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LIFE SCIENCES

Home LIFE SCIENCES Page 5

by EOS Intelligence EOS Intelligence No Comments

The Smoke around Legal Cannabis

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Till date, 31 countries and 41 states in the USA either legalized cannabis in various forms, including making it legal for medical or recreational use, or decriminalized it while still maintaining its illegal status. Few countries are preparing to legalize or decriminalize the use of marijuana for all purposes while many countries are still debating over the legalization of this plant only for medical and not for recreational use. With the rise in education about cannabis and its benefits for humans, economies, and culture, chances of positive changes in laws around cannabis are growing across the world. As legalizing cannabis is still a topic of debate with variety of business, political, and cultural views involved, we are looking at how the legalization of cannabis might impact the economy and businesses in the countries taking the step towards less restrictive approach to handling the issue.

Cannabis – a controversial medicinal plant

Cannabis or marijuana plant and its alleged benefits and risks for human body have been a difficult topic of debate amongst law makers, medical professionals, researchers, economists, politicians, and (of course) cannabis users. In many parts of the world, it still has negative connotations with a narcotic drug, due to presence of psychoactive substance tetrahydrocannabinol (THC) which brings an intoxicating effect to human mind.

In many countries, cannabis has been treated similarly to other chemical drugs, such as cocaine, heroin, etc., in terms of its legal status, by banning from legal cultivation, purchase, or selling for any purpose. However, there has been a continuous development in spreading awareness by the medical professionals, researchers, and scientists on the benefits of using cannabis for medical purposes. This has been followed by voices being raised on people’s right to legalized cannabis also for recreational purposes, comparing it with alcohol and tobacco, which are claimed to have far worse impact on human health, yet are enjoying legal status in many countries.

In addition to this, many economists too are coming forward in favor of legalizing cannabis to bring a boost to economies. As a result of such strong petitions, more and more countries are considering legalization of cannabis and the future might see countries such as USA (including all 50 states), Mexico, New Zealand, The Netherlands, Columbia, France, Spain, Italy, Czech Republic, Jamaica, and Portugal legalizing the plant for all purposes, along with legalization of personal cultivation of cannabis with an aim of bringing cure or relief to several diseases, helping to control healthcare costs, curbing illegal drug businesses, and stimulating country’s economy through adding another taxable business activity.

The Smoke around Legal Cannabis

Countries signal green light for marijuana

The league of countries with full legalization of cannabis for all purposes is still a small, two-member club, which was most recently entered by Canada (in October 2018) with more than 100 legal cannabis retail stores running across the country. After Uruguay that started this league in December 2013, Canada is the second country in the world to completely legalize cannabis, and it does not seem that the club will expand any time soon.

The USA are considering to gradually legalize cannabis for recreational use along with medical use. As of November 2018, The District of Columbia and 10 states including Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, and Washington have legalized the recreational use of cannabis. An addition of 30 states along with US territories of Puerto Rico and Guam allow the use of cannabis only for medical purposes.

Amongst the European countries, none of them has legalized smoking cannabis or using it for recreational purposes yet, but there are several countries which have legalized the medical use of cannabis under a treatment process, while also decriminalizing the use of cannabis for recreational purposes. Malta, Greece, Luxemburg, and Denmark are amongst the European countries that legalized medical cannabis in 2018 adding to the group of other European countries such as Italy, Norway, Poland, The Netherlands, France, Spain, Slovenia, to name a few.

Some Asian countries are also moving towards legalizing cannabis but exclusively for medical purposes and that too with strict policies. Recently, in November 2018, Thailand legalized medical marijuana, but with very stringent rules to get access to marijuana plants. Also, in November 2018, South Korea became the second Asian country to legalize medical cannabis, while Malaysia is expected to be the third nation to fall into this group. Interestingly though, India, known to be the origin of cannabis sativa plant, has not legalized the use of cannabis for any purpose yet, although the country runs a huge illegal trade of marijuana as well as hashish (a drug made of cannabis resin). There are many petitions already submitted by various Indian economists and politicians in favor of legalizing cannabis for use in cancer patients and even hemp cultivation for horticulture use, but due to changing political environment in India, the petitions are still pending to be considered by the relevant law-making bodies.

Cannabis business – boom in economies

According to a report published in 2018 by Brightfield Group, with the on-going trend of countries moving towards legalizing cannabis, the global legal cannabis market is expected to reach US$ 31.4 billion by the end of 2021, owing to the growing adoption of medical cannabis in treatment or relief in a range of diseases and ailments, such as cancer, mental disorders, chronic pains, and others.

