blockchain primer: preparing for this ......blockchain technology can operate without any central...

Internal Audit, Risk, Business & Technology Consulting

Protiviti Perspective provided by Brandon W., Houston

BLOCKCHAIN PRIMER: PREPARING FOR THIS DISRUPTIVE TECHNOLOGY

HFMA 2018 FALL CONFERENCEHEALTHCARE: A BRAVE NEW WORLD

September 18, 2018

© 2018 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

DE-MYSTIFYING BLOCKCHAIN

2


WHAT IS BLOCKCHAIN?

3

Blockchain is a distributed digital ledger technology in which transactions are recorded chronologically

on a shared ledger. Originally developed as the technology underpinning the Bitcoin cryptocurrency, it

uses consensus and cryptography to validate each transaction while also protecting the identities of all

participating parties. It can operate in permissioned and permissionless models.

01

0302

04

Every transaction in a blockchain is fully

recorded and traceable to individual

participants in Blockchain.

Blockchain technology can be leveraged to

facilitate peer-to-peer (P2P) transactions and

the exchange of value or information between

any two parties.

Blockchain technology can operate

without any central authority as the

record of events can only be

updated after a consensus of the

participants, and once information is

entered it can never be erased,

sometimes referred to as

immutability.

Blockchain is shared between all

parties that participate in the events.


EVOLUTION OF BLOCKCHAIN4

Blockchain has evolved in ways that provide greater and greater utility. As a result, blockchain has

delivered a mechanism to holds the potential to re-architect certain aspects of many business

processes and, perhaps, inspire entirely new business models:

First Generation Second Generation Third Generation

• Blockchain technologies

(which traditionally supported

Bitcoin) based on capturing

unique identities, protecting

sensitive customer data and

maintaining a payments

transaction audit trail

• Programmable services

(indexation of assets – driving

third-party automation or

verification services)

• Internet of Things data

integration

• Content (contracts,

documents, claims forms,

invoices that link end

transactions with client and

policy or claims documents)

• Access to third-party

information

4


KEY CHARACTERISTICS OF A BLOCKCHAIN NETWORK

Consensus Provenance Transparency Immutability

For a transaction

to be valid,

all participants

must agree

on its validity.

Participants know

where the asset

came from and

how its ownership

has changed over

time.

Blockchain

consists of a fully

auditable ledger

of transactions

which can be

accessed by all

the members

within the

network.

No participant can

tamper with a

transaction after it’s

been recorded to

the ledger. If a

transaction is in

error, a new

transaction must be

used to reverse the

error, and both

transactions are

then visible.

5


Distributed Ledger

TechnologyNodes

1 2 3 4 5

Permissionless or

Public Blockchain

Permissioned or

Private BlockchainCryptography

Distributed Ledger Technology is a consensually shared and synchronized database spread across multiple computers. Any changes are reflected and copied to all participants within the network.

The nodes are basically the individual computers that make up the network that manages the data on thesynchronized ledger.

Permissionless or public Blockchain allows anyone to participate in the network, so long as they adhere to the rules of the network.

Permissioned or private Blockchain allows participation by only verified participants.

Cryptography is the mathematical process that ensures the integrity of the data on the Blockchain and the security of access through public and private key technology.

6

OTHER KEY TERMS

Public Key Private Key

6 7 8 9 10

Smart Contracts APIs Oracles

Public keys provide a means of encrypting and identifying the sender or recipient of messages on the blockchain

Private keys, combined with public keys, are used to “unlock” transactions, enabling security of transactions on the Blockchain

Smart contracts are self-executing contracts that are built into a Blockchain. They define the rules around an agreement in the same way that a traditional contract does, but also automatically enforce those obligations

Application Programming Interfaces (APIs) are the technical connections or interfaces between systems..

An Oracle is an agent that finds and verifies real world occurrences and submit this information to a Blockchain such that it can be utilized by Smart Contracts.

© 2018 Protiviti – Confidential. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.7

9

Distilling it down…Distribute

LedgerNodes

Like a collaboration system. Whatever is

published to the system is accessible by anyone on

the network.

Simply computers (users) on the

network.

…DISTRIBUTED LEDGERS AND NODES


Distilling it down…Permissionless Permissioned

Anyone can go to a public park.

One has to be invited into a private club and abide by

the rules of the club.

….PERMISSIONED AND PERMISSIONLESS BLOCKCHAINS


Distilling it down…Cryptography Private KeyPublic Key

Cryptography and encryption are used to ensure the integrity of the data and secure transactions on the

Blockchain.

Public keys are like an email address. You

share it with everyone to allow them send

messages to you and recognize messages

from you.

