Blockchain Technology and the Future of Healthcare in the U.S.

Blockchain and the Economy

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Advocates are increasingly looking at blockchain technology as a solution to the many challenges currently facing the U.S. healthcare system. Primarily used for cryptocurrency transactions, blockchain’s core functions — decentralization, security, transparency, and immutability — have the potential to address issues like fragmented information systems, data security concerns, and inefficient payment methods.

Key Takeaways

• Healthcare data interoperability and security remain major issues in the U.S., where patient information is often scattered across disconnected systems.
• Blockchain technology could provide a secure, decentralized infrastructure for managing healthcare data while maintaining HIPAA compliance and patient privacy.
• For successful blockchain integration in healthcare, providers, insurers, and tech companies must team up to create standardized protocols and data governance frameworks.

Healthcare Issues in the U.S.

The American healthcare sector suffers from numerous challenges, but data and information management is one of the most critical along with the rising cost of care and insurance. Patient data is frequently scattered across multiple facilities, even separated across state or county lines. This can create significant challenges for doctors attempting to provide continuity of care, as crucial medical details can’t be accessed when needed.

Data Fragmentation and Interoperability

Data is frequently siloed across separate healthcare providers, facilities, and electronic health record (EHR) systems. When a patient sees multiple providers, their medical history may be incomplete or inaccessible at crucial moments. A recent World Economic Forum report noted that a single hospital generates about 50 petabytes of healthcare data annually, much of which remains isolated within individual systems. Blockchain could create a safe, unified ledger where authorized providers can access complete patient histories while maintaining strict privacy controls.

Security and Privacy Compliance

Healthcare organizations must strike a balance between data accessibility, HIPAA compliance dictates, and cybersecurity concerns. Patient records contain sensitive personal data that, if breached, can lead to identity theft and insurance fraud. Blockchain’s cryptographic security features and immutable audit trails could help organizations maintain regulatory compliance while protecting patient privacy. Smart contracts could automate access controls and maintain detailed records of who views patient data.

Payment Processing and Claims Management

Healthcare payment systems often involve multiple intermediaries, leading to slow processing times and high administrative costs. Delays in payments and coding errors add more stress for patients navigating health issues. Blockchain-based smart contracts could automate claims processing and payment verification, diminishing administrative overhead and accelerating reimbursements for patients and providers alike.

Data Quality and Care Coordination

Patient histories can become fragmented or contain errors without standardized record-keeping. This can lead to misdiagnosis, duplicate testing, or treatments that are inappropriate. A blockchain-based health information exchange could ensure that all providers work from the same verified patient record, improving care coordination and reducing medical errors.

How Could Blockchain Help Healthcare?

Blockchain has the potential to improve management of health data in several key ways:

• Secure Health Information Exchanges: Blockchain could create a unified, secure network where medical records are accessible to authorized providers in real time. Each medical event would be recorded as a transaction in the chain, creating an immutable audit trail. Smart contracts could automate access controls and maintain HIPAA compliance. Patients could control who views their records through private keys.
• Claims Processing and Payment Systems: Smart contracts could automate insurance claims verification and processing. Payment transactions could be executed automatically when predefined conditions are met. Reduced administrative overhead could greatly lower healthcare costs. Real-time claim status tracking would improve transparency for patients and providers.
• Clinical Research and Drug Supply Chain: Blockchain could ensure the integrity of clinical trial data. Smart contracts could automate protocol compliance. Drug supply chain tracking could reduce the number of counterfeit medications. Patient consent management could be streamlined through blockchain.

Blockchain Applications Already in Healthcare

Healthcare organizations have been moving from theoretical use cases to practical implementations, much like other sectors. Two specific initiatives demonstrate how blockchain’s core features—decentralization, immutability, and transparency—can be leveraged to address healthcare’s most pressing challenges.

