Blockchain: What to know before investing in the tech

Optum's blockchain guru describes how the company singles out and pursues the most promising pitches.
By Dave Muoio
08:53 am
blockchain investing

While blockchain’s overall impact might still be under contention, it’s hard to argue that there isn’t widespread interest among C-suites about just what the distributed ledger technology could bring to their businesses.

Nearly three in four executives could see a “compelling business case” for blockchain, and roughly a third said that some manner of blockchain system was already underway at their organization, according to a Deloitte survey published in August. Within healthcare specifically, 55 percent of executives said they believed the technology would prove to be disruptive and more than 60 percent felt their business will be at a disadvantage if it does not begin exploring blockchain.

So how does an organization take that first step and decide whether or not blockchain is really worth the investment? For Optum — which has been investigating blockchain for two and a half years and now headlines the Synaptic Health Alliance, a seven-organization blockchain pilot focused on efficiently maintaining health plan provider directories — it’s about understanding what the technology is capable of, and how those characteristics relate to the specifics of an individual business problem.

“A lot of our work has been trying to communicate, distinguish and vet use cases around the should, versus could, criteria,” Mike Jacobs, senior distinguished engineer with Optum Health and the company’s blockchain spokesman, told MobiHealthNews. “It was a little bit of groping in the dark in the beginning. First of all, we had to distinguish between what was real versus what was hype. And once we understood what the technology actually could do in its current form, I flipped the question around to ‘What characteristics of the business problem would lead me to conclude that blockchain is a good idea?’”

When its own blockchain initiatives were first getting off the ground, Optum developed its own set of fit-for-purpose criteria that a blockchain implementation would need to meet before receiving serious consideration, Jacobs explained. These criteria eventually took the form of an online survey tool that asks the user a handful of directed questions about the nature of their pitch — for example, whether or not multiple parties need to write data, whether there is already a legal contract between entities, or if a field-level audit trail would be necessary.

Having this kind of process allowed the company to provide high-level guidance on blockchain’s applicability to a specific use case, or whether an idea would need to be reworked before progressing past an early stage. Equally important, Jacobs noted, the tool itself substantially cut down the amount of time lost to pitches that would never see the light of day.  

“It’s just a question of learning curve, and then flipping the question around to business terms,” he said. “We ask people to use that at first, so unless you get back a positive response, you probably should go back and rethink what use cases to look at. That helped with scaling the requests because many times we were just seeing ‘I need to meet with you for an hour and talk about this to see if it’s a good use case.’ And we were like, ‘we need to have an online tool to help filter this.’”

Should a pitch meet the predetermined criteria, however, Jacobs said that his company will initiate a more thorough investigation into the proposal via a cost-benefit analysis. This “research phase” includes a more stringent look at the business problem, the fit for purpose, the costs associated with whatever process is being replaced and the annual savings or revenue increase that could come with its implementation.

From there, the pitch faces a formal funding decision, in which the cost of an established proof of concept implementation and the potential benefits of a successful rollout are gauged against that group’s allotted budget.

“That proof of concept might be a side job that the organization uses it side by side with the existing process to verify that [the initial proposal’s] assumptions are holding true. And perhaps there’s a pivot point there, where the proof of concept evolves to better meet the needs of the use case,” Jacobs said. “At least in [UnitedHealthcare Group], Optum, there’s a very disciplined approach we’ve taken to make sure we’re not just making a bunch of science experiments for fun, and making sure that we’re doing something useful for the business.”

In terms of the wider blockchain investment landscape, Jacobs said that he still sees another five years or so until the often-proposed longitudinal health record concept becomes feasible, while other implementations involving coordination of benefits or shared ledger accumulators are much more realistic in the short term. Regardless of any particular angle, though, he was firm in the belief that interested organizations need to get moving fast.

“If there’s any interest in getting started in investing in blockchain, you need to get started now and stay up to date. The landscape changes on a monthly basis in terms of the technology evolving, so I’d say if you’re an early adopter, get started and have someone devoted to the technology and keeping up to date with what’s going on in the industry,” he said.

Focus on Blockchain

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