Private keys are like your password. It

allows you to access your mail account to

send and receive messages.

….CRYPTOGRAPHY, PRIVATE KEYS AND PUBLIC KEYS


Distilling it down…Smart Contracts APIs Oracles

Rules that dictate when new transactions should be added to the ledger. Could be based on

time, satisfaction of defined conditions or some other terms.

An oracle is like a lookout that monitors for outside events and reports them

to smart contracts.

If…Then

…SMART CONTRACTS AND ORACLES

Like sockets and plugs that connect

systems.


HOW DOES BLOCKCHAIN WORK?

7

Traditional Databases

Local Data Governed by Individual Entities

Entity A Entity B

DB 1 DB 2 DB 3 DB 4

Intermediary or Clearinghouse

Data Sharing Through Interfaces or Intermediaries

• Each entity has defined their own technical standards for

database management

• Must develop methods (B2B interfaces or clearinghouses)

for sharing data

U

U

UU

U

UU

U

U

U

Chain Rules

& Governance

Entity BEntity A

• Entities must agree on the common business

requirements and governance to gain access

• Each entity with access to the ledger automatically

receives an up-to-date copy, reducing data latency and

integrity issues

vs..

It’s important to understand how Blockchain solutions differ from traditional database solutions.

Blockchain


….SO WHAT DOES THIS ALL MEAN?

12

• Blockchain or Distributed Ledger Technology (DLT) is a means of sharing information between parties.

• It offers the promise of streamlining processes and reducing the need for data reconciliation and adjudication.

• It’s no silver bullet, and it won’t replace all existing systems.

• It requires cooperation, standards, and governance across the network.

BUT

Distilling it down…


WHEN IS BLOCKCHAIN APPROPRIATE?

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Source: Fintech Insider, Medium

WEF Model

This model helps an

organization determine whether

they need

Blockchain or not.

IBM Model

Blockchain solution

to be implemented only based on nature

of transactions

Suichies Model

Suggests that intra

firm Blockchain doesn’t provide

additional help.

Birch-Brown - Parulava Model

Focuses on how DLT

works with or without Blockchain.

Morgan E.Peck Model

It describes

Blockchain as a means of trust

management within

transactions.

Karl Wüstl and Arthur Gervais Model

This model helps

companies decide if Blockchain is a right

solution for them.

Lewis Model

The Lewis Model

highlights comparison between

Central Database and

Blockchain Solution.

Multiple Models

Emerging

• Models focus on a

variety of

considerations,

including

• Blockchain vs.

Traditional Database

• Permissioned vs.

Permissionless

• Nature of the

transactions

https://thefinanser.com/2018/08/do-we-need-a-blockchain.html/

https://medium.com/@sbmeunier/when-do-you-need-blockchain-decision-models-a5c40e7c9ba1


BOILING THE DECISION MODELS DOWN

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• What Blockchain protocol

is right for the intended

solution?

• Are existing processes

adequate or appropriate,

or does a Blockchain

solution demand new

processes, or even an

entirely new business

model?

• Are key participants

onboard?

• What standards will be

applied?

• What will the governance

model be?

• How will the solution be

integrated with existing

systems?

Other Considerations

Answering a few questions can determine if blockchain is appropriate

2. Are trust boundaries a factor?

3. Do events need to be validated? Is data provenance a critical concern?

4. Can you reduce dependence on or eliminate third parties?

1. Is information shared between multiple parties?


The healthcare industry has many attributes that are could benefit from blockchain:

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BENEFITS FOR HEALTHCARE

Shared data/records management

Intermediaries

Data reconciliation costs

Fraud

Supply chain

Identity management – patients and providers


BLOCKCHAIN OPPORTUNITY - KEY STATISTICS

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Excitement around the potential of blockchain in healthcare has reached all-time highs and is

accelerating. Only through hands on experience one can validate the true potential of blockchain in

healthcare, refine its application, improve any deficiencies identified, build trust, and scale both in

terms of network of healthcare organizations and use cases.

According to National Healthcare Anti Fraud Association estimated healthcare frauds costs 68 billion to the nation annually.

$ 68 billion

Caregivers in the healthcare industry have predicted, that it will take only 5 years to implement blockchain across all healthcare organizations.

37.9%According to a Hyperledger Survey 42.9% of healthcare organizations believe that the need for interoperability of electronic health records will help for faster blockchain implementation.

42.9%

According to Market Watch Survey Blockchain Technology in Healthcare segment is estimated to be USD 53.9 million in 2018.

$53.9 million

According to Medium, 55.2% users in Healthcare Sector believe implementation of blockchain would feature disintermediation, data integrity & provenance globally.