Apart from medical applications, the recreational use of cannabis too has led to a continuous rise in sales of cannabis for direct and indirect use, thus giving a push to retail businesses as well as tourism sector in countries that moved towards legalization. As a result of the rise in sales, governments of these countries and states have registered increased tax revenues and a boost to local economies. For instance, California that legalized cannabis for recreational use in January 2018, generated US$74.2 million of tax revenue during second quarter, with a rise of 22% over the first quarter. In another, more hypothetical example, according to a report by Canada’s Parliamentary Budget Officer, Canada could generate US$463.74 million in tax revenue by 2021 if the projections of nearly 734 metric tons of legal cannabis to be consumed by that year are correct.

Similarly, according to a study by New Frontier Data, if cannabis was legalized in all American states, it would generate a combined US$131.8 billion in federal tax revenue between 2017 and 2025, considering 15% retail sales tax, payroll deductions, and business tax revenue. In fact, according to a research study by Ameri Research Inc. in 2017, in the USA, tax revenues from legal cannabis are now comparable with revenues from other products, such as draft beer and e-cigarettes, a fact highlighting the recent growth of sales in legal cannabis market in the USA.

Apart from tax revenue generation, creating new business opportunities is also one of the reasons for countries to seriously consider legalization of cannabis. States such as Colorado, for example, have registered some 431,997 new business entities between 2014 and 2017. In 2017, it also experienced a 17.7% rise in employment over 2016 with 17,281 full-time equivalent jobs. Also, in 2017, across the USA, there were 9,397 active licenses with slightly more than 3,000 licenses active in Colorado. These licenses were made active for cannabis businesses dealing with cultivation, manufacturing, retailing, distributing, delivering, and even lab testing that generated 121,000 jobs in 2017 across the District of Columbia plus 10 US states. This number is expected to reach 1.1 million jobs by 2025, if cannabis is legalized in all 50 states, across all ends of cannabis industry supply chain, from farmers to transporters to sellers.

It is expected that through legalization of cannabis, several countries, especially Mexico, USA, and Canada, are also expected to witness significant drop in illicit activities related to drugs industry. According to a study by Deloitte in 2018, cannabis users in Canada are willing and in fact looking forward to pay more for legal purchase of cannabis grown and processed under federal laws and sold through legal channels rather than going for illegal drug purchase options. This goes hand in hand with Canadian government’s hopes to crack down on illegal drug trade while also finding new sources of stimulation to the country’s economy.

Impact of legal cannabis market on other business sectors

The emergence of legal cannabis market has raised many business opportunities in various sectors such as retail, food and beverages, real estate, and even tobacco and alcohol industry.

Amongst these sectors, real estate has been developing strongly in many countries allowing for legal cannabis for medical as well as recreational use. Properties and facilities that are well-suited for cannabis-related operations are experiencing rise in industrial rents and sales price premiums owing to the rise in demand for warehouses, industrial and storage facilities, agricultural, and other properties.

In Canada, legalization of growing and sales of recreational cannabis has fueled a six-fold surge in plant-growing facilities to 8.7 million square feet in 2018 according to data from Altus Group, Canadian real estate company. Aurora Cannabis, one of Canada’s leading cannabis companies, has already started its project for cultivation of cannabis in a new 8 million square feet facility in 2018. Canopy Growth, market leader in cannabis industry of Canada, has announced plans in October 2018 to develop 3 million square feet of greenhouse space in British Columbia through October 2019, which will be more than double its production surface as of 2018. With the legalization of cannabis, the demand is also rising for commercial real estate thus giving an opportunity for struggling retailers to make a move into a new market. Alberta, where cannabis industry is fully private, has experienced a sharp surge in demand for 1,200 to 3,000 square feet retail real estate to set up cannabis shops and dispensaries in malls and street-front locations.

Similarly, within the USA, Colorado, experienced a rise in real estate sector through increase in housing values by about 6% owing to increasing development in retail sector through legal cannabis pharmacies, dispensaries, cafés, and retail shops. Going beyond real estate, the retail industry is also likely to receive a push thanks to opportunities in auxiliary businesses such as accessory shops, cannabis cafés, weed gardening products stores, bakeries, and candy shops, contributing to rising demand for retail locations.

