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How Blockchain Operates in Hospital and What Are Their Challenges

The use of blockchain in healthcare is growing. Research and Markets have estimated that in 2022, global investment in blockchain in this industry will exceed $500 million. IDC considers medicine to be one of the areas where technology expenditures will rapidly increase, amounting to 52.5%. What is the reason for such interest in using blockchain in custom healthcare software development? What are the benefits of this innovation? Let’s figure this out in our article.

About blockchain technology

Blockchain is a distributed system where data, transactions, and other information are stored. Archive records are located not in the central repository but in a peer-to-peer computer network. When a device is used for a transaction, the computers generate identical blocks. If one of the parties changes the data, a block for local information recording is created in each device. The previous data is not deleted, allowing anyone to view the changed information.

The records are secured with the hash – a unique identifier uniting the blocks into a systematic chain. It’s extremely difficult to decrypt the cryptographic code; that’s why the National Institute of Standards and Technology notes that security is the blockchain’s key benefit. Although blockchain is associated with well-known basic technologies like networks, hashing, and encryption, using it entails going beyond classical programming, databases, and web interfaces.

Challenges that modern healthcare faces

In 2020, PwC surveyed healthcare institutions’ executives, researchers, insurance providers, and clients. As a result, the company outlined the following healthcare challenges:

  • The need for improving the quality of patient care. Healthcare facilities need to find a balance between virtual and personal services.
  • Difficulties in conducting clinical trials. The industry will have to build a decentralized clinical trial model with less load on subjects and clinicians.
  • Process automation. Healthcare facilities introduce digital technologies to relieve doctors from repetitive manual work and speed up patient care.
  • The work with analytics. Clinics need a prediction system that will forecast events in the insurance market and the economy, as well as future waves of infectious diseases. To do so, medical facilities need to learn to manage, collect, and analyze health data in order to predict changes affecting the industry.
  • Resilient and rapid supply chain. The industry seeks to modernize logistics by making them transparent, flexible, and safe.

In addition to the challenges identified by PwC, the issues of confidential data protection, personalized care, and medical service cost reduction remain relevant. Blockchain technology is able to eliminate these obstacles.

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How blockchain works in healthcare

The healthcare industry is gradually learning how to use blockchain, and the first IT solutions have already borne fruit. The technology addresses issues on all levels of care – from developing drugs to providing services.

Here is how blockchain works in healthcare

1. Data protection

In 2020, over 40 million people suffered due to the compromise of medical records. Although according to Verizon, the healthcare industry ranks ninth in terms of the number of incidents, the average cost of data leakage is the highest in the industry, exceeding nine million dollars.

Blockchain is a reliable solution for healthcare apps. The technology conceals user identity with the help of complex and secure codes, thus protecting data privacy. Blockchain’s decentralized nature makes it possible for patients, doctors, and healthcare providers to quickly and reliably exchange information.

Medical data is controlled by its owners. It is they who determine what organizations, doctors, hospitals, labs, and insurance companies can get access to this information. By using smart contracts, patients allow doctors to remotely view medical records, hold consultations, and give their opinions.

Even if one of the blocks is hacked, malefactors won’t get access to all the medical data of an organization – they’ll have to attack each user individually.

2. Better patient care

Medical institutions, pharmacies, labs, and insurance companies maintain lots of health documents. Quite often, EHRs only allows for the transfer of client data within an organization or a network of companies. This complicates the diagnosis and treatment of diseases.

Blockchain provides for faster diagnosing and adoption of treatment plans for a particular person. An app places transactions in a blockchain in order to collect information about a patient’s health throughout their lives. Everybody who takes part in patient treatment gets into a unified data ecosystem.

With a blockchain-powered app, a smart contract is initialized, opening limited access to the user’s EHR. Doctors add records, scans of documents, and lab test results that take the form of transactions. Pharmacies dispense medicines and add transactions to the blockchain. Patients promptly receive quality care.

