April 23 by Sharath Beedu
Rising healthcare costs will continue to encourage disruption across the healthcare ecosystem in the years ahead. Key players in the industry are aligning on a common goal: Deliver more value to the patient and share a stake in both the risk and the outcome, while also dramatically reducing operational costs. Given the pace of innovation, emerging technologies have the potential to transform business models and the entire contracting paradigm.
Blockchain technologies are poised to open cost reduction opportunities and increase transparency across the industry. The most applicable use for blockchain technology is the “smart contract.” The nature of contracting processes – high-value contracts, inefficiencies when validating data, multiple parties, middlemen and transaction fees, and scrutiny over trust and security, are a perfect match for a distributed ledger. As a secure, distributed, immutable system of record, the distributed ledger can provide complete security and transparency to all parties and seamlessly automate settlements between manufacturers and suppliers, payers, providers, GPOs, and other stakeholders.
The use cases – whether procuring and tracking raw materials, tracking patient compliance and providing data transparency during clinical trials, or triggering payments upon delivery for commercial contracts – are endless. Instead of thousands of hours spent in collecting, cleaning, validating patient scripts and claims data, the industry can leverage smart contracts deployed, replicated, and then executed on a distributed network of computers to auto-validate transactions.
A smart contract also enables the practical adoption of new contracting models such as performance-based risk-sharing agreements. With a secure method to provide sensitive and regulated patient data across multiple parties, track patient compliance, and automate complex payment structures based on defined conditions, pharma manufacturers and payers will be able to deliver expensive, precision therapies at scale. Further, with the application of machine learning, manufacturers can use probability analysis to predict risk and patient outcomes, reflecting this intelligence in their pricing strategies.
There is never a dull moment in the healthcare industry. With technology at the forefront of change, future holds significant promise to drive digital innovations and positively impact millions of lives. The question of change is not if, but when. Organizations that adapt and embrace the proven innovations available today will be poised to achieve operational excellence, drive enterprise value, and build sustainable competitive advantage.