The buzz surrounding blockchain hit a fever pitch in 2016, but it wasn’t supported by much in the way of real world examples. That will change in 2017, as academic and theoretical discussions give way to production-ready applications. In our regular interactions with innovators from healthcare systems, healthcare device and wearable companies, to finance and professional services firms, we’re seeing that the groundwork for healthcare on the blockchain has already begun.

As context, blockchain is a highly secure network coupled with a distributed database, also known as a distributed ledger. This ledger is used to record the network's transactions with reliable time stamps and standardized rules for all participants on the network to verify and access information. Why will the shift from talk to action take place this year?

1. Healthcare on the Blockchain Moves from Theory to Practice

“There's one more lesson to draw from the early days of the internet. If you had understood in 1995 the opportunities and threats it would ultimately present to your company or industry, what would you have done differently—to become the disrupter rather than the disrupted? That is where we are with blockchain today.”

- Ginni Rometty, President and CIO of IBM

The shift to value-based care isn't just a shift in economics; it is also a shift in the kinds of technologies required to deliver those economics. Costs are increasingly the responsibility of the consumer, as well as the providers with whom they share financial risk. This shift in financial responsibility requires new patient access models with real-time, up-front accumulator (deductible) adjudication and payment calculations that the current infrastructure isn't designed to support.

In addition, the move to value-based care includes a move to reimbursement based on "episodes of care" which necessitate changes to billing, data collection, and reimbursement rules, along with the technologies that support those models. Further, a typical episode of care, for example, a Type 2 diabetic's exam, will likely have many services that occur outside the hospital setting requiring technologies that can record all relevant transactions, from device data to nutritionists, and attach them to the correct episode and patient, regardless of whether or not the transaction is recorded in a centralized EHR.

Changes to Value-Based Economics Necessitate Changes in Technologies

In addition, to efficiently deliver patient care, this diverse network must now exchange data in real time, around the clock. Add to that the explosion in device and user-generated data that can be analyzed for relevant information and we have completely surpassed what legacy manual processes and 1990s era health IT architecture was designed to handle.

Insert blockchain.

Many of the technologies that make up blockchain have existed for some time and part of blockchain's value is in organizing those technologies into a single system to address the fundamental business problems and processes in healthcare and other industries. Blockchain offers a distributed, secure system that enables a diverse network of healthcare providers, including payers, providers, device makers, and acute care facilities to work together, seamlessly, with the patient at the center of the healthcare experience for the first time.

“We believe that blockchain technology is a powerful tool for creating global prosperity.”

- Alex Tapscott, author of Blockchain Revolution

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Realizing the immense value from a real-time, distributed network like blockchain requires a new class of artificially intelligent (AI) agents, called “smart contracts.” These agents can orchestrate automated business, analytical, and contractual processes on the blockchain at a scale only recently made possible through advances in processing power and efficiency. Participants in a blockchain network can encode and host their most common business processes and contracts as smart contracts. Whether for a business associate agreement (BAA) or a patient on-boarding process, the blockchain acts as a safe, auditable, always-on coordination mechanism for executing smart contracts.

To date, interoperability has been addressed as an afterthought between legacy EMRs, since they were never designed to be truly interoperable. This approach won't scale in an always-on world. And it certainly won't connect to the machine learning and artificial intelligence technologies PokitDok and others are applying to deliver value-based care. Blockchain offers interoperability, support for current and emerging data standards, and strong encryption, all baked into a transactional architecture. It is accessible to ALL healthcare stakeholders; from physicians and their EMRs, to sensors and devices, putting the patient at the center of care.

“....Soon billions of smart things in the physical world will be sensing, responding, communicating, buying their own electricity, and sharing important data, doing everything from protecting our environment to managing our health. This Internet of Everything needs a Ledger of Everything.”

- Alex Tapscott, author of Blockchain Revolution

As an example, PokitDok now runs real-time eligibility checks through our APIs on DokChain, for a fully transparent, private, and encrypted transaction that compliant healthcare businesses require today. While this is an undeniable first for the business of health, in order to have a fully operational blockchain solution, many more parties need to be involved. This is only the beginning.

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Blockchain Delivers Interoperability and Automation to the Business of Health

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- Ted Tanner , Co-Founder, CTO of PokitDok

“Blockchain will be the newCPU, and it will be everywhere, running all the time.”