Securing Patient Records

Medrec:M operates a transparent peer-to-peer ledger that allows providers to quickly access files and information. Key facts:

• Developed by MIT Media Lab
• Creates a decentralized record management system
• Enables patients to control access to their medical data
• Uses smart contracts for automated consent management
• Being tested in multiple healthcare networks
• Focuses on maintaining HIPAA compliance while improving data accessibility

Pharmaceutical Supply Chain Issues

International Business Machines Corp. (IBM) and Walmart Corp.’s (WMT) blockchain initiative tracks pharmaceuticals from start to finish. Key facts:

• Provides end-to-end tracking of pharmaceutical products
• Ensures drug authenticity and proper handling
• Creates an immutable record of temperature controls during transport
• Reduces counterfeit medications in the supply chain
• Enables rapid response to quality issues or recalls

Why Blockchain Adoption Remains Limited

The sluggish implementation of blockchain in healthcare stems from a number of issues that are particularly acute in the sector. These factors include:

Legacy Systems

The most significant barrier is the deeply entrenched nature of existing healthcare IT infrastructure. While many financial institutions could build blockchain systems from scratch, healthcare organizations have already invested billions in EHR systems over the past two decades. While these systems are criticized for their limitations, they represent massive investments and are deeply integrated into clinical workflows. Replacing or modifying them would create both financial and operational risks that many healthcare organizations are reluctant to take.

HIPAA Compliance

Healthcare’s complex regulatory environment presents another major hurdle. While blockchain can theoretically improve HIPAA compliance through better security and audit trails, implementing these systems would require careful navigation of privacy laws. Organizations must ensure that blockchain implementations improve data sharing while maintaining compliance with the constantly evolving privacy regulations.

Healthcare Is Not a System

The fragmented nature of the U.S. healthcare system itself poses unique challenges. Unlike countries with centralized healthcare systems, the U.S. has thousands of independent healthcare providers, insurers, and technology vendors. Creating a blockchain network that serves all these stakeholders requires unprecedented cooperation and standardization, which has been historically difficult to achieve in the American healthcare landscape.

Costs vs. Value

Cost is a crucial factor as well. While blockchain might cut expenses in the long term—this is still theoretical—the initial investment required for implementation is substantial. Healthcare organizations, particularly smaller providers operating on thin margins, often struggle to justify such investments, especially when the return on investment isn’t immediate or certain. These are not insurmountable challenges, but they help explain why blockchain adoption in healthcare is going to be, at best, evolutionary, not revolutionary. Success will require not just technological shifts, but also industry-wide collaboration and regulatory clarity.

What Exactly Is Blockchain in Simple Terms?

Essentially, blockchain is a secure digital ledger shared across a network of computers. Each block contains a set of records or transactions, and once information is added to a block, it cannot be changed without leaving a clear trace. Every computer (or “node”) in the network has a copy of the entire chain, and they all work together to verify new information before it’s added. In healthcare, these blocks might contain medical records, prescription information, or insurance claims. Data is decentralized, transparent, secure, and permanent. This contrasts with traditional databases where information is stored in one place and controlled by a single organization, like a hospital or insurance company.

How Could Blockchain Ensure Patient Privacy While Still Enabling Data Sharing Between Healthcare Providers?

Blockchain uses private and public keys, similar to a highly secure email system. When patient data is added to the blockchain, it’s encrypted with the patient’s public key. Only those with the corresponding private keys—controlled by the patient and authorized providers—can access the data. This means data can be shared widely across the network while remaining inaccessible to unauthorized users.

What Do Proponents Say Makes Blockchain More Secure than the Current Electronic Health-Record Systems?

Traditional systems store data in centralized databases, creating a single point that hackers can target. Blockchain distributes data across many nodes in the network, making it very difficult to compromise the entire system. Any attempted changes to medical records are permanently logged and must be verified by multiple parties. This creates a transparent audit trail that makes unauthorized modifications or access immediately apparent.

The Bottom Line

Blockchain technology supports compelling solutions to healthcare’s most pressing challenges, particularly data security, interoperability, and administrative efficiency. However, its adoption remains limited to pilot programs and narrow use cases rather than system-wide deployments. Healthcare regulation, complex stakeholder relationships, and deeply entrenched legacy systems present unique challenges. Success will require not just technological changes but also industry-wide collaboration on standards, significant infrastructure investment, and careful navigation of privacy regulations.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.

• Zehra Ozge Candereli and Levent B. Kida. “Blockchain Applications in Health Services,” in “Exploring Blockchain Applications: Management Perspectives,” eds. Sezer Bozkus Kahyaoglu and Vahap Tecim. CRC Press, 2024.
• National Institutes of Health. “Blockchain Technology in Healthcare: A Systematic Review.”
• Centers for Medicare and Medicaid Services. “Electronic Health Records.”
• World Economic Forum. “How Generative AI and Large Language Models Can Close the Gap Between Data and Outcomes in Healthcare.”
• Private Equity StakeHolder. “PESP Private Equity Hospital Tracker.”