3. Management of medical product supply chains

According to Stephen Schondelmeyer, a pharmacist and Ph.D. of the University of Minnesota in Minneapolis, “the beginning and the end” of the drug supply chain in the US needs improvement. Problems arise when an active pharmaceutical ingredient is not available. Manufacturing is postponed, and the required medicine doesn’t appear on the shelves of pharmacies and hospitals. Another obstacle is that counterfeit drugs of unknown origin penetrate pharmacies. It is necessary to establish a supply chain where medicines are delivered on time and with the consideration of forecasts and prospective demand.

Blockchain ensures supply chain transparency. The technology provides a means for tracking goods from the place where they were manufactured and all the way to a consumer. Each movement of medicines is recorded in a block, and the data can be neither modified nor falsified. If failures occur at a certain stage of delivery, the chain participants note this and try to remedy the situation.

Blockchain helps companies track the origin of medicines, their expiry date, and other useful information, as well as comply with legislation.

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4. EHR management optimization

A system of medical records integrated with the current EHR/EMR system can be created using blockchain. It will work as a single medical record. All records made by doctors, prescriptions, and lab test results are hashed. You only can read them (decrypt hash) if you have an owner’s permission.

Blockchain-powered EHRs provide reliable data protection. Those who work with them are granted temporary access. Blockchain collects lots of data, which will allow for personalized care.

With digital medical records, facilities better control drug consumption, evaluate the performance of medical personnel, and collect medical statistics.

5. Improved health insurance contract management

Blockchain smart contracts improve the traditional insurance system, excluding unnecessary intermediaries. Users acquire medical insurance policies with the details stored in their profiles on digital cards.

Blockchain automates the submission of insurance claims. If the insurance covers a medicine or a medical procedure, a smart contract is activated, and money is transferred from a payer to a care facility without unnecessary calls or paperwork. Such a system saves insurance agents and doctors time, and clients may receive care based on their insurance even if they don’t have a policy with them.

6. Automated certification of medical personnel

When a healthcare specialist applies for a job, an employer needs to make sure that this specialist possesses the necessary qualification. Hospitals and clinics place their employees’ data in a uniform system so that their future employers have access to them. With such data at hand, managers will employ people faster, while patients will be able to view the information about the qualifications and working experience of medical staff.

7. Clinical trial monitoring

People would turn to innovative treatment methods more often if they knew about ongoing clinical trials. Only 16% of all candidates participate in clinical trials. Blockchain allows scientists to select the required number of subjects. Anonymous data is stored in a chain of blocks, and institutions can contact the candidates who meet the requirements.

Blockchain eliminates fraud in clinical trials. The documents created in the course of a clinical trial can be neither edited nor falsified.

8. Genomics development support

Blockchain securely stores terabytes of information. This can work to the benefit of genomics – a science that explores genes and seeks personalized treatments for people. Blockchain will enable people to sell encrypted genetic information. A huge database is formed based on it, which scientists use for genomics research and development.

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Challenges of blockchain in healthcare

Although blockchain improves medicine and solves the problems of the industry, the following challenges in implementing it need to be overcome:

  • there is a need for developers who know the technology and the peculiarities of healthcare and can handle security issues;
  • blockchain is not enough to ensure medical data security, as stated by adherents of the Health Insurance Portability and Accountability Act (HIPAA),
  • data control: when users physically can’t open access to their data, it’s not clear who will provide this access and how to solve the problem;
  • legislation: there is a need for regulations regarding blockchain and relationships between participants within it;
  • scalability: blockchain must be able to store large amounts of data without slowing down the network.


Blockchain is improving healthcare software development services. This technology is ensuring medical information security, making communication between doctors and clinics better, and combating counterfeit drugs. It is excluding intermediaries from the supply chain and reduces transaction costs.

The potential of blockchain in healthcare depends on the degree to which it is accepted in the industry. This technology offers prospects of streamlining traditional medical services and research.