Blockchain and the Indian Healthcare Ecosystem

An evaluation of the potential of the technology to redefine trust and governance in this sector

Samparna Tripathy
9 min readJul 18, 2018

Block chain is anticipated to be a technological disruption that can change the way we look at institutions and governance. In an era of trust deficit, what appeals the most about block-chain is its reliance on a trustless collaboration among all network participants — established cryptographic techniques allow peers on a network to store, exchange or view information without the need for a centralized authority.

This trustless system is enabled by the distinguishing characteristics of block chains from other conventional databases — consistency (i.e. no conflict with some other data already present in the database), immutability (i.e. append only leaving behind an audit trail) and ownership (i.e. data itself can be attributed to owners via unique digital signatures that comprise of public keys known to all in the network and private keys known only to the owner).

Each block chain participant can download a copy of all transaction records and has the authority to verify and approve of changes made in them. A complex consensus algorithm, ensuring that at least 51% of the block chain participants authenticate any transaction, inspires faith in data integrity — the sine qua non for trust. Any sector where multiple parties generate transactions that change information in a centralized repository, intermediaries are inefficient and not trustworthy and enhanced security and integrity are the need of the hour — needs to take a hard look at block chain use cases.

Though the distinction between Block chain and Bitcoin is subject to debate, the world seems less divided on the applications of the former technology. Even the prescient Warren Buffet has invested in block chain solutions in the transportation and logistics sector. As tempting it is to jump on board, block chain too isn’t a panacea for all and only relevant for solving specific real world problems

Health Care Ecosystem in India

One such field is health care and life sciences. The lack of implementation of common architectures and standards that would allow for the safe transfer of sensitive medical information among all stakeholders in a health care ecosystem is responsible for the disjointed state of health data in our country today. Over the course of their lives, patients change health care plans, specialists and places of residence or occupation.

In India, as per National Family Health Survey — 3, more than 35% of the population relies on private, non institutional points of care like single doctor clinics. Low transaction volumes do not make consolidation of data in a single repository a solid business proposition.

While moving through the hierarchy of health institutions in India, medical tests and diagnostics (accounting for around 7% of total Out of Pocket Expenditure on health) are often repeated. The inability to access complete medical histories increases the probability of wrong diagnosis or lengthening the duration of hospitalization. In a country where any form of health insurance barely covers 14% of the rural population, conflicts exist between insurance providers and beneficiaries in the time of processing claims, out of pocket expenditure on health stands at 62% (one of the highest in the world, greater than other BRICS nations, US and UK) and each government bed is mapped to approx. 2000 people at the same time, health data in silos isn’t a luxury we can afford.

Medicines form the major chunk of India’s Out of Pocket Expenditure on health (which at 62% is one of the highest in the world). Contribution of blockchain in clinical trials, drug testing and supply chain monitoring can help deliver quality generics at affordable prices to consumers in India.

Any form of health information exchange is also required for conducting clinical research and drug trials — especially significant to introduce better quality generics in the market, thus driving down medicine costs which currently forms around 45% of the OOP expenditure of health in India. Advancements in precision medicine directed towards genetically derived non communicable diseases also need access to rich population health data.

The National Health Policy has advocated an increase of government spending from the existing 1.1% of GDP to 2.5% (as per WHO recommendation, it should be at least 4% of GDP). Quite a paradox that various CAG reports have highlighted the under-utilization of funds allocated to healthcare. In a performance audit of the Reproductive and Child Health scheme under the National Rural Health Mission (NRHM) tabled in the Parliament last year, CAG said the cumulative unspent amount in 27 states increased from Rs. 7,375 crore in 2011–12 to Rs. 9,509 crore in 2015–16. This points to a deep flaw in the way in which public funds are managed in the country.

For Centrally Sponsored schemes, the inflexibility in the budget design is a major issue. Due to absence of macro level financial information system (that would identify where the expenditure is being incurred, where are the gaps and where funds flow is required), budget allocation can be faulty. Moving funds across line items isn’t technically permitted. Also, the process of fund flow — from budgetary allocation to final release — has to cross a maze of red tape and bureaucratic hurdles, overtly reliant on paper based manual verification of data. Though it hasn’t yet been officially established that the mass deaths of children suffering from Japanese Encephalitis in the Gorakhpur hospital were due to a lack of oxygen, it is alarming that unpaid bills amounting to 70 lakhs, primarily due to red tape, led to the cut off of a critical resource like oxygen.

A closer look at the funds that do get utilized may reveal the poor quality of health care delivery systems in the country. Major lapses in supply chain monitoring lead to massive introduction of counterfeit drugs in the system. As per the World Health Organization, 35% of fake drugs sold all over the world comes from India. In spite of a major crackdown under the Pre Natal and Conception Diagnostics Act to arrest the declining female to male child sex ratio, sex determination through portable ultrasound devices and abortion through unregistered clinics continue in the country. Monitoring of the life cycle of a pregnant woman from her first ultrasound to delivery and post partum care still remains an unfulfilled need. Siphoning off funds by intermediaries and poor quality of ingredients used in nutritional supplements for pregnant women and young children have impeded the society’s fight against severe malnutrition. None of the work done by all of us today would actually matter if we cannot build a healthy nation for tomorrow.