55.2%

According to the Health Research Funding Organization (HRFO), approximately 10%-30% of drugs in developing countries are fake. US businesses lose up to $200 billion annually because of drug counterfeiting

$200 billion

Healthcare continues to be the most expensive industry for data breaches, as healthcare data breaches cost organizations $380 per stolen record, more than twice the average global cost across all industries.

$ 380 On average, a company can expect a 5% increase in lossof existing customers after the data breach becomes public.

5%

Source: Medium, bcbsm, Microsoft, hfma

https://medium.com/swlh/how-blockchain-technology-can-transform-the-healthcare-sector-604d1bcdc16b

https://www.bcbsm.com/health-care-fraud/fraud-statistics.html

https://azure.microsoft.com/en-in/blog/dive-into-blockchain-for-healthcare-with-the-himss-blockchain-webinar/

https://www.hfma.org/Content.aspx?id=48424


POTENTIAL APPLICATIONS FOR BLOCKCHAIN IN HEALTHCARE

Source: BCG

17

Secure Supply

Chain

Put Patients in

Charge of their Data Accelerate R&DTransform Service

Delivery

Today

Product tracking at every

step of supply chain, and recording activities.

Recording audit trails of

attempts to access and protect data.

Using Smart Contracts to

Authenticate and Authorize Data Access.

Developing Use Cases for

New Services by Companies and

Consortiums.

Future

Applying intelligent

algorithms on data for fraud detection and

environmental breakdowns.

Enabling patients to use

public and private keys to license data access to

third party organizations.

Maintaining Distributed

Data Analysis Platforms, with Automated Protocol

Verification and Regulatory Approval.

Developing New Services

using Smart Contracts to facilitate Secure

Payments.

https://www.bcg.com/en-in/publications/2018/prescription-for-blockchain-healthcare.aspx


CURRENT REVENUE CYCLE EXAMPLE

PharmacyRetail & Wholesalers

PharmaDrug Manufacturer

($) Claims

Reimbursement

Claims

ProvidersDoctors

PayerHealth Insurer

Care Administered

($) Copay

PatientsConsumers

Drugs

($) Copay

($) Rebates ($) Rebate Share

($) Reimburse

Drugs

($) Drug

Purchase

PBMPharmacy Benefit Manager

• Multiple participants

• Independent databases

• Point-to-point interfaces

• Data transformation

• Data adjudication

• Opportunities for fraud and

inefficiency


POTENTIAL REVENUE CYCLE USING BLOCKCHAIN

Blockchain Could Reduce Inefficiency and Waste

• The transparency the blockchain provides could

eliminate the need to identify inaccurate

payments and chase over-and under-payments.

• The shared ledger of a blockchain can provide

complete transparency to all parties. This could

allow payers and providers to negotiate complex

bundle claims.

• The security and stability of the blockchain could

increase trust between all parties involved.

• Smart contracts could make the claims

adjudication process seamless.

• The blockchain could also remove middlemen or

the middlemen could become a part of the

blockchain governance.

• Blockchain could help in reduction of

counterfeiting of medicines.

• Implementation of blockchain in healthcare could

help reduce of fraudPayerPatients

Pharma Providers


CURRENT VS FUTURE STATE WITH BLOCKCHAIN

Current State

Using Blockchain• Complex network of connections

between disparate parties – patients, providers, pharma, payers, etc.

• Independent systems of record for participants across the network

• Manual or semi-automated processes to manage the revenue cycle

• Multiple points of reconciliation and adjudication

• Simplified, near real-time network that tracks events

• Single source of truth for all participants, established by consensus and creating trusted provenance of data

• Contract terms defined as code in smart contracts, enabling greater automation, yielding faster time to revenue recognition


…HOLDING THE PROMISE OF BUSINESS BENEFITS

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• Faster time to revenue through

improved access to data

• Lower costs through reduced

need for data reconciliation and

adjudication

• Improved customer experience

through reduced errors

• Lower risk of data breaches

(maybe) through improved security

capabilities

• Reduced fraud through greater

data integrity


Blockchain is a powerful technology but is not a silver bullet for all business problems. There are a number of items to be considered when pursuing a Blockchain solution.

Keep in mind that Blockchain is not appropriate for every problem, and its value may be best unlocked in

combination with other technology solutions, like IoT and robust APIs.

CONSIDERATIONS FOR IMPLEMENTING BLOCKCHAIN

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Blockchain technology can provide a level of transaction security, but it does not provide

account/wallet/API security. The distributed database and the cryptographically sealed ledger prevents any

corruption of data. However, value stored in any account is still susceptible for account takeover.

