cryptocurrency news

Picture: Shutterstock

Latest crypto guides

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Ask a question
Go to site