How blockchain can help reduce administrative costs

The technology can help ensure that healthcare data is more easily managed while consistently saving money for providers, payers and patients.


Patients payments for healthcare services now represent about 35 percent of the healthcare spend. As a consequence, they’re expecting more value for their money.

From the payer perspective, their value proposition now includes providing adequate coverage while controlling overall costs. Policy administration, however, is not an easy task. In fact, it’s one of the areas in which costs have spiraled out of control.

Consequently, policy administration is an area in which intermediaries could benefit most from blockchain technology. It can simplify tasks related to claims, fraud and verification, enabling payers to direct more time and funds to providing better, more affordable coverage for policyholders.

A blockchain-powered system could ensure healthcare data is more easily managed while consistently meeting safety and security regulations. It can help payers improve efficiency by reducing the time spent on wasteful processes, as well as reduce opportunities for fraud and improve trust between payers, patients, vendors and partners.

Blockchain technology can bring benefits to entities other than large payers. For example, it could assist employers, which are increasingly trying to save money through self-insurance.

Because these employers have greater access to claims data, they can discover "problem areas" that are more expensive than others—such as obesity or smoking among employees—and then create wellness initiatives around those areas.

For example, employers can use blockchain to create an employee health wallet that enables employees to earn points or currency based on healthy behaviors. The points could be traded in a blockchain-enabled ecosystem of wellness and prevention services, such as massages, Pilates, maintenance physiotherapy, mental health and nutrition coaching, functional medicine and more.

Blockchain is still in its infancy, but it is already making a significant impact in healthcare, and there are several ways it can already impact providers and payers.

First, it can speed up processes to save time and money. Because the information will be easily accessible to those who have permission to view it, it will dramatically cut down on paperwork and make processes more efficient.

PokitDok, a startup focused on blockchain and machine learning, is using this type of technology to improve efficiency within the health insurance industry. Its eligibility solution software is able to verify patients' insurance details instantly and provide eligibility results in real time, and all of the information is secure and available only to those with permission to view it.

The use of smart contracts can also help detect fraud, saving hospitals and health insurance providers money and time. Healthcare fraud costs the U.S. an estimated $68 billion per year, and smart contracts can reduce that number by ensuring all patient information is accurate, secure and not fraudulent.

Finally, blockchain also makes it easier for payers and providers to collaborate across systems in a safe and secure way. The State of Illinois recently announced it will be partnering with Hashed Health to improve how credential data in the medical industry is managed and stored. The goal is to ensure accuracy and reliability, as well as streamline processes and make it easier for different organizations to collaborate and share information.

Like the internet and the cloud, it can take a few years and several phases for blockchain to become a universal data management tool within the world of healthcare. However, once it takes hold, blockchain can revolutionize how health data and insurance plans are managed. The organizations that get ahead of the curve by looking into its implementation now will benefit most when it does.

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