There are cyber security risks to the blockchain network if a malicious actor takes over a majority of the

network nodes for a duration of time, especially in a closed permissioned framework.

Existing policies and procedures will need to be updated to reflect new business processes. Additional

technology concerns could include speed, scalability, and interface with legacy systems in implementing

the technology.

Any business organization considering Blockchain technology will want to question who will have access

to the data, since any kind of failure in securing the data can result in unauthorized persons gaining

access.

Deployment of Blockchain solutions require a new type of governance model and agreement of

participants in establishing standards and consensus mechanisms.


WHAT ARE APPROPRIATE STEPS TO TAKE?

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Stay abreast of the evolution of the technology and other emerging technologies (IoT, AI, ML, etc.) - It is essential to conduct research for extensive applications this is helpful not only for present scenario’s but to leverage the future benefits of technology

Build your understanding of blockchain (POC?) - Understanding proof of concept through industry use cases before implementing Blockchain this will help in eased implementation and profitable outcomes.

Consider the process and business implications - An organization must analyze their current processes, infrastructure and return on investments before implementing Blockchain technology.

Engage in industry consortiums and standards bodies - Organizations must join Blockchain consortium’s as it’s a low risk effort to stay current on Blockchain trends, learn about the practices being followed by competitors, and be prepared to implement the current technological changes.

Monitor key players in the industry - Competitive analysis can help recognize the practices followed by other players within or across industries with respect to Blockchain. Organizations can monitor or replicate these practices basis requirements.


INDUSTRY CONSORTIUMS AND STANDARDS BODIES

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Consortium Description Partners

Global Blockchain Healthcare

Alliance

This consortium basically combines

Blockchain, Artificial Intelligence, DNA

sequencing and Cryptography for Security &

Privacy needs of healthcare.

• Simply Vital Health

• Shivom

National Blockchain Alliance

This consortium uses Blockchain

Technology to help insurers maintain up-to-

date records of healthcare providers to

prevent fines from regulatory like CMS (The

Centers for Medicare and Medicaid

Services).

• Humana

• United Healthcare

• Optum

• Quest Diagnostics

• Multiplan

MedRec

This platform provides transparent and

accessible view of medical history. They are

using Blockchain Technology to perform

data encryption and security such that

legitimate users and institutions only can

access the data.

• Digital Currency Initiative

• MIT Media Lab

• Robert Wood Johnson

Foundation

• Viral Communications

https://www.prnewswire.com/news-releases/simplyvital-health--shivom-announce-global-healthcare-blockchain-alliance-300638082.html

https://www.dr-hempel-network.com/digital_health_events_news/national-blockchain-alliance-for-healthcare/

https://medrec.media.mit.edu/


A N A L Y T I C S

KEY PLAYERS

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Logo Company Name Description

Nebula Genomics

Nebula Genome is an healthcare organization focusing on data

analytics to resolve issues related to healthcare. They are using Blockchain Technology to solve issues related to data security and

privacy.

BurstIQ

BurstIQ platform leverages Blockchain and Machine Intelligence to

bring together disparate data sources into a unified, HIPAA-compliant data repository. The platform is fully operational with

multiple business customers.

Doc.AI

Doc AI has developed Robo Genomics platform through

combination of AI and Blockchain Technology to improve genetic data comprehension and provide decision support. The agent can

converse on disease, traits, pharmacogenomics and family planning.

Health Linkages

Health Linkages enables healthcare institutions to do better, secure

data analysis and governance in population health and medicine using Blockchain Technology.

Coral Health

Coral Health provides Blockchain powered solutions to Accelerate

Care Delivery, Automate Multiparty Administrative Processes and improve Health Outcomes.

https://www.nebulagenomics.io/

https://www.burstiq.com/

https://doc.ai/

http://healthlinkages.com/

https://mycoralhealth.com/index.html


KEY PLAYERS

I D E N T I T Y


Accenture

Accenture partnered with Microsoft and Avanade to develop an

identity prototype based on Blockchain Technology that could provide a Digital Identity for 1.1 billion people who don't have a

formal ID. Creating a formal ID for individuals such as refugees can become critical as they seek education and healthcare services.

Bowhead Health

The Bowhead platform comprises of the Bowhead device which

monitors customer’s biometric data to dispense personalized supplements and medicine. The patent pending “Anonymized

Health Token” allows customers and Bowhead token holders to be compensated for the leasing of medical data, and patients have full

control of this by means of smart contracts.