Powerful influencers, like cardiologist and author, Eric Topol; blockchain expert and author, Alex Tapscott; President and CEO of Humana, Bruce Broussard; President and CEO of IBM, Ginni Rometty; and PokitDok CTO, Ted Tanner, predict that blockchain will become the latest healthcare technology innovation; the new CPU, running everywhere, all the time. For example, when a patient has a simple procedure, like an MRI, the blockchain can review, verify, and authorize information and process the claim in real-time for immediate reimbursement to the provider or payment by the patient, if they haven't met their deductible.

“It’s unreasonable to consider an overnight technological transition. Blockchain supports an evolution.”

Big Players are Involved and Invested

Things move slowly in healthcare for a reason. It's important to get technology, and the data and processes it affects, right and it's unreasonable to consider an overnight technological transition. Blockchain, however, supports a phased business model evolution — one that works fluidly with legacy and new systems alike.

Blockchain Supports a Phased Approach to Healthcare’s Evolving Business Model

“Back-and-forth haggling with the health plan about what was paid, why it was paid or whether it should have been paid [will be a thing of the past]. With transparency and automation, greater efficiencies will lead to lower administration costs, faster claims and less money wasted," noted Humana’s Broussard. Topol notes that “the trust machine —blockchain —[will finally] enable each individual to own their medical information,” which he considers to be a ‘civil right.’

Other parties actively exploring blockchain implementations include Dartmouth-Hitchcock, Microsoft, and Cigna, all of which are current members of the Blockchain Alliance PokitDok is spearheading on DokChain, it's implementation of blockchain for healthcare.

By taking advantage of Blockchain’s advanced security and encryption, healthcare can lay the technological groundwork to support a future, fully consumer-centered experience without having to immediately overhaul costly IT investments and operations. This flexibility is invaluable.

To realize the full potential of healthcare on the blockchain in 2017, major players need to get involved and actively lay their future IT framework while enacting live pilot programs. IBM’s healthcare blockchain endeavor, “Bluemix Garage,” and Philips’ Blockchain Lab are excellent examples of just that. Further, PokitDok’s laser focus on automating business processes through smart contracts with our partners in the DokChain Alliance will lead us toward realizing a blockchain powered system, one that allows healthcare consumers to experience their healthcare the way they want.

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Healthcare is complicated and heavily regulated, that much we know. We also know it's possible for technology to flip the healthcare business model to which we've grown accustomed in favor of a transparent, patient driven, e-commerce experience.

In 2017, after years of testing and prediction, e-commerce for healthcare will finally take root and make its way to the mainstream.

2. Demand Drives Adoption of Healthcare E-commerce• 71% of millennials would be interested in

using a mobile app to actively manage their well-being, review health records, and schedule appointments.

• 63% of millennials would be interested in providing their health data from Wi-Fi / wearable devices to their doctor so they can personally monitor their well-being.

• 60% are interested in using telehealth options (e.g. video chat with doctor) as an alternative to in-person office visits.

Consumers are Clamoring for It

“Healthcare Consumerism is about transforming an employer’s health benefit plan into one that puts economic purchasing power—and decision-making—in the hands of participants.”- The Institute of Healthcare Consumerism (IHC)

Frustration is nothing new for the business of health, but we’ve reached the tipping point. Millennial changemakers demand a fundamental and radical shift for healthcare to match their consumer-driven expectations, and there’s no going back. In a world governed by data, the following statistics, as reported by TripleTree, represent millennial sentiment about their healthcare experiences and health data:

Millennials want to engage in their healthcare as well-educated consumers — and not merely as passive patients. As millennials reach milestones in their lives (e.g. financial independence, marriage, children, aging parents), they will interact with the U.S. healthcare system in more meaningful ways. The quicker healthcare companies respond to these preferences and the power this group holds to shape future delivery and business models, the more successful they will be. The impact of this change will be profound - driving the innovation agenda for years to come.

Walled gardens, long the standard in healthcare IT, are beginning to crumble in the face of demand for transparent and seamless consumer experiences. Application programming interfaces (APIs) are fast becoming the new standard in healthcare technology to connect legacy infrastructure and disparate data. Payers and providers are finally communicating electronically, exchanging data via APIs, and using that information to power transparency and consumer health. Leaders in this mission like CommonWell, PokitDok, the IHC, and more are banding together to move from talking about the possibilities of consumer-driven health to delivering realities.

The Technology Exists

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Lisa Maki, CEO of PokitDok, envisions a day, in the not so distant future, where people will shop for their healthcare services much like they shop on Amazon. “In fact, that was our vision when we founded PokitDok five years ago,” she said.

“Imagine the cost saving potential, the impact on the financial health of the nation, the day to day lives of healthcare professionals, and of course the relationship consumers have with their health, if we had access to simple things like eligibility, pricing, online scheduling, personal health records, etc. The potential is limitless.”