The impact of cannabis legalization is visible also in food and beverage industry thanks to new products such as cannabis-infused edibles such as cakes, candies, and drinks. In 2017, California reported sales of US$180 million of edibles, whereas Colorado has seen about a 60% rise in edibles sales volume (with 11.1 million edibles unites been sold in the same year). The future of food and beverage industry with cannabis-infused edibles is projected to be promising due to the benefits of cannabis plant for using it in food products. According to a food and beverage industry expert, Sylvian Charlebois, cannabis offers good nutrients (proteins, vitamin E and C, to name a few), hence for food products manufacturers looking for new avenues of growth, cannabis could be deemed the next ‘superfood’.

On the other hand, the legalization of cannabis has affected alcohol industry due to the emerging inclination of people towards choosing the “green high” over alcoholic drinks.

According to a study by Deloitte in 2018, in Canada, cannabis is likely to be increasingly perceived as a substitute to beer, spirits, and wine which could negatively impact the alcoholic beverages-related revenues for governments, liquor companies, and retailers. This is already observed in the USA, where a joint recent research study of 10 years conducted by two US-based universities, namely University of Connecticut, Storrs and Georgia University, Atlanta in cooperation with Universidad del Pacifico in Peru, has suggested that the counties located in medical marijuana states showed almost a 15% decline in monthly alcohol sales between 2006 and 2015.

At the same time, some industry experts believe that since it is part of American and European food culture to drink alcoholic drinks such as beer and wine with food, the legalization of cannabis is not going to affect the demand for such food-complementing alcoholic drinks. In fact, cannabis legalization is also coming out to be a stepping stone for large alcohol brands to enter the cannabis industry with cannabis-infused alcoholic beverages, mostly through mergers and acquisitions with leading cannabis growing companies. In August 2018, New-York based Constellation Brands acquired more that 50% stake of Ontario-based Canopy Growth for US$4.0 billion, the largest investment registered in cannabis industry so far. The received investment is believed to help Canopy Growth strengthen and expand its leadership position in Canada and other countries with legalized cannabis. It is expected that in the future, other alcohol industry leaders will also consider getting involved in cannabis industry in order to expand through cannabis-infused drinks, creating a new segment of products with combination of alcohol and cannabis.

EOS Perspective

The benefits of cannabis on human body in diseases such as cancer, acute and chronic pains, or neurological and mental illness, have resulted in a growing count of countries legalizing use of cannabis. On the other hand, the legalizing of cannabis for recreational purpose is still receiving mixed views by industry experts and public opinions in several countries. The only way to make this experiment work, is to follow the steps of those countries that have legalized recreational cannabis and are simultaneously focusing on implementing a completely regulated system to scrutinize the whole supply chain in order to curb illegal drug activities and over-dose of cannabis by the users.

For this purpose, the leaders – Uruguay and Canada – have created systems of registration cards with a specific limit to purchase a quantity of cannabis for recreational use per month. As a result of this, the situation is expected to be under control and authorities believe that this will help in curbing illegal trade activities while keeping check on personal consumption of cannabis.

It is also recommended to consider the fact that legalization of cannabis for recreational and medical purposes is likely to reduce the use of other, more harmful and addictive drugs, as well as curb (at least to some extent) the over-consumption of alcohol that is associated with serious health hazards and many deaths, generating huge social burden and healthcare costs in many countries.

Considering all these factors, the success of legalizing cannabis for all purposes in any country depends on how the processes across cultivation, distribution, retail, all the way to the end buyer is regulated and scrutinized by the law makers and law enforcers of the country. There surely are both pros and cons of legalizing cannabis but with solid work towards improved awareness, and, more importantly, a regulated system with proper (enforced) laws, it can give the countries a boost to their economies along with rise in employment, better medical treatments, and decline in illegal drug activities.

Healthcare fraud
by EOS Intelligence EOS Intelligence No Comments

A Ripple Effect of Healthcare Fraud in the USA

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In June 2018, the US Department of Justice held nearly 600 individuals, including doctors, responsible for the largest healthcare fraud in the US history resulting in losses of over US$2 billion. Each year, the American healthcare system loses tens of millions of dollars to fraudulent claims not only overloading the healthcare system but also affecting the security and identity of patients and other citizens. To combat the ill effects of healthcare fraud, the government is laying strict measures to monitor such incidents and is using artificial intelligence (AI) to identify threats before they actually occur.