Health Combix

Health Combix’s HCX Pay platform is a token-based healthcare

payment and risk management network enabling payments, data asset monetization and risk adjustment. The platform preserves

digital privacy while allowing for interoperable data exchange, giving patients and providers control over the data.

https://www.accenture.com/us-en/insight-healthcare-innovation

https://www.bowheadhealth.com/#/

https://healthcombix.com/


KEY PLAYERS

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D A T A S H A R I N G


Blockchain Health

Blockchain Health is a software company that provides healthcare

organizations with HIPAA-compliant blockchain solutions. Users can share health data with researchers using the integrated

platform, which creates a tamperproof chain of information custody.

Gem Health

Gem an enterprise Blockchain organization have developed Gem

OS enterprise platform for healthcare which allows all stakeholders secure access to shareable data with the right permissions. The

platform is in compliance with HIPAA, streamlining communication along the continuum of care.

Patientory

Patientory developed a Blockchain-based platform for securing

health data for patients, providers and medical institutions. Its healthcare app lets users create a patient profile to keep track of

their health history. The software provides patients with an easy way of tracking doctor visits, medical bills, personal medical

information, insurance, immunizations and pharmacy medications.

https://www.blockchainhealth.co/

https://enterprise.gem.co/

https://patientory.com/


KEY PLAYERS

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T E C H N O L O G Y


Block M.D

Block M.D is an healthcare information platform built on Distributed

Ledger Technology which ensures healthcare information exchange on permission based Blockchain platform, This ensures data-

integrity interoperability across hospitals, health tech startups, labs, insurances, regulators and, patients through well-defined API and

data standards.

Chemonics

Chemonics and BanQu partnered to establish the Blockchain for

Development Solutions Lab to build, test and scale blockchain solutions that aim to reduce poverty and increase aid effectiveness.

Hyperledger

The Hyperledger Healthcare Work Group identifies opportunities for

open source software development projects to host on Hyperledger, an operating system for marketplaces, data sharing networks,

micro-currencies and decentralized digital communities. They have organized a meetup in Hyderabad to explore in healthcare sector.

IBM

IBM has developed a Blockchain RX platform this platform helps in

increasing transparency, personalizing and improving patient experience, moreover it would also help in reducing counterfeit

medicines, promote more effective research and development, and drive new or optimized business models.

https://www.block-md.com/

https://www.chemonics.com/news/blockchain-transforming-development/

https://www.hyperledger.org/category/healthcare

https://www.ibm.com/blogs/blockchain/2018/05/blockchain-rx-a-cure-for-healthcare-and-life-sciences/


KEY PLAYERS

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T E C H N O L O G Y


HealthureumThe Healthureum platform is designed on the Ethereum based Blockchain using smart contract technology to improve efficiency and interoperability of healthcare services.

Corda

Corda healthcare platform was formed by the combination of R3 and HSBlox. This platform facilitates secure exchange of data ensuring compliance to healthcare regulations. This platform also provides connectivity to insurance providers to automate claims process.

Guard timeGuard time have partnered with the Estonian eHealth Foundation in February 2016 to accelerate the adoption of blockchain-based transparency and auditable lifecycle management for patient records.

Hashed Health

Hashed Health is a collaborative healthcare innovation firm dedicated to Blockchain and Distributed Ledger Technologies. The company forms work groups to develop networks focused on specific healthcare users and provide services such as network product management, development, regulatory guidance and technology support.

IRYO NetworkIRYO Network is an healthcare platform for keeping health records unified and secure, Moreover it also allows patients to share their medical history to ensure they get the best treatments and advice.

Medical ChainMedical chain uses Blockchain Technology to securely store health records and maintain a single version of the truth.

http://www.healthureum.io/

https://www.corda.net/

https://guardtime.com/

https://hashedhealth.com/

https://iryo.network/#crowdsale

https://medicalchain.com/en/


IN A NUTSHELL….

30

• Blockchain is a means of sharing data between interested parties

• It’s characteristics offer the promise to streamline and automate processes and perhaps disrupt current ecosystems

• There are massive investments being made to harness the power of the technology

• The technology is still in its infancy, and there are technical limitations (which will be overcome)

• It is not fit for all purposes

• It requires governance and standards to achieve its potential

• It will require integration to existing systems and processes

BUT

Prepare yourself – get educated, engage in POCs

Evaluate opportunities to leverage blockchain

Get involved in industry standards bodies

Monitor industry consortiums and engage where appropriate

SO

© 2018 Protiviti Inc. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not l icensed

or registered as a public accounting firm and does not issue opinions on financial statements or

offer attestation services. All registered trademarks are the property of their respective owners.

blockchain primer: preparing for this ......blockchain technology can operate without any central...

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