Four Ways Blockchain Technology Can Reform Financial Management in Healthcare Companies
Sheetal Nariani is an expert on blockchain technology who has worked for over a decade in the financial management sector within the healthcare and pharmaceutical industry, including pharmaceutical giants like Cipla and Novartis, and has advised multiple renowned companies in the healthcare and pharmaceutical sector on how to plan, develop, and execute their financial strategies.
As discussed previously, Blockchain is a ledger of records arranged in data batches called blocks that use cryptographic validation to link themselves together. Each block references and identifies the previous block by a “hashing function,” forming an unbroken chain, which is where we get the name.
Ms. Nariani shared with Tech Times her insights into the ways Blockchain tech can reform and sharpen financial management in healthcare companies, explaining that the implementation of blockchain technology empowers finance managers to adopt a patient-centric approach, which results in well-coordinated, affordable products and services -- very important in a healthcare market that is becoming more and more consumer driven.
First, a Blockchain refresher from the article:
Blockchain has been defined as - "tamper-evident and tamper-resistant digital ledgers implemented in a distributed fashion (i.e., without a central repository) and usually without a central authority ([e.g.,] a bank, company, or government). At [its] basic level, it enables a community of users to record transactions in a shared ledger within that community, ensuring such that no transaction can be altered changed once published under a normal operation of the blockchain network, "- by National Institute of Standards and Technology (NSIT). This technology on which Satoshi Nakamoto developed Bitcoins is currently the most transparently distributed ledger ever known to man.
Ms. Nariani identified the following as the most important benefits of adopting Blockchain technology:
Easier Processing of Medical Claims
One problem the healthcare industry faces today is the exceptionally long processing time for medical claims. It usually takes anywhere from 2 to 4 weeks for electronic claims to be settled, and about 6 to 8 weeks for paper-based claims. Using 'Smart Contracts' issued by the blockchain can significantly reduce the processing time to about 15 minutes.
Hence, instead of involving intermediaries (to execute patient-firm contracts), the institution can program its private blockchain network to receive claims, process them in real-time, and transmit payments to healthcare providers.
Therefore, using a Smart Contract is a great way to save time and remove third parties that slow the process from the equation. Similarly, blockchains can also secure and store patient data or client history.
Efficient and Timely Transactions
Based on a consensus mechanism to validate transactions, blockchains can significantly reduce transaction time and costs. Albeit not all healthcare activities are transaction-based, blockchains enable finance managers to carry out and execute seamless transactions with their clients directly without third-party interference. Transferring funds for medication or payment for consultation becomes easier and efficient as the use of tokens significantly reduces the timeframe to settle bills compared to settling them in the current time frame of days or even weeks.
Eliminate Chances of Double-Spacing
Businesses lose millions of dollars in false claims and double-spending. To eliminate such transactions, banks charge a hefty amount. Blockchains, on the other hand, use advanced cryptography to register an ongoing transaction on the blockchain. This simply means that the first transaction and all subsequent transactions are time-lapsed along with the details describing them; the value that has been spent is recorded and is available for immediate verification. So, if someone attempts to make false claims, the company can easily verify and subsequently invalidate their claim in a matter of minutes. Thereby, protecting companies from double-spending claims and saving millions in lost revenue.
Since banks and other third parties are not involved, there is no way that money in the company's account cannot be redirected back to the customer, without prior consent.
Execute Better Accounting
Another problem most healthcare institutions and companies face is the high velocity of transactions. With the current accounting tools and processes, it is difficult to keep up with the sheer volume of transactions. Blockchain technology, however, simplifies this process and drastically enhances the audit and reporting by the use of a distributed ledger that tracks all transactions made on it. Additionally, its immutable nature makes it practically impossible to erase or manipulate transactions. Hence, making financial procedures more transparent and accessible in real-time.
Another exciting area where this technology can be implemented is the facilitation of pharmaceutical product analysis. It stores the information related to the entire supply chain across warehouses and shipments. Therefore, making it easier to keep track of the stock in their inventories and monitor the generated revenue.
In a more and more competitive healthcare environment, it's worth noting that IBM, Alphabet, Google, UnitedHealthcare, the FDA and many other players have already invested deeply into Blockchain tech -- staying abreast of ongoing Blockchain developments and implementations is crucial. A key component for blockchain is electronification of documentations -- particularly remits and EOBs/EOPs. To leverage blockchain technologies, the healthcare industry must continue its push to a fully electronic revenue cycle management system -- and, to achieve this in the short- and long-term, exploit AI technologies for the best solution.