Smart contracts can disrupt and revolutionize the healthcare ecosystem
As on today healthcare systems are bloated with cost, bureaucracy, and middlemen. It’s absolutely at the brink of having a disruption. Already there has been a lot of talk about Amazon to soon enter the prescription drug market. This would bring in a bigtime disruption to traditional brick-and-mortar retail pharmacies. It also will threaten the present overall healthcare ecosystem which consist of the following
- Consumers, who pay monthly premiums to health payers and also pay co-pays to providers and pharmacies.
- Pharmacy Benefit Managers (PBMs), who hold enormous leverage in negotiating prices with drug manufacturers and places drugs on a health plan’s formulary. They also receive rebates from drug manufacturers and share some percentage of this rebate with health payers. They are also responsible for reimbursing pharmacies for drug prescriptions.
- Health Payers; they receive claims from healthcare providers. They reimburse providers for care and PBMs for drug prescriptions.
- Pharmacies; who are mostly part of the PBMs network. Thus the PBMs end up being more incentivized through their own pharmacies. This ends up resulting in to higher drug prices paid by the consumers.
Thus the presence of the middlemen in the present pharma eco system ends up adding a lot of cost as well as complexity. This brings in a significant need for transparency between PBMs, pharmacies, hospitals, physicians, health plans, and the healthcare ecosystem at large.
Now the question is how can blockchain help in with disrupting the present healthcare eco system? The answer is very simple; blockchain model has the capability to significantly cut costs for the end customer.
Blockchain being a distributed ledger at its core, is the best technology for the exchanging of values and ownership. With the potential to simplify, secure and facilitate trade, Blockchain can offer major benefits to business and consumers. One of the most useful concept that blockchain offers is the “smart contract”.
What is a Smart Contract?
Smart contract is a digital contract that self-executes when a predetermined condition is met. These code-based contracts enable agreed upon actions (such as payments) to occur automatically, immediately and without intermediaries, upon the satisfaction of the terms of the contract.
The smart contract is an agreement between parties involved in a transaction that holds each party responsible for their role in the transaction. Smart contracts define the rules and penalties around a transaction akin to a traditional contract, but also ensure that the contract is enforced.
In simple terms smart contracts are pre-written computer code that are deployed, replicated, and then executed on a distributed network of computers / ledgers.
The direct and indirect benefits of conducting Smart Contracts in the Pharma Eco System.
Currently, miscommunication and mistrust among all stakeholders makes it very difficult to transition to value-based care. Smart contracts has the potential to make process seamless.
Reduce the occurrence of health payers ending up paying for inaccurate claims. Moreover cut down upon the amount of time and money in reconciling over- and under-payments.
It can provide complete transparency to all parties, allowing payers and providers to negotiate complex claims that are tied to bigger stakes and values.
It can significantly reduce inefficiency and waste of lifesaving resources due to several malpractices in the healthcare ecosystem.
Smart contracts can ensure that all contracts amongest the stakeholders are encrypted, thus it will allow only authenticated and authorized users can access these entries.
The reimbursement processes can get triggered by the smart contract only when certain conditions are met.
A smart contract between the consumer and the drug manufacturer can directly ensure a certain amount of co-pay to be transferred from the consumer to the drug manufacturer.
Smart contract between health care providers and payers will ensure that every time a patient receives care an authenticated entry will be registered as in the distributed ledger.
This authenticated entry will help executes transparent and accurate claims of reimbursements from the payer to the provider, and also transfers a certain amount of co-pay from the patient to the provider.