Out of the country’s total health expenditure, estimated to have to crossed US$3.5 trillion mark in 2018, as much as 10% is lost annually due to healthcare fraud (examples include billing for services not provided, providing services not medically needed, and reporting patients as having a more severe illness in order to obtain higher reimbursement), bleeding not only taxpayers’ money but also billions of dollars from the healthcare system.

Over the past decade, reduction in the number of fraud cases in healthcare programs has emerged as a significant priority for the US government and other federal agencies – US Department of Health & Human Services, Office of Inspector General (HHS OIG), the Centers for Medicare & Medicaid Services (CMS), and the US Department of Justice (DOJ). These agencies make laws, use anti-fraud tools, and also partner with private sector to help protect consumers against healthcare fraud.

A Ripple Effect of US Healthcare Fraud on Consumers and Healthcare System

Anti-Fraud Laws

The need to curb the exploitation of healthcare system by healthcare providers for illegal gains has led to the formation of laws that fight fraudsters, ensuring better quality and more equal medical care to all. These laws assist physicians, if they comply by them, to easily identify the red flags with regards to their relation with payers, other physicians and healthcare providers, and vendors. These are:

  • False Claims Act (FCA) – enacted in 1863, this civil law prohibits the submission of false claims to the government

  • Anti-Kickback Statute (AKS) – this criminal law, enacted in 1972 and enforced in the mid-1980’s, prohibits willfully offering, paying, soliciting, or receiving any remuneration directly or indirectly for referrals of federal healthcare program

  • Physician Self-Referral Law (Stark Law) – introduced in 1988, this law limits physician referrals in case of a financial relationship with the entity

  • Criminal Healthcare Fraud Statute – As part of the US Code (18 U.S.C. § 1347), this statute prohibits willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain any money under any healthcare benefit program

  • Civil Monetary Penalties Law (CMPL) – As part of the US Code (42 USC § 1320a-7a), it prohibits willfully executing of a scheme or use false statements to obtain funds held by a federal healthcare program

  • Exclusions – legally excludes participation of healthcare providers and suppliers in all healthcare programs if convicted of criminal offenses

Policymakers have established these laws to minimize, or at least reduce, healthcare fraud. The laws have contributed, for instance, to the US government being successful in finding parties responsible for healthcare fraud, mainly due to FCA, especially in the form of information coming from whistleblowers. Under the act, there are financial incentives for whistleblowers, who bring healthcare fraud to the attention of the government, receiving 15% to 30% amount of the total recovery. Incentivizing whistleblowers has been successful – through aid from private individuals and units or individuals serving as whistleblowers, the government has been able to recover more than US$31 billion of taxpayers’ funds over the past thirty years.

Anti-Fraud Partnerships

The government is also focusing on strategic partnerships with other private agencies to fight fraud, which include:

  • Healthcare Fraud Prevention Partnership (HFPP) – A public/private partnership between the federal government, state agencies, law enforcement, private health insurance providers, employer organizations, and healthcare anti-fraud associations with the purpose of exchanging data, building competence and proficiency to fight fraud. Since its inception in 2012 till the end 2017, the number of public, private, and state partner organizations as participants of the partnership reached 85

  • Healthcare Fraud Prevention and Enforcement Action Team (HEAT) – established as a conjoint effort between DOJ, OIG, and HHS in 2009. The purpose of this partnership is to invest in new resources and technology to prevent fraud, reduce healthcare costs and improve the quality of care, and highlight best practices by providers and public sector employees

  • Medicare Fraud Strike Force – launched in 2007, resources from federal, state, and local law enforcement entities come together to prevent and combat healthcare fraud by harnessing data analytics and exploratory intelligence

  • Centers for Medicare & Medicaid Services (CMS) – a federal agency, established in 1965, administers and oversees medical programs by partnering with individuals, contractors, entities, and law enforcement agencies

  • Office of Inspector General (OIG) – founded in 1976, its purpose is to protect the integrity of HHS programs as well as the welfare of the beneficiaries of those programs

  • Center for Program Integrity (CPI) – established in 2006, it promotes the integrity of health programs by monitoring and identifying program vulnerabilities through audits and policy reviews

  • General Services Administration (GSA) – an independent agency of the US government formed in 1949 that maintains the Excluded Parties List System (EPLS) that includes information on entities suspended, disqualified, and/or excluded from receiving contract, financial assistance, and other benefits

Such partnerships and agencies help prevent healthcare fraud on a national scale, to a certain extent, as they take substantive actions to stop fraudulent payments thus improving the overall process of monitoring fraud.

