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By Stephanie Musal • January 13, 2017

What is Blockchain and What Does it Mean for Healthcare?

Blockchain is becoming an increasingly popular topic in healthcare. This is part one of a three-part series aimed at helping you understand what Blockchain is, what its benefits and downfalls are for healthcare, and where it fits into your technology stack.

What is Blockchain?

A blockchain is a decentralized, permanent record of online transactions and exchanges. It entered the market in 2009 as the foundation for trading the digital currency, bitcoin. Blockchain technology is meant to be ultra secure. 

At first glance, blockchain seems like a database with built in transaction validation. While this is correct, the unique piece to blockchain is that the ledger is not stored in any master or location. Rather, it is distributed across multiple computers at the same time in such a way that anybody can maintain a copy of it. No one person controls the blockchain or has any master say over what gets put in / taken out. It's totally distributed in ownership and so inherently honest. This serves as a fundamental part of the validation system copies of the database have to exist on every miner/node. 

More importantly, the block validation system ensures that no one can tamper with records. Old records are preserved forever while new records are added to the ledger irreversibly.

Terms you should know

  • Mining: The process of adding transactions to the shared ledger. 
  • Miners: The people who verify the validity of an incoming block, typically using a computer system
  • Hash: The sequence of letters and numbers that uniquely identify the block

Each block ensures validity because the unique hash used to identify the block is built on the hash of the previous block. If a block’s hash was tampered with everyone would know.

What Blockchain Promises for Healthcare

Data Integrity and Security

As digital health has become more widely adopted, the volume of patient data managed by hospitals, doctors and insurance companies increases. These organizations hold information from Electronic Health Records (EHRs), Health information exchanges, data collected from monitoring systems and IoT devices as well as medical insurance claims.

Because a hallmark of blockchain systems is strong data integrity, once information on the blockchain is recorded and confirmed by nodes on the network, it is nearly impossible to modify or erase.

Healthcare has two approaches to take if Blockchain was ever to be implemented. The first option is to build a private Blockchain system among a trusted set of parties. The other option is to anchor data to the public blockchain. This would help verify the integrity and timestamp of any data, file or business process. While this seems like a minor technological advancement, it can have wide reaching benefits across the healthcare system including:

  • Proving integrity of data collected at clinical trials
  • Reducing the cost of audits and regulatory compliance
  • Verifying the integrity of patient health data shared between organizations
  • Creating immutable audit trails for the healthcare business process

New Standards

To date, interest in blockchain is largely from the financial sector. R3Cev is a grouping of 45 member banks that work together to develop the use of the technology in the financial sector. A similar grouping could be formed in healthcare with insurance companies and other key players. Doing so would create the opportunity to improve standards for managing healthcare records, insurance claims and patient data.


This new technology would allow small-mid sized companies to get a leg up on the competition, especially as healthcare orgs look to modernize infrastructure within their organizations. Blockchain combined with secure cloud computing technology may be sufficient to have a meaningful impact on the healthcare industry.

The Downfalls of Blockchain for Healthcare

While Blockchain technology seems incredibly promising for healthcare, it’s not without its downfalls. Check back for part two in our Blockchain series to find out what they are.