While blockchain brings considerable hope -- and a hearty dose of hype -- it faces a series of obstacles that healthcare organizations must overcome before it gains widespread implementation.

For starters, the industry so infamously slow to adopt technology may not be ready, from either a workflow or regulatory point of view, for the changes some say blockchain could bring.

Healthcare has some well-entrenched and very complex ways of managing data, said Sharon Klein, a partner in Pepper Hamilton’s health sciences department and chair of its privacy, security and data protection practice.

[Also: How does blockchain actually work for healthcare?]

"It's a complicated web, in terms of the continuum of care. And it's a regulated web, with business associates and covered entities," Klein said. "So the question is how does blockchain fit into the regulatory scheme. Blockchain is great in terms of security – or could be.”

The privacy problem

HIPAA rules, which govern how healthcare handles sensitive patient data, has multiple subchapters and healthcare entities are going to have master them all for blockchain.

“HIPAA has privacy rules, security rules, interoperability stuff and healthcare clearinghouse rules,” Klein said. “And those are old – 1996 – but you still have to comply.”

Klein added that HIPAA, in turn, presents the challenge of security mechanisms for requirements such as data minimizations and controls with blockchain. “There's so many more rules if it's in a designated record set."

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Klein’s colleague, Joe Guagliardo, who chairs Pepper Hamilton’s year-old Blockchain Technology Group, said that the emerging technology may never replace the current infrastructure, if only because of so many regulations.

Then there’s interoperability

Health information interoperability and data security are the two most-discussed potential use cases for blockchain in healthcare.

But while interoperability is already a difficult problem, blockchain will not be an immediate answer. Achieving interoperability, rather, is going to be a critical piece of widespread blockchain deployment, Guagliardo said.

“Without solving the interoperability issue, I don't think we're going to get any of this implemented,” he added, noting that aligning all relevant stakeholders will be more complicated than developing the technology.

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Performing analytics on encrypted data is another challenge.

"Can we do in-flight decryption and then re-encrypt it back? Possibly,” said Prashant Natarajan, director of healthcare solutions at Oracle.

Perhaps the larger issue affecting blockchain's long-term prospects in healthcare has to do with a more essential question.

"What money can it save, what money can it generate, what can it do for the patient?,” Natarajan said. “If it doesn't answer those questions, frankly, I think the broad use case doesn't matter."

Who pays?

While the prospects of blockchain applications are exciting, and there are legions of talented technologists working on projects large and small to bring its potential for data security and interoperability to fruition, it's fair to say we're probably still a good way off from seeing it widely deployed.

[Also: Google's DeepMind developing blockchain-like tech to track health data]

Natarajan says blockchain has tremendous value for the healthcare space because it essentially moves away from the mistake-prone, documentation-centered approach to a flexible process where the transaction is key.

"The question is not whether it works,” Natarajan said. “The question is who's going to pay for it? And blockchain is going to be expensive."

[Also: IBM launches blockchain tool on Linux Hyperledger Fabric]

Not just financially expensive, either, in terms of updating or replacing IT systems to efficiently use the technology, although there's that. But also in the work it will take to change ways of thinking and adjust long-ingrained workflows.

"We're definitely at the height of the hype curve. I think there's going to be about two or three years of disappointment setting in once people figure out it's not the greatest thing since sliced bread,” Natarajan said. “And then they're going to have to figure out how to build a skilled staff, how to change the mindset and change the existing systems to be able to accept this."

Twitter: @MikeMiliardHITN