In efforts to combat fraud committed against all health plans, both public and private, the Healthcare Fraud and Abuse Control (HCFAC) Program was established in 1997, under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The program was designed to coordinate federal, state, and local law enforcement activities with respect to healthcare fraud and abuse. Under the program, each year, funds are allotted to the various offices of HHS and DOJ to support the effective and smooth functioning of the programs and partnerships directed towards identifying and fighting fraud in healthcare sector. In 2017, a little above US$1 billion was allocated and over US$2.4 billion was recovered in healthcare fraud judgments and settlements and around US$2.6 billion (including amount assimilated from preceding years) was returned to the government or paid to private persons. The program yielded an ROI of US$4.2 for every dollar spent for the period 2015-2017.

Senior Medicare Patrols (SMPs)

Senior Medicare Patrols (SMPs) are grant-funded projects of the federal US Department of Health and Human Services (HHS), US Administration for Community Living (ACL), Administration on Aging (AoA) – an agency providing leadership and expertise on programs, advocacy, and initiatives affecting older adults and their caregivers and families. These grants are supported by SMP National Resource Center, created in 1997 as a demonstration project in 12 regions moved on to become a nationwide program in 2003 and now includes 54 SMP programs across all the 50 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands.

ACL issues a new request for proposals for the program every three years, and then awards grants to a selected project across all regions (each US state, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands). Since 2016, SMP grants are funded as discretionary projects by HHS operating division, ACL, through the Healthcare Fraud and Abuse Control Program (HCFAC) – a program designed to coordinate federal, state, and local law enforcement activities with respect to healthcare fraud and abuse. The resource center, through these projects, reaches out to approximately two million beneficiaries each year via 5,000 volunteers associated with the SMP program.

These projects, through trained volunteer workforce, provide education and assistance to Medicare beneficiaries, their families, and caregivers to identify, prevent, and report healthcare fraud. These groups also help protect elderly persons’ health records, financials, and medical identity. Moreover, they provide assistance, when issues are identified, about whether or not fraud is suspected by referring to the appropriate authorities for further investigation.

Data Analytic Tools

An effective way to prevent fraud in healthcare system is to identify it before claims are paid, and data examination capabilities such as data analysis, predictive analytics, trend evaluation, and data modeling approaches can be utilized to analyze and examine fraud patterns.

Data analytic tools can identify fraud patterns by developing a certain set of rules. One can set up a ‘rule’ or an ‘alarm’ for identifying fraud related to medical expertise – a healthcare provider claiming for a procedure outside his area of expertise or when the claim crosses a certain amount for a particular test or treatment. These tools use AI, continuously mine data, and identify patterns thus enabling the user to set new rules or alarms.

Up to 30% of total healthcare expenditures in the USA are estimated to be related to fraud, waste, abuse, and errors – a key contributor to soaring healthcare costs in the country. Analytic tools, by tracking fraudulent payments have helped in cutting down costs related to fraud and abuse. In 2014, CMS prevented more than US$210.7 million in healthcare fraud using predictive analytics. In addition, the tool also enables CMS to assign risk scores to specific claims or providers, spot claim irregularities or errors that were earlier hard to detect, and identify inconsistent billing patterns thus eliminating future potential fraud.

Government authorities are not the only entities to use data analysis for monitoring and tracking purposes. Insurance companies are also using similar tools to reap benefits and reduce fraudulent payouts. For instance, United Healthcare, a US-based healthcare and benefits services provider that manages more than one million claims every day, transitioned to a predictive modeling environment based on Hadoop big data platform. The company claims to have spawned a 2,200% return on their investment in big data technology.

EOS Perspective

The healthcare system in the USA is considered unstable with no sufficient policies in place to regulate the healthcare pricing. In addition to exorbitant prices, over the years, increasing cases of fraud have not only overburdened the healthcare system but also consumers, contributing to large number of personal bankruptcies due to healthcare treatments being disproportionately expensive. Moreover, as the spending on healthcare is projected to rise rapidly in the coming years – CMS projected healthcare spending to reach nearly US$5.5 trillion by 2025, the cost of healthcare fraud is likely to follow suit, resulting in weighing down the consumers even more as they bear the costs of fraud, topped with an existing unaffordable exorbitant healthcare, thus worsening the situation altogether.

