Strategies to Identify Blockchain Use Cases

Blockchain technology receives much attention as a potential solution for many business needs across various industries, including healthcare. While many attributes of blockchain technology appear to solve obstacles that exist within healthcare, it is essential to objectively evaluate organizational needs and then assess whether or not blockchain technology is a viable solution. A set of practical strategies for identifying where, when and how blockchain technology could be utilized is outlined below.

The goal of this section is to help stakeholders evaluate the appropriateness of blockchain solutions for their specific use cases. By considering the various steps outlined below, implementers can respond to real needs and opportunities for leveraging a blockchain solution. In doing so, risks of project failure and cost escalations might be avoided, which often contributes to the rising costs in healthcare.

Blockchain technology has been criticized as a solution seeking a problem to solve. This poses the risk of creating new problems, failing to address existing problems, and missed opportunities. Therefore, a practical first strategy for blockchain application in healthcare is to identify the root problem(s) or opportunity related to a specific use case. By identifying the current state within a defined scope with appropriate benchmarks, stakeholders and beneficiaries of blockchain technology implementations will be able to align on the origin of a problem and the evolution to a potential solution set. Oftentimes, multiple stakeholder perspectives may or may not acknowledge the need for a particular use case or perceive a problem’s origin in the same way. Therefore, clearly articulating the problem or opportunity for all impacted stakeholders is a critical first step for a successful collaboration.

All use cases include both internal and/or external stakeholders who are in some way connected to a need or opportunity in healthcare. Actors in healthcare use cases can be numerous and diverse. Patients receive healthcare from individual practitioners or networked care teams during individual encounters or in longer duration episodes of care across multiple care settings. Health IT vendors and regulatory agencies make up another group of influential stakeholders in a use case. Use case identification is highly dependent on the nature of who is involved and is constrained by the motivations, obligations, or risks of each participant. Stakeholders have contractual and legal obligations that define control in business relationships and information sharing parameters that will need to be reevaluated in light of the decentralized nature of blockchain technology. With the peer-to-peer consensus model of blockchain controls, stakeholder roles and relationships will differ greatly and therefore must be assessed and understood by all involved in order to proceed successfully.

Once stakeholders agree upon the need for a use case, the next practical strategy is to align on the desired outcome(s) for the solution. There can be both long-term and immediate desired outcomes depending on the nature and complexity of the use case. Particular focus should be placed on tangible, short-term benefits that are incremental to the long-term desired outcome. Problems can be solved in many different ways. Therefore, stakeholders need to evaluate both the potential positive and negative outcomes. Stakeholders will need to have realistic expectations, be open to unanticipated outcomes, and set necessary guardrails for solution development and implementation. As multiple solutions have been developed for healthcare use cases in existing systems, layering in or replacing current solutions with blockchain technology requires that the desired post-implementation conditions are, at a minimum, equivalent or improved.

Organizations need to assess tradeoffs and perform an analysis on alternative solutions in order to finalize its desired approach. Tradeoffs are often determined by criteria such as funding, scalability needs, internal and external stakeholders, regulatory issues and skill set requirements.

In healthcare’s digital ecosystem, enterprise solutions, certified or earlier lifecycle software, mobile apps, workstation interfaces, cloud storage and on premise data center storage, represent only a sample of the diversity and complexity of technological solutions currently available for healthcare’s various use cases. Blockchain technology represents a new entry into the digital health ecosystem. Blockchain’s design, scalability, cost, and other attributes will make it appropriate as a solution for certain use cases but not others. An alternative solution analysis can help determine if blockchain technology is an appropriate solution.

With the problem or opportunity defined along with the various approaches to achieve solutions identified, stakeholders must assemble a value proposition outlining the benefits of each approach. Value is relative to unique stakeholders in specific contexts and articulating value may not be just a matter of standard metrics (e.g., money, time, material, human effort, etc.). Value may be expressed in standardized terms such as return on investment (ROI) or return on adoption (ROA) using various models and inputs. Value may also be expressed in terms other than quantitative measures (e.g., reputation, quality of life), allowing value propositions to take on multiple dimensions. One unique quality of blockchain technology is the trust framework it provides, which also should be factored into the value proposition for a particular use case. Therefore, stakeholders should anticipate aligning on appropriate models of value and inputs.