Health systems and payers alike are making price transparency and convenient, online patient access a top priority. Aside from telehealth companies like Doctor on Demand and Teladoc owned HealthiestYou, where an e-commerce exchange is native to their business model, big players like TransUnion, Dignity Health, and UCSF are speaking publicly about their initiatives to power digital patient access experiences.

PokitDok CEO, Lisa Maki, directly discussed this topic on the 2016 Health 2.0 stage with Michael Seagraves, Sr. Director, Digital Transformation, Dignity Health; Pamela Hudson, COO of Digital Health, UCSF; and Jonathan Wiik, Principal, Revenue Cycle Management, TransUnion. Their message to the standing room only crowd was unanimous: e-commerce is happening in healthcare.

Who Is Actually Doing It?

“Consumers increasingly demand easier and more affordable access to care and greater flexibility in payment options.”- Advisory Board

Ascension (the largest not-for-profit hospital system in the US), Cigna, and others, including St. Clair Hospital who is using PokitDok's out of pocket price calculator, have transparent patient access sites underway and live. Ascension's VP of New Virtual Markets and Incubation demoed their PokitDok-powered patient access site on stage at the recent AWS re:Invent conference telling attendees that real-time e-commerce is now available for healthcare. Now is the time to lay the framework, test, and plan larger rollouts to prepare large and small systems to support patient driven experiences - where the system focuses less on high cost administration and more on delivering the best care possible.

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The adoption of telehealth services has continued at a rapid pace over the past few years, but 2017 should be the year that telehealth “crosses the chasm,” moving from a passionate base of early adopters and expanding to an early majority of users.

As wait times at emergency rooms increase — the CDC’s National Center for Health Statistics reports that most ER wait times last nearly an hour — and the cost of an expensive ER visit more often falls on a consumer who hasn't met their deductible, the appeal for the convenience and affordability of telehealth will grow stronger. With more states requiring private insurers to cover telehealth consultations, look to employers and payers to strengthen outreach programs that promote telehealth use. Other factors driving increased telehealth use will include:

3. Telehealth Finally Goes Mainstream

Intensified Focus on Value-Based, Patient-Centered Care

“The number of Americans receiving virtual medical care is forecast to double, from 15 million in 2016 to 30 million in 2017.”

- American Telemedicine Association

Financial risk for healthcare continues to shift from payers and employers to providers and patients, driven by untenable cost increases, an aging population beset with chronic conditions, and legislative changes. This has driven the move from fee-for-service business to value-based business models.

To make those value-based models pay out, providers in particular will need to increasingly leverage technologies like telehealth that decrease the number of unnecessary ER visits and the cost of chronic care management. With telehealth, providers can directly diagnose, monitor, and treat patients remotely through real-time communications delivered over digital devices; reducing per capita costs and improving patient satisfaction in the process.

and physicians eclipsed in-person visits for the first time, with over 110 million consultations conducted using technology like smart phones, tablets, kiosks, and video conferencing.

This on-demand, always-on healthcare saves patients the hassle of unnecessary or inconvenient trips to a hospital and enables Kaiser to reduce costly trips to the ER and provide better care. As a bellwether healthcare organization, Kaiser will no doubt influence other hospitals and health systems to seriously consider launching or expanding telehealth initiatives in the coming year.

In addition to reducing initial in-person hospital visits, telehealth can also vastly improve communications after a patient is discharged. For instance, telehealth services can save them a return trip to the ER by securely connecting them to their provider through a video call. Telehealth also holds promise in encouraging preventative care that can avert the onset of ill health.

“Almost 75% of large companies offered telehealth doctor visits as part of their health packages in 2016, a jump of 48% over 2016.”

- American Telemedicine Association

Some innovative healthcare organizations are already reaping the benefits of telehealth. Kaiser CEO, Bernard Tyson recently reported that virtual interactions between its patients

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Earlier incarnations of telehealth systems stumbled out of the gates because they were often based on expensive, rigid, proprietary hardware that didn’t integrate well with electronic health records (EHRs). That’s changing rapidly, as the telehealth industry enacts more standards and offers its customers less costly, off-the-shelf hardware options.

Telehealth vendors are also making great strides in integrating across a range of different electronic health record providers. This is increasingly important since EHRs operate as the hub for a whole slew of clinical and transactional functions related to patient care and reimbursement. Integrating with existing physician workflows and enabling data to flow freely between different EHRs will speed the path to further adoption in 2017.