Healthcare fraud is a grave problem and affects the entire healthcare system including patients, government, and insurance companies. The foremost effect of fraud perpetrated by healthcare providers is experienced by consumers as this drains the taxpayers’ pockets in the form of higher insurance premiums, reduced benefits, and overall coverage.

In the USA, insurance fraud accounts for approximately $30 billion in lost revenue for the insurance industry and fraud related to healthcare is the second most common form of fraud after vehicle theft. While it is almost impossible to determine how much health insurers lose every year to fraud cases, as low as 5%, or even less, of these losses are recovered annually. The downside is that the heightened cost of fraud and errors are borne by the customers as the companies translate this loss into higher premiums. This deters many individuals from purchasing insurance policies, which makes them unprotected in case of serious diseases and injuries due to reduced medical coverage (or complete lack of it).

Healthcare fraud is a financial gutter in the healthcare system that not only strips individuals of health benefits and insurance companies of money but also results in higher taxes and budgetary nuisances for the government.

Besides increasing the economic costs, such fraud cases extensively affect an individual’s medical identity. In 2017, of total identity thefts reported in US, nearly 3% were related to medical theft standing at a number of 134,260 cases; the overall tally, however, is anticipated to be much higher as the count of incidents unaccounted for remains unknown. Cases of medical identity theft result in misuse of an individual’s medical information that can cause dire consequences.

Each individual is issued a Medicare number, a unique identification number, as part of the national health insurance program. As these Medicare numbers are distinctive and cannot be changed, unless issued a new one, once compromised, such fraud cases put the person’s healthcare and future benefits at a huge risk. The victim could end up receiving wrong medical treatment or, in some cases, even die due to altered or misrepresented medical records as a case of identity fraud. In addition, medical identity theft also impacts an individual financial stability related to medical concerns – the fraudster ends up claiming the treatment amount in medical bills from insurance company, when the victim actually approaches the insurance company to file a legitimate claim, he is informed that he has already reaped the benefits, thus orphaning the victim of his right to medical care. As an extreme repercussion, victims may also have to deal with legal authorities over false allegations of procuring and possessing illegal drugs.

Given the impact on individuals, medical system, and economy, it is clear that healthcare fraud is a costly problem and a critical threat to the US economy as it not only increases healthcare costs for everyone but also affects common people leaving them incapacitated and vulnerable. While the government has achieved some triumph, over the last few years, in detecting fraud cases and punishing the wrong-doers, the success rate of detecting such frauds is always questionable.

At this stage, though immense efforts are being bestowed in formulating laws and technological investments being made to identify impostors, it is very difficult to ascertain what the government has accomplished, as fraud related to healthcare cannot only be measured in terms of monetary loss. The measure should also include the extent of safeguarding the interest and identity of the citizens, and the degree to which this has been achieved is debatable. It must be noted, however, that in the current scenario, where the key focus is on reducing the rate of fraud in the healthcare sector, while keeping the overall healthcare costs in check, the task in hand for the American government is of mammoth scale.

by EOS Intelligence EOS Intelligence No Comments

Driving Down Healthcare Costs with AR and VR Technology

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Augmented Reality (AR) delivers digital components atop an existing reality in order to make it more meaningful and interactive, while Virtual Reality (VR) enables immersive simulation of real-life setting or environment. AR and VR have wide-reaching applications in healthcare, from treatment and therapy to training and education. Though AR and VR have promising applications in healthcare, are these technologies prime for widespread adoption? This will largely depend on how effective these technologies are in relation to its cost of investment. Some of the AR and VR solutions standout to bring in significant cost savings.

In 2015, based on analysis of 80,000 surgical cases (retrieved from 2010 National Inpatient Sample, USA), Johns Hopkins University School of Medicine estimated that if all US hospitals increased the number of minimally-invasive procedures by 50%, nearly 3,600 complications could be avoided and hospital stays could be cut by 144,863 patient days, resulting in total cost savings of about US$288 million annually.

Augmented reality can offer higher accuracy

Despite such evident advantages, minimally-invasive surgeries are not as common as traditional approaches, because they require high precision and accuracy – and that is exactly where AR can be useful. For instance, Philips, a Dutch medical technology company, developed a real-time imaging solution which allows projection of high-resolution 3D image of the patient’s spine and a fully-automatic AR navigation system which guides the surgeon to plan the optimal device path, and subsequently place pedicle screws. The first pre-clinical study on the technology showed that the use of AR technology resulted in 85% accuracy as compared to 64% accuracy in case of conventional techniques. Using AR technology, doctors can perform minimally-invasive surgical procedures with high level of precision and efficiency, while minimizing mistakes and errors, thus reducing the preventable costs.