Although blockchain technology leverages existing hardware, software, and networks, its peer-to-peer consensus model expands the scope, user base, and ownership model beyond common assumptions for current technology paradigms. This introduces a range of new challenges and complexities for healthcare leaders and financial professionals focused on capital planning, budgeting, and investment control.  These challenges have the potential to confound established financial planning and governance processes, which in turn slows down organizational decision-making. Early consideration of how to adapt existing financial administration and governance constructs is critical to project success.  A series of variance points from standard practice are outlined below; these are areas to review as early as possible in evaluation of a blockchain initiative.  If it is determined that current approaches will be inadequate to support efficient financial decision making and planning, a parallel initiative is recommended to optimize them in the context of blockchain technology implementation.

Ownership is mutualized.

Varying based on the architecture, consensus model, and use case(s), ownership of a new blockchain initiative in healthcare is generally mutualized, or shared among network participants. This includes physical and virtualized infrastructure, smart contracts, transactional and other data persisted to the blockchain, decentralized applications (dApps), and the entirety of the business administrative function surrounding the initiative. From a financial perspective, it can be challenging to determine how to estimate and allocate start-up and ongoing operating costs among network participants. Stakeholders should seek to reach agreement on a common model for financial estimating and capital planning first, then formalize the agreed method of cost allocation among network participants within the given blockchain governance model. This includes, but is not limited to, (1) determination of common accounting methods for the relevant assets, such as valuation and capitalization, and (2) creating shared investment control functions.

Evaluating shared benefits and risks with partners.

Likewise, attribution of the benefit or value could also be hypothetically uneven among the network participants. Each sector brings a different set of values, priorities, resources and competencies to a partnership. The challenge of any coalition is to bring these diverse contributions together, linked by a common vision in order to achieve sustainable development goals.
Such potential benefits include:

  • Access to knowledge: Greater understanding of operational context may mitigate risk and reduce potential mistakes.
  • Access to people: Provides a wider pool of technical expertise, experience, skills, labor and networks.
  • Effectiveness: Create more appropriate products and services, whether commercial or not-for-profit.
  • Efficiency: Increased by sharing costs and delivery systems and avoiding duplication.
  • Innovation: Develop unexpected and new ways of addressing legacy issues and complex challenges.
  • Human resource development: Enhanced professional skills, talent management and competencies.
  • Long-term stability and impact: Achieve greater ‘reach’ by being efficient and effective to create an expanded sustainable development impact.

Despite the benefits, collaborating is not a low-cost, quick fix or risk-free option. The costs can be high, due to the time needed to explore, establish and maintain relationships. Potential collaborations need to consider the opportunity costs and, preferably, establish some benchmarks against which they will measure the anticipated outcomes of collaboration to determine whether participation is worth the investment. Frequently, collaborating in the early stages can be a ‘catch 22’; partners invest time, energy and ideas (often over months and sometimes years) and then continue to stick with the endeavor even when the transaction costs are becoming unacceptable. This often occurs because organizations feel pressure from their colleagues for some kind of return on investment.

As an aid to organizations considering a collaborative approach, it is advisable that they also consider the areas of potential risk including:

  • Loss of autonomy: The challenge of shared decision-making processes, requiring the need for building consensus before action can be taken and the implications of wider accountability to other participants and to wider beneficiaries.
  • Conflicts of interest: Consider how to move forward where a decision or action that is right for the interests of the partnership may be at odds with the individual organization’s interests.
  • Drain on resources: Commitment often becomes significantly greater than anticipated as the time and energy exerted by key staff to facilitate relationship building and project development, coupled with any additional use of financial or other resource contributions become burdensome.
  • Implementation challenges: Costs related to the day-to-day demands of delivering a program as a collaborative venture, with all of the additional management, tracking, reporting and evaluation requirements that it entails.
  • Negative reputation impact: When collaborations go wrong, there may be damage to the reputation or track record of individual participants by their association.
  • Lack of experience: Since blockchain technology adoption is still fairly new in the healthcare sector, it should be expected that there will be a lack of experience in deploying blockchain. A learning curve is a key part of any significant blockchain use case. Therefore, limited experience and the need to account for a learning curve should be considered as another cost factor.

Blockchain technology represents a new approach to solving problems and/or providing opportunities for healthcare use cases. Existing analysis principles for identifying use cases can be applied to both blockchain technology and alternative solutions. As blockchain technology introduces new business models, the relationship between need and value will continue to exist. However, these new business models will address the industry need in ways that test traditional control and compliance of entities in favor of more distributed, consensus driven trust models.

The open ecosystem approach required by blockchain will require a dramatic mindset shift, including the need to collaborate with external partners in a way that few traditional businesses have done before. Adopting a collaborative approach will be a challenge for most companies. Business leaders need to become comfortable with the idea of platform-based business models, the industrial sharing economy (e.g., sharing assets, resources and knowledge), data-driven business models and placing more trust in security and cryptography.