Opportunities for Block chain in Indian Healthcare System

Each gap in the health care system today is an opportunity that can be leveraged by block chain developers. Organizations may consider this technology to verify a patient’s digital identity, genetics data, or prescriptions history. The patient would be the owner of the data and can provide or revoke provider access to his medical records anytime. Data such as age, gender, procedures performed, genetic history, response to treatment could be accessible via public keys — these could be queried by the government to access population health data and researchers for clinical studies and incentives for the same would be payable to the owners. Personally identifiable information such as unique identification numbers, insurance card numbers etc. could be accessible only via private keys.

Blockchain has the potential to not only overcome the inefficiencies of manual medical data (available in silos) but also data integrity, privacy and ownership concerns plaguing digitization of medical records.

Once a standardized set of health care information is established, “smart contracts” can be used for faster and more efficient processing of data. Whether it is your nearest diagnostic facility with your MRI scan data or the internet enabled wearable shirt monitoring your pulse rate, all data will be keyed in through APIs into the smart contracts. Based on the logic defined, such contract could accept that data on the block and even trigger an insurance claim automatically. Data integration through block chain systems could allow for real-time risk adjustment to premiums. Providers, payers and insurers may leverage gamification principles and behavioral economics theories to incentivize patients to adopt healthy behaviors.

Block chain promises to reduce cross-industry payment processing overhead by eliminating touch-points that don’t add value, reducing costly reconcilia­tions and automating transactions through the use of smart contracts. Such interoperable databases can also preserve data integrity. In 2015, there were 112 million health care record breaches worldwide due to hacking and other information technology breaches. The probability of such incidents can be drastically reduced through block chain since the hacker would need to individually hack every single user to obtain unique private keys to access identifiable information of value. Things made possible such as creation of a master patient index, identification of duplicate prescriptions and bills could reduce medical fraud to a great extent.

By providing a full audit trail of production, including sourcing of raw materials, manufacturing, packaging and distribution, drug packages can be authenticated using block chain technology. The tracking of active ingredients across the value chain would ensure that the products have claimed ingredients and patient receive assurance of the quality of drugs sold. This could facilitate penetration of unbranded but quality generics in the health care market- thus savings on costs incurred by patients. The same supply chain monitoring can also be used to arrest adulteration of food & nutritional supplements delivered as a part of health initiatives.

Block chain technology could also substantially reduce costs of provider management by stream­lining the process of accessing and updating provider data, credentials and certifications. Rather than requiring a third-party validating body, the network would instead verify or update credentials, licensing information or current provider information directly across the network.

Assuming a scenario that the cost of remaining out of the block chain network on account of poor credentials outnumbers the cost of certification, health care providers would not like to be left out and would hence be incentivized to formally adhere to compliance and regulatory guidelines (almost akin to what happened during the launch of internet).

Health audits would also be impacted by real time access to data on several block chain networks. Instead of asking clients for bank statements or sending requests to third parties, the veracity of a transaction can be confirmed by directly accessing copies of the ledgers on the block chain. Sample based substantive testing may be replaced by the audit of the entire population data and annual audits may be replaced by ongoing real time audits, thus increasing the assurance gained and efficiency promoted through audits. With block chain enabled digitization, auditors will also be able to leverage machine learning and advanced data analytics in order to report unusual transactions on a real time basis.

Challenges and Hurdles in Implementation

Having visualized the use cases in the healthcare sector, it is important to acknowledge that block chain technology is still in its infancy and many aspects demand further study and introspection. For example, storing medical information directly on the block chain would be fully secured by the block chain properties and immediately viewable to those permissioned to access the chain. But this would slow down transaction speeds and make scalability an impossible task. The speed and scalability issue could be solved by storing encrypted links to the health data on block chain but this could suffer the risk of information decay. Organizations considering how data should be stored should therefore carefully evaluate both technical and confidentiality constraints.

Health care policy makers need to collaborate with the industry to understand and design the regulatory framework congenial for the growth of a block chain ecosystem. Questions on the implications of the costs for deployment of technology, distributed nature of storage, ownership and access need to be asked and answered. The type of high level demographic information that is stored has to be carefully considered.

For example, there may be a distinct possibility of combining a rare health disease data along with location to triangulate an individual, thus negatively impacting the patient’s privacy or even cost of healthcare.

Audit processes in health care would need to shift towards the assessment of operating effectiveness of internal information technology controls — such as for validation of transactions before execution, prevention of phishing attacks and disaster recovery procedures.

It is also important to understand and design proper incentives for adoption of block chain. For example — in permissionless block chains, multiple nodes now agree to lend their computing power for block chain transactions only when they are able to mine crypto-currency for their efforts.

The flight of developers, who earn primarily in crypto- currencies, from India to more bit coin friendly nations such as Estonia should force us to evaluate whether our government’s policy guideline dubbing “block chain as good and bit-coin as bad” makes sense.

The costs of putting data into block chain also need to be considered — if too low, the data quality could go for a toss and if too high, mass participation could be affected. Similarly, in case of conflict, incentives will determine what data block a node will choose to process and hence these rewards need to be aligned with network goals.

Finally, adoption of block chain would require a massive skill upgrade in areas such as cryptography, public key infrastructure, informational architecture and user experience. Collaboration issues such as choosing a block chain platform and convincing partners to share their data will have to be addressed. If block chain really lives up to the hype of being a foundational technology, it can rewrite the rules of health care. And none of us can afford to wait and watch on the sidelines. The time to act is now !

(This article has been written under the guidance of Amar Patnaik, a civil servant. He was a panelist at the FICCI Block chain Innovation Summit held on 11th July, 2018 in New Delhi. Views expressed are personal)