Can Technology Reduce Healthcare Costs?

By Kirstin Cash

August 30, 2018

Many industries have lowered costs and improved quality through investment in technology, yet healthcare infrastructure remains widely inefficient and expensive. The question of how to manage population health while containing cost can be answered with technological solutions using blockchain technology and data analytics.

Technology and Cost Reduction

As healthcare markets experience significant cost constraints, providers may hesitate to invest in innovative technology as this typically involves significant upfront costs and an extensive period to deliver benefit to the patient.

Justifying these costs and delays proves to be challenging. Any cost savings are spread across the lifetime of the patient or course of a disease, and there is a possibility that these savings are passed on to another provider or payer if the patient switches insurers or moves to another area of the country throughout his/her lifetime. But overall, technology may be the best way to make healthcare delivery more efficient and drive down the cost of American healthcare.

Blockchain

A promising technological solution is the use of blockchain technology. Blockchain is a list of records that can grow by linking cryptography enabled blocks. These blocks contain cryptographic hashes with a timestamp and portions of transaction data from the previous block which combines to make a chain. Blockchain is an ideal medium for optimizing continuous, secure access to patient databases in real-time for providers and patients. A blockchain database is not stored in one unique location, rather it is a shared ledger of secure, digitally signed transactions maintained by a decentralized network of computers over the internet. The process of verifying and recording each transaction and addition of information to the chain maintains the security and integrity of the data; an attractive trait for managing patient medical and financial data, and other private health information.

Many medical record systems used in the US health system are incompatible, and data must be re-entered or copied by separate offices, insurers, and members of the medical staff. With this comes high error rates which can largely affect the quality of care patients receive. Errors such as these contribute to the increasing costs of healthcare. With utilization of blockchain technology, all parties involved maintain simultaneous access to the encrypted data, and an audit trail is created each time the patient’s data is modified. Blockchain can be used to provide a secure, accurate medical history for individual patients, allowing them to manage their own records and grant permissions to doctors or other providers to view their medical records as needed.

Blockchain technology can be implemented beyond the medical record into the claims processing space to improve the insurance-claims process as well. With use of blockchain, incorrect information and small discrepancies that lead to wrongful insurance denials can be avoided. Change Healthcare, a Nashville-based health network, introduced a system in January 2018 for processing insurance claims using Blockchain.[i] The shared ledger of encrypted data represents a “single source of truth” where participating providers can view accurate information about a claim in real time. This alleviates stress on patients and time spent calling multiple parties to verify information. The savings generated from use of a blockchain insurance-claims system is a result of eliminating previous efforts in reconciling and verifying data.

Another useful application of blockchain technology lies within streamlining provider directories. Maintaining provider directories collectively costs an estimated $2.1 billion per year with current methods.[ii] Doctors’ groups, hospitals, insurers, and diagnostic companies typically maintain their own online listings of contact, practice, and biographical details, which is expensive and time-consuming to verify. Using blockchain, providers can update their information themselves for all parties in the network to view. This consolidation into a single source would bridge information gaps, reduce costs, and save an estimated 75% of the current cost involved in maintaining such directories. [iii]

Data Analytics and Other Technology

Large American employers increasingly seek to manage employee health and tackle rising healthcare costs internally, as opposed to relying on insurers. Network gear maker Cisco Systems, Inc. negotiated a health plan directly with the nearby Stanford Health medical system.[iv] A telemedicine system was established for virtual exams with Stanford doctors using Cisco’s HealthPresence technology, as well as on-site care which saves employees time and money. In this program, physicians closely track about a dozen health indicators such as glycemic levels and blood pressure to prevent unexpected emergencies and complications, ultimately driving costs down. According to Cisco’s Integrated Health Manager, Stanford physicians have been able to flag an estimated 30 pre-cancerous cases through their weekly examinations of employees.[v] Follow-up visits are expedited and more efficient since the preliminary exam has already occurred. In this instance, the costs for participants on Cisco’s Stanford plan are 10 percent lower than the health insurance plans most of the other employees use. Intel has developed a similar program, with about 38,000 employees and dependents enrolled, and a reported 17 percent saved on healthcare costs along with overall improved employee health[vi]. Although this small movement is limited to a few large US corporations with Silicon Valley resources, the benefits are substantial and applicable to many provider-patient situations and specialties, especially patients in rural areas or with limited mobility. Similar technologies are produced by Avaya, Juniper Networks, Hewlett Packard and IBM.

Recent pressure for increased price transparency from agencies like CMS can help, but the use of big data analytics is key in the effort to lower costs. Accumulating claims data, electronic health record (EHR) data, and outcomes data along with quality measurements will aid in the comparison of pricing with quality metrics and clinical pathways. These advancements would provide insights to beneficiaries and allow individuals to identify the highest value and lowest cost providers for specific procedures and services.[vii]

Summary

Although there may be significant upfront costs in implementing blockchain technology into a health system, the benefits should outweigh the costs, and with general improved population health. Combined, these innovative technologies can both improve the American health system while simultaneously driving down costs.


[i] Geron, Tomio. “How Blockchain Could Help Lower Health Costs” The Wall Street Journal 10 Jul. 2018. https://www.wsj.com/articles/how-blockchain-could-help-lower-health-costs-1527559440?ns=prod/accounts-wsj.

[ii] Id.

[iii] Id.

[iv] Humer, Caroline. “Fed up with rising costs, big U.S. firms dig into healthcare” Reuters 10 Jul. 2018. https://www.reuters.com/article/us-usa-healthcare-employers-insight/fed-up-with-rising-costs-big-u-s-firms-dig-into-healthcare-idUSKBN1J70ZZ

[v] Upadhyaya, Preeti. “Cisco and Stanford bring back house calls with telemedicine” Silicon Valley Business Journal 10 Jul. 2018. https://www.bizjournals.com/sanjose/news/2013/11/12/cisco-and-stanford-reinvent-doctors.html

[vi] Id.

[vii] Bresnick, Jennifer. “Can Big Data Solve the Health Insurance Transparency Problem?” HealthITAnalytics 10 Jul. 2018. https://healthitanalytics.com/news/can-big-data-solve-the-health-insurance-transparency-problem