The first pre-clinical study on the technology showed that the use of AR technology resulted in 85% accuracy as compared to 64% accuracy in case of conventional techniques.

Remote mentoring and assistance delivered through augmented reality

Tele-mentoring is another practical application of AR which can bring considerable cost savings. In some complex cases, the locally available healthcare professionals are not skilled and experienced enough to carry out the procedure and experts from different cities or countries need to be called in to perform the treatment, and this involves a lot of time and costs. There are certain AR platforms that allow experts from remote locations to virtually join a surgical procedure. Using Google Glass or tablet, a real-time projection of the remotely located expert’s hands could be overlaid onto the local surgeon’s field of sight during the procedure.

In 2016, as a part of ongoing neurosurgical collaboration between Children’s of Alabama Hospital (USA) and Children’s Hospital in Ho Chi Minh City (Vietnam), Virtual Interactive Presence and Augmented Reality (VIPAR) telecommunication system was implemented at both hospitals to provide intraoperative assistance. The cost of setting up the hardware, software, and internet connection (for one year) was around US$2,500. This is far less in comparison to the cost of the American experts’ travel and stay in Vietnam. For instance, the expense of sending a team of three doctors from the USA to Vietnam for 14 days could total to around US$12,500.

Virtual reality could be an alternative to opioids

VR therapy is proving to be effective in providing relief from pain. Several studies have suggested that parts of the brain linked to pain-somatosensory cortex and the insula are less active when patients are distracted by an immersive experience created by VR technology, thereby reducing the pain. A clinical study by AppliedVR, a US-based company building VR platform for use in healthcare, suggested that VR therapy was effective in reducing pain by 52%.

This can prove to be a breakthrough in the field of pain management, and possibly reduce the opioid prescription. High-income countries such as the USA, Canada, UK, and Australia are struggling with the opioid crisis. Although, the cost of opioids is relatively low, the resulting addiction problems and drug overdose deaths lead to high societal and economic costs. For instance, the economic cost of the opioid crisis in the USA in 2015 was estimated at US$504 billion (85% of these costs were associated with fatalities resulting from overdose). This was equivalent to about 2.8% of GDP of the country that year. For countries such as the USA, where opioid epidemic is declared as a public health emergency, there is a high demand for non-addictive, less harmful alternative pain therapy such one delivered through as VR.

The economic cost of the opioid crisis in the USA in 2015 was estimated at US$504 billion, equivalent to 2.8% of GDP of the country. For such countries, there is a high demand for non-addictive, less harmful alternative pain therapy such as one delivered through VR.

Virtual visualization can reduce the cost of training

VR-based medical training through immersive visualizations is proven to be more effective than conventional teaching methods. In 2015, Miami Children’s Health System claimed that the medical professionals could retain as much as 80% of the information from a VR training session, compared to 20% retention level with traditional teaching methods.

VR can also help to significantly reduce medical training costs. For instance, elderly care facilities in the USA spend on average US$3,000 per employee to teach tracheal insertion through traditional methods; however, Next Galaxy, a US-based company, developed a VR software that will bring down the cost of training per employee to US$40. This VR software uses leap motion force feedback technology which enables the medical professionals to sense when the procedure is going wrong. As a result, this tool can create a realistic scenario, and medical professionals can have nearly hands-on experience of performing the procedure in a safe and controlled training environment, without risking the life of a patient, thus saving costs incurred in potential litigations.

EOS Perspective

AR and VR are among the next-generation technologies with the potential to transform healthcare. There is a consensus amongst analysts that a healthy growth of the global AR and VR in healthcare market can be expected over the coming years. For instance, a research company MarketsandMarkets estimated the market size at US$769.2 million in 2017, with forecast growth at a CAGR of 36.6% to reach US$4,997.9 million by 2023. Similarly, another research firm, Key Market Insights, expects the market to reach to US$5.6 billion by 2022. Several clinical studies indicate that innovative techniques powered by AR and VR are more efficient and effective over conventional methods, thus spurring the interest of private companies and in turn, expanding the market space.

Though AR and VR technologies offer significant opportunities for cost savings, the cost of investment in such new and emerging technologies is also an essential point of consideration.

