What is blockchain, and what do CIOs need to know about how it can improve healthcare? It's a question that's both straightforward and complex.

There's a forum on Reddit called Explain Like I'm Five. And there's plenty of discussion there about the basic concepts behind distributed ledger technology, from the mechanics of how it's designed to the real-world problems it could solve.

But one of the best explainers we've seen is one from Wired, where a blockchain expert literally explains how it works to a child (and, with ever-mounting layers of complexity, to a teenager, a college student, a grad student and a fellow expert).

At its essence, of course, blockchain is a network to enable easier peer to peer exchange and reduce dependence on intermediaries. As blockchain researcher Bettina Warburg explained to the girl, it's "a type of technology that means you could trade with any kid, all over the world … you don't need the store and you don't even necessarily need to know the other person."

Of course, it's a lot more complicated than that. Blockchain has its own technical jargon, and all that talk of hashing and forking and sharding, genesis blocks and master nodes and Merkle trees can be confusing if not intimidating – even for the tech-savvy.

In a recent HIMSS Learning Center webinar, blockchain expert Maria Palombini, director of emerging communities and initiatives development at the IEEE Standards Association, said that, for all the promise – and not a little hype – surrounding blockchain, it can be very difficult to define.

"The technology itself is continuing to emerge," she said. "Today there's probably 10 to 12 consensus algorithms and 10 others that have been developed. So it's hard to define it. What I like to focus on is the features of the technology itself."

Those features include the fact that it's immutable. It's peer-to-peer. It's chronological. It verifies and time-stamps data transactions.

"All of these things are critical features of the chain," said Palombini.

And they're also just the things that make distributed ledger technology so intriguing for healthcare. A tamper-proof means of peer-to-peer data exchange lends itself well to any number of use cases, from patient engagement to clinical trials management, revenue cycle to supply chain.

Deep interest, steep learning curve

As we showed yesterday, healthcare organizations are deeply curious about blockchain and what it can do for them. But much of their interest at this point is still theoretical. Fewer 15 percent of decision makers polled by HIMSS Analytics say their orgs are ready for blockchain deployments. More than 45 percent say they're still in learning mode.

The number and variety of new proofs of concept and pilots is sure to increase – even if just how quickly, and over how steep of a learning curve remains to be seen.  

Earlier this year, Gartner and IDC both offered some tips for CIOs looking to take advantage of this new way of doing things. Both emphasized the need to strike a balance between jumping in in early to realize the benefits of low-hanging fruit, but also proceeding with caution and steering clear of hype. That's easier said than done.

"Blockchain technologies offer a set of capabilities that provide for new business and computing paradigms," said David Furlonger, distinguished vice president analyst at Gartner. "Exploiting blockchain will demand that enterprises be willing to embrace decentralization in their business models and processes. It is not straightforward."

The challenges IT professionals need to navigate are numerous, from issues around competition and collaboration, technical challenges, and privacy sensitivities related to HIPAA and GDPR.

Gartner suggested CIOs start by looking at how their colleagues in other industries are deploying blockchain – many are already well ahead of healthcare in terms of their maturity.

Then, of course, they should think hard about how they want the new approach to be tailored to their own specific use cases.

"Though blockchain holds great promise, often the technology is offered as a solution in search of a problem," according to Gartner. "To ensure a successful blockchain project, make sure you actually need to use blockchain technology."

The report also cautions about steering clear of the hype: "Much of what is on the market as an enterprise 'blockchain' solution lacks at least two of the five core components: Encryption, immutability, distribution, decentralization and tokenization."

Despite the sunny pronouncements from some blockchain evangelists, there's no shortage of challenges to keep aware of, whether it's gray areas with privacy and accounting law, native interoperability; scalability and more.

"Further, security for blockchain is a challenge given the lack of best practices and standards," said Gartner researchers.

"Within cryptocurrency, for example, tens of millions of dollars have been stranded or stolen due to misunderstandings, basic code errors, fraud and security errors. Security vulnerabilities also exist in the technology that surrounds the blockchain ledger, meaning all blockchain projects must be evaluated for technology, governance and compliance, human misunderstanding and value at risk."

Tread cautiously but deliberately

Those hurdles shouldn't scare health systems away from the big potential upside. They just need to be kept in mind as more and more providers dip their toes in these waters.

For yet another helpful primer, this recent Medium post offers useful perspective on an array of data management issues related to blockchain: transaction speed, security, maintenance, stewardship, governance and more. It also highlights what the author, Dana Love, said were inherent trade-offs in the technology.

"Under the right circumstances, blockchain could be transformative, but without careful planning it could also become a costly misadventure," he said, noting that CIOs should understand that "blockchain is not the ideal solution to every data problem; it is a different rather than a better way to address data or transaction management, we can evaluate the criteria that matter for enterprise data or transaction management."

Love's advice for those IT professionals curious about trying out some blockchain projects boiled down to three words: "Wade, don’t dive," he said.

"Prototypes and shadowing in-place systems may be a valuable tool in measuring trade-offs without putting critical data at risk. Participating in consortia or other partnerships may be another way to test the water," he explained. "Those incremental steps may allow delay of significant investments until the technology and business environment has reached greater maturity and the potential gains become clear."

That squares with what Corey Todaro, chief operating officer at Nashville, Tennessee-based Hashed Health told us earlier this year. His four main recommendations for healthcare tech teams were as follows:

1. Don't get locked into a single protocol. "Blockchains are deployed through open-source protocols: There's Ethereum, there's a number of them under the Hyperledger, like Fabric, Sawtooth Lake, with backers like IBM and Intel," said Todaro. Maintain a protocol-agnostic approach allows healthcare orgs to "experiment and fail fast," he said. "You don't want to pick a protocol and put all your eggs in one basket."
2. Develop a tailored enterprise blockchain strategy. "Enterprises really need help getting their arms around the technology," Todaro added. His advice? Start experimenting with a couple use cases. See if certain features and functions actually mature. Keep an eye on how the value might evolve in the short term. "Hedge your risk, limit investment to something well-defined, and make sure the scope of the risk is something you understand very well."
3. Take part in pilots. "That enterprise strategy is a precursor to actually participating in a build," said Todaro. "We can't help convene these networks unless the industry is educated around that. Fundamentally, blockchains are network plays. And unless the network constituencies and counter-parties are conversant and familiar, we're not going to entice them into these networks that we're designing and convening."
4. Now is the time. Early adopters shape the conversation, after all – and, arguably, future trajectory. "By coming in early, you're going to be able to help design that governance agreement," said Todaro. "Come in later, and you're going to be given that agreement and told, 'Yea or nay, do you want to participate or not?'"

Twitter: @MikeMiliardHITN
Email the writer: mike.miliard@himssmedia.com

Healthcare IT News is a publication of HIMSS Media.