There is also change afoot on the software side, as vendors increasingly embrace open architectures that enable creation of more customized solutions that can be adapted to new business models. This, in addition to improved interoperability, will go a long way to removing barriers that have impeded telehealth’s momentum in the past.

Improved Integration and Flexibility

Technology is putting consumers in charge of virtually every aspect of their lives. Healthcare will be no different, and telehealth will be in the vanguard of putting patients in control.

But while convenience has been a hallmark of telemedicine — as any parent with a sick child in the middle of the night can attest — it hasn’t offered consumers much in the way of control. To date, initiating a telemedicine consultation has connected a consumer to a random caregiver, which doesn’t instill a lot of trust and confidence in patients.

That began to change this past May, however, when American Well announced the launch of an online marketplace that allows telehealth customers to select from a menu of doctors rather than be subject to the luck of the draw.

Other telehealth providers are sure to follow suit in 2017, especially as healthcare systems strive to burnish their brand, keep more patients in-network, and improve patient satisfaction and HCAHPS scores.

To fully realize their promise in 2017, telehealth vendors will still need to improve their integration with EHRs and clinical workflows, improve what can still be an onerous reimbursement process, and demonstrate an ROI for providers. PokitDok can help with all three, which is why major telehealth platform providers like American Well, Doctor on Demand, MDLive, Teladoc and Zipnosis all rely on us.

Consumerism, Choice, and Control

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In the wake of the 2016 U.S. presidential election, Americans anxiously await President-elect Trump’s cabinet appointments and what they portend for the future of healthcare. While it is impossible to know with clarity the magnitude of the changes to come, it is evident that change is on its way. And while that change will rock the healthcare boat, we don't believe that it will tip the boat over.

4. The Trump Presidency Will Rock the Healthcare Boat

The ACA Will See Modifications Rather than Total Repeal

“Dismantling the entire structure of the ACA, ‘root and branch,’ would be difficult.”- Beth Halpern, Partner at Hogan Lovel, as interviewed by Fierce Healthcare

While immediate repeal of the Affordable Care Act (ACA) was Donald Trump's campaign promise, that is not likely to happen.

For one, a total repeal of the ACA would undoubtedly face a Senate filibuster, where Democrats currently have enough votes to stop it. In addition, there are aspects of the ACA that have appeal across both political parties. The provision that prevents insurance companies from denying coverage because of preexisting conditions has bipartisan support, as does the provision that allows parents to insure their children until age 26.

Moreover, there are practical reasons that repeal will not happen overnight. It took many years for providers, payers, and others throughout the healthcare ecosystem to implement ACA and Meaningful Use requirements; enacting any material changes and unwinding what has already been implemented will require significant time as well.

While some features of the ACA will remain unscathed in the near term, others are more likely to be axed, especially now that Representative Tom Price — an outspoken critic of the ACA — has been selected to lead the Department of Health and Human Services. Politically ‘safe’ items, like the Cadillac tax or a reduction in subsidies, will be likely first targets for elimination. Other, more complex issues, like universal coverage, will need to be debated, revised, and evolved, especially regarding the 20 million lives affected.

Funding for expansion of Medicaid may also be ripe for repeal. This will likely reduce the number of covered individuals and result in still higher levels of bad debt that providers must write off. Expect to see more hospitals and clinics that seek to capture the cost of care upfront at the time of service, possibly in return for a discounted rate to the patient for paying in full.

“... Some believe Republicans and a Trump administration will selectively choose parts of the ACA to repeal ... despite campaign promises to completely ‘repeal and replace’ it.”

- Modern Healthcare

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Healthcare has been undergoing a fundamental shift from the traditional fee-for-service model to more of a value-based model, brought about by unsustainable costs that have not resulted in better health outcomes. This shift is likely to continue in one form or another under the Trump administration.

After all, the underlying challenges that have fueled the move to value-based care still remain. The U.S. population continues to age, and struggles with an obesity epidemic and an increase in the number of people with co-occurring chronic conditions. These factors have resulted in increased costs for payers and employers who have, in turn, shifted the risk to providers and patients in the form of high deductible plans. All of which is pushing everybody to accept more openness, accountability, and transparency. None of these macro trends is likely to change in the near term.

The Shift to Value-based Care is Here to Stay

Even providers seem to prefer risk-based or performance-based payment models rather than deal with continuing reductions in fee-for-service reimbursements. At least with these new payment models there is a sense among providers that they can control their own destiny.

Beyond the economic and medical motivations, there are also political reasons to believe that the move to value-based pricing will continue. To date, there has been bipartisan support for initiatives that strive to reduce the cost of care and link costs to improved health outcomes — MACRA was passed in Congress with 91% support — and there is no reason to believe that this will change substantially.

“The concept of value in healthcare has been around a long time…. [Some things like the importance of transparency and data to patients, providers and competition] are more Republican than Democrat, frankly.”- Helen Darling, CEO National Quality Forum

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High Deductible Health Plans Should Flourish

High deductible health plans (HDHPs) have continued to gain favor with employers as a way to mitigate the spiraling cost of healthcare premiums. Consumers have also begun to select them in growing numbers, albeit often as a cash flow tactic rather than an enthusiastic endorsement. These plans should become even more popular under the next administration, especially those that are tied to health savings accounts (HSAs).

The Trump healthcare platform has even floated the notion of allowing those who contribute to an HSA to pass on the accumulated value to their successors. Currently, HSA funds can only be passed on to a spouse without incurring tax implications. In language pulled directly from the Trump website, it states “Contributions into HSAs should be tax-free and should be allowed to accumulate. These accounts would become part of the estate of the individual and could be passed on to heirs without fear of any death penalty.” Stay tuned.

“25% more Americans signed up for health savings accounts in the first half of 2016 than in the same period in the previous year.”- Devenir

While proposed alternatives to the ACA, put forward by the GOP, have met with mixed reactions among congressional Republicans over the years, HSAs have received almost universal endorsement within the party. HSAs are particularly appealing to Republican legislators because they enable patients to understand the true cost of care — at least in theory — and give consumers a say in how much they spend and where they decide to seek treatment.

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While the Trump administration will usher in some changes, we believe that many of the fundamental healthcare challenges will remain: the need to drive down costs and improve health outcomes, the quest for more transparency, and the desire for more interoperability in support of more efficient care delivery models. These will require the continued development of new business models.

The drumbeat to drive down healthcare costs will only grow louder in 2017, as payers and providers continue to search for ways to drive out inefficiency, eliminate errors, and introduce more automated solutions. We believe that this focus will finally lead them to more fully embrace auto-adjudication in a meaningful way, especially for non-acute procedures, which tend to be consistent, repeatable, and the same amount from patient to patient.

Auto-adjudication uses software to encode business rules and processes that can be applied to review claims and render decisions on whether to reimburse or deny claims, without the need for manual review. The ultimate goal being a clean claim that gets processed automatically after the first submission without the need to contact the provider to request more information.

When done well, auto-adjudication reduces claims processing costs, decreases clearing times, and allows integration of real-time fraud detection and recovering services. While the benefits seem compelling, payers have been slow to adopt as they have traditionally been financially incentivized to hold on to insurance premium dollars as long as possible.

5. Adoption of Auto-Adjudication will AccelerateNew healthcare economics and improvements in technology are changing that view, however, as the cost of processing claims, particularly non-acute and simpler claims, exceeds the benefit of a slower, manual process. New technologies that automate complex business rules and fraud detection at scale mean more payers will find margin improvement by delivering shorter and more consistent clearing times.

“A claim requiring human intervention costs approximately $4 to process, while an auto-adjudicated claim costs approximately $1.”

- Alsbridge, Inc.

And it’s not just payers that will push auto-adjudication forward in 2017. With the move to high deductible plans, providers are shouldering more of the financial risk and are seeking ways to get paid faster and more consistently. Providers are motivated to work with their EHRs, RCM, and insurance companies to process claims more quickly, with auto-adjudication being the holy grail for revenue cycle stability.

Practice management software vendors are interested in partnering to deliver adjudication and business rules as a market differentiator. Most practice management systems and electronic health records (EHRs) are currently designed to process claims after medical procedures are complete.

New technologies are on the horizon that will make it even easier to encode and apply business rules for a growing a host of business and supply chain processes. With the emergence of healthcare on the blockchain, practice management and EHR companies will be able to offload business rules for business processes like adjudication to software programs, known as “smart contracts”. This will automate complex business processes, operate more efficiently, and greatly reduce cost to payers, providers, and ultimately consumers.

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About PokitDok

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The healthcare delivery system has traditionally been opaque, with critical data isolated at different points along the continuum of patient care. This siloing of data poses a significant obstacle to creating new business models necessary to address fundamental shifts within healthcare.

PokitDok Helps Solve This Problem

For more, visit pokitdok.com

We provide a software development platform that frees, secures, and unifies business data across the entire continuum of care, so that healthcare transactions can be quickly and easily integrated into any app, website or service. Without requiring that providers or payers rip and replace equipment or change their existing workflow.

Hospital systems, digital health companies, business process outsourcing providers and systems integrators rely on PokitDok to improve workflows, cut costs, and speed time to market.