Blockchain and the healthcare sector

Yes – blockchain, not bitcoin.
By providing participants with an immutable trail of interactions between schemes, members and practitioners, blockchain will make it easier for patterns of fraud to be detected. Image: Shutterstock

The Government Employees Medical Scheme (Gems), the second biggest scheme in the country, had a problem in KwaZulu-Natal. It identified this province as the most problematic when it came to fraudulent claims.

In one example, Gems uncovered irregular claims of R93 million by a service provider who had 36 practices registered under its name. 

But they are not alone. 

Medical aid claims attributed to fraud, waste and abuse cost the sector between R22 billion and R28 billion a year.

These numbers were revealed at the inaugural Fraud, Waste and Abuse Summit organised by industry regulator the Council for Medical Schemes (CMS) earlier this year. They accounted for an average of around 25% of the total healthcare claims paid by the industry in 2017. 

Discovery Health, the largest open medical aid scheme in the country, says that in 2018 its efforts to curb fraud, waste and abuse resulted in it recovering R555 million, and it estimates that an annual “halo effect” brings this number up to R1 billion.

The scheme estimates that 7-15% of its total healthcare spend goes to fraudulent claims. In 2018, 40% of these were claims submitted for services not rendered. 

It’s clear that the issue is immense, and while various stakeholders in the sector have their own methods and applications to tackle this trend, medical expert Dr Ntuthuko Bhengu says technological solutions like blockchain, have the potential to drastically curb fraud and wasteful expenditure, if only they could be adopted by the industry.

Data management 

Blockchain is a type of distributed ledger technology used to record and store transaction records. It is a shared and fixed record of peer-to-peer transactions built from linked transaction blocks and stored in a digital ledger. 

Data management and information exchange are one of the biggest loopholes that make it difficult for schemes to detect, monitor and prevent healthcare fraud, according to Dr Katlego Mothudi, managing director of the Board of Healthcare Funders of Southern Africa.

“Because of inadequate use of data you find that the industry is, most of the time, a few steps behind people who deliberately abuse the system,” he says. 

“If a practitioner’s facility decides to hit one scheme using a particular fraudulent plan, once that scheme figures out how that plan works and the information is not shared in the industry, that practitioner moves to another scheme and applies the same methods until they are caught.”

Given that blockchain is a decentralised system where transactions are recorded and shared among all network participants, by using blockchain, the CMS, for instance, would have access to the immutable audit trail of all interactions between medical schemes, their members and practitioners. This would make it easier for it to detect patterns of fraud.

Blockchain is not bitcoin

“The biggest challenge is to make the case that Blockchain is not bitcoin,” says Bhengu, who is a member of the Health Market Inquiry panel and commissioner at the SA National Planning Commission. 

Bhengu gave a presentation at the Gems Symposium in Durban earlier this month on the advantages of incorporating blockchain in the way the healthcare sector stores patient information, saying it would remove the inefficiency and fragmentation in how the sector currently operates. 

“The problem with healthcare, both locally and globally, is that there is too much of silos and, if you think about it, this is one industry that needs to see patient data shared to the extent that any practitioner that sees the data should know what the previous one actually found, examined and prescribed,” said Bhengu. 

Beyond fraud, he added, there is also a lot of wastage in the system. Due to the disjointed databases and lack of any cohesive communication between practitioners and facilities, a patient could see a doctor then go to a specialist, who would repeat the same tests done two weeks earlier. 

“One of the things blockchain will do, and is doing in other jurisdictions, is to make sure that when the patient moves along the healthcare chain they take their data with them because it introduces the holy grail of interoperability,” said Bhengu.

This means a patient’s record can be seen by any practitioner at any time – provided the patient has given permission.


Another benefit to an interoperable blockchain is that it is secure. A global study by computer hardware company IBM in 2019 found that data breaches in 2018 cost South Africa $3.06 million. 

IBM found that on a global average, for the ninth year in a row, healthcare organisations had the highest costs associated with data breaches, at $6.45 million. This is over 60% more than the global average of all industries. 

Because blockchain is immutable, healthcare professionals would not have to worry about information being corrupted.

Further, the decentralised and distributed ledger technology of blockchains makes them less susceptible to hacker invasion and ransomware attacks that would have to access the nodes in the network to infiltrate the system. 

“There’s a whole area of medical malpractice litigation where records go missing,” said Bhengu, adding that incidents of patient records going missing would be reduced in a blockchain-enabled environment.

Not a panacea

If blockchain presents so many solutions why is the healthcare sector not embracing it? 

Well for starters Bhengu notes that the technology is not fully mature and cannot be immediately adopted. 

Secondly, he said there is a reluctance to fund the uptake – particularly by those in the venture capital industry who see healthcare as complex. 

A Deloitte report titled Blockchain: Opportunities For Healthcare in the US lists additional challenges such as the need to create the technical capacity for a blockchain environment. This speaks to the need for interconnected computers to provide the computing power to create blocks once data is transmitted. Blockchain requires a lot of computing power to process transactions and the cost is determined by the volumes of data that is processed. 

Deloitte says that beyond the bitcoin blockchain, there are few blockchains in full production and “as such, it is difficult to forecast the possible costs of operating a blockchain at scale within a private enterprise or among a consortium of partners”.

There is also the added challenge of getting organisations to buy into participating in the network. 

In a June 2018 CMS newsletter in which Mothudi addressed the issue of fraudulent healthcare claims, he remarked that one of the key reasons for the reluctance to share data between schemes and administrators is that “fraud management ultimately becomes a factor of competition”.

“Schemes and administrators that are more adept at detecting and mitigating fraud will enjoy lower operating costs and thus have a greater competitive advantage.”

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Take it one step further. Create a cryptocurrency for the healthcare sector. Call it the Disprin. It will be backed by a headache.

End of comments.





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