There is high uptake of VR applications that are compatible with consumer-grade VR headsets such as Google Cardboard, Oculus Rift, HTC Vive, etc. These devices have already reached mainstream use. Moreover, as the technology matures, the competition is increasing, further driving down the price of the devices; for instance, in 2017, Oculus Rift (headset with motion sensor controller) was priced at US$399, half of its launch price in 2016. Increasing use of more affordable consumer-grade VR devices for healthcare applications will further bring down the cost of investment, thereby driving adoption of the VR technology in the sector.

Increasing use of more affordable consumer-grade VR devices for healthcare applications will further bring down the cost of investment, thereby driving adoption of the VR technology in the sector.

While AR headsets and smart glasses such as Microsoft HoloLens and Google Glass are still in trial version, some of the AR applications can be experienced on any smartphone/tablet without the need of headset or controllers, thus making it more accessible and affordable; for instance, EyeDecide, developed by OrcaMD, is an AR-based mobile app that simulates patient’s vision to demonstrate their actual medical condition. Such applications, which are priced as low as US$1.99 to US$4.99, can be widely used to enhance patient experience.

Healthcare organizations could leverage AR and VR technology to improve efficiency and quality of service and enhance patient care while cutting costs. Moreover, as these technologies are reaching mainstream, the cost of investment is expected to go down. Thus, AR and VR technologies are proving to deliver more value while reducing overall costs.

by EOS Intelligence EOS Intelligence No Comments

Modicare: Which States Matter the Most?

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Dubbed as ‘Modicare’ (named after the Indian prime minister), India’s National Health Protection Scheme (NHPS) is being considered as the world’s largest government funded healthcare scheme. The scheme is expected to benefit 500 million people by providing them with cover for secondary and tertiary care hospitalization. While the recent press around the scheme focuses largely on the implementation and funding challenges, we are looking at Modicare from the perspective of opportunities it will bring to the table for healthcare industry players.

Announced during the 2018 union budget, NHPS is a government-funded secondary and tertiary healthcare plan aimed at 100 million financially vulnerable families, referred to as Below Poverty Line (BPL) families, in India. Expected to be launched on 2nd October 2018, NHPS will replace the existing central-government-operated Rashtriya Swasthya Bima Yojana (RSBY), which provides an annual insurance cover of INR30,000 (~US$460) for a family of maximum five members, and is operational in only 15 (out of total 29) Indian states. The new scheme will offer insurance cover of INR500,000 (~US$7,700) per family.


NHPS is expected to provide secondary and tertiary healthcare access to more than 40% of the Indian population, which was earlier deprived of it due to financial constraints. This will create a new healthcare market, giving boost to the entire healthcare ecosystem in India. Companies across the entire healthcare value chain, including medical education providers, healthcare service providers, construction firms, pharmaceutical and medical devices companies, etc., are expected to witness ample growth opportunities. One can expect increased investments in the Indian healthcare sector by private companies as well as foreign investors.

Since the scheme is aimed primarily at making healthcare affordable and accessible for BPL population, opportunities will be up for grabs for companies to tap and expand their reach in areas where the BPL population resides in India. Based on the currently available scheme details, we have tried to identify top five states in India that are ripe for opportunities with the expected launch of the new scheme.

EOS Perspective

Taking into account various factors, including red tape, electricity supply, political stability, etc., as well as the current state of healthcare infrastructure and BPL population, we project the states of Uttar Pradesh (UP), Bihar, Telangana, Madhya Pradesh (MP), and West Bengal (WB) will be most attractive for healthcare industry players.

Uttar Pradesh offers greatest opportunities on the basis of a large BPL population residing in it. The state boasts of a robust road infrastructure and a stable political climate. UP has legacy issues related to administrative challenges, however, the state has taken major steps in cutting the red tape.

Madhya Pradesh is the leading state in India in terms of ease of doing business. The state has electricity surplus, with good road infrastructure, and reasonably priced real estate (as compared with the remaining four states), making it an ideal destination to invest.

One of the largest BPL populations resides in Bihar, a fact that makes it one of the most attractive markets expected to be created after the introduction of NHPS. However, the administrative bottlenecks and lack of infrastructure (as compared with the other four states) may act as constraints for the market players in realizing the full potential.

Telangana, a newly formed state, offers excellent opportunities due to a reasonably large BPL population. The state has performed well on administrative reforms front, and it is expected to improve infrastructure (including electricity availability) in the future, to make it more attractive.

West Bengal has shown remarkable improvement in the field of administrative