Industry leaders today recognize blockchain technology's potential to achieve strategic goals such as value-based care. The lack of accessibility to medical records, slow processing of transactions, risk of double-spending all pose as a barrier to a transparent and efficient healthcare system.
However, before we can talk about how Blockchain technology can reform the financial management systems of healthcare institutions, let us explore what blockchain is.
What is Blockchain Technology
Blockchain has been defined as - "tamper-evident and tamper-resistant digital ledgers implemented in a distributed fashion (i.e., without a central repository) and usually without a central authority ([e.g.,] a bank, company, or government). At [its] basic level, it enables a community of users to record transactions in a shared ledger within that community, ensuring such that no transaction can be altered changed once published under a normal operation of the blockchain network, "-by National Institute of Standards and Technology (NSIT). This technology on which Satoshi Nakamoto developed Bitcoins is currently the most transparently distributed ledger ever known to man.
Sheetal Nariani, an expert on the matter who has worked for over a decade in the financial management sector within the healthcare and pharmaceutical industry, explains that blockchain technology has emerged as the technology being adopted by healthcare institutions worldwide.
Sheetal, who has worked with pharmaceutical giants like Cipla and Novartis, has advised multiple renowned companies in the healthcare and pharmaceutical sector on how to plan, develop, and execute their financial strategies. She explains that the implementation of blockchain technology empowers finance managers to adopt a patient-centric approach. That results in well-coordinated, affordable products and services.
The benefits of using blockchain
Blockchain is ideal for hospitals and other healthcare companies as it works well with the ever-changing idiosyncratic nature of the healthcare industry, chronologically added data, and provides data security complying with the advanced medical data protection standards.
Here are four reasons the finance managers of health care companies should give this technology a thought:
Easier processing of medical claims
One problem the healthcare industry faces today is the exceptionally long processing time for medical claims. It usually takes anywhere from 2 to 4 weeks for electronic claims to be settled, and about 6 to 8 weeks for paper-based claims. Using 'Smart Contracts' issued by the blockchain can significantly reduce the processing time to about 15 minutes.
Hence, instead of involving intermediaries (to execute patient-firm contracts), the institution can program its private blockchain network to receive claims, process them in real-time, and transmit payments to healthcare providers.
Therefore, using a Smart Contract is a great way to save time and remove third parties that slow the process from the equation. Similarly, blockchains can also secure and store patient data or client history.
Efficient and timely transactions
Based on a consensus mechanism to validate transactions, blockchains can significantly reduce transaction time and costs. Albeit not all healthcare activities are transaction-based, blockchains enable finance managers to carry out and execute seamless transactions with their clients directly without third-party interference. Transferring funds for medication or payment for consultation becomes easier and efficient as the use of tokens significantly reduces the timeframe to settle bills compared to settling them in the current time frame of days or even weeks.
Eliminate chances of double-spending
Businesses lose millions of dollars in false claims and double-spending. To eliminate such transactions, banks charge a hefty amount. Blockchains, on the other hand, use advanced cryptography to register an ongoing transaction on the blockchain. This simply means that the first transaction and all subsequent transactions are time-lapsed along with the details describing them; the value that has been spent is recorded and is available for immediate verification. So, if someone attempts to make false claims, the company can easily verify and subsequently invalidate their claim in a matter of minutes. Thereby, protecting companies from double-spending claims and saving millions in lost revenue.
Since banks and other third parties are not involved, there is no way that money in the company's account cannot be redirected back to the customer, without prior consent.
Execute better accounting
Another problem most healthcare institutions and companies face is the high velocity of transactions. With the current accounting tools and processes, it is difficult to keep up with the sheer volume of transactions. Blockchain technology, however, simplifies this process and drastically enhances the audit and reporting by the use of a distributed ledger that tracks all transactions made on it. Additionally, its immutable nature makes it practically impossible to erase or manipulate transactions. Hence, making financial procedures more transparent and accessible in real-time.
Another exciting area where this technology can be implemented is the facilitation of pharmaceutical product analysis. It stores the information related to the entire supply chain across warehouses and shipments. Therefore, making it easier to keep track of the stock in their inventories and monitor the generated revenue.
Blockchain technology can provide innovative solutions to empower the healthcare industry. It presents healthcare providers with solutions that can help reduce the cost of products & services, reduce administrative inefficiencies that result in a transparent, secure, and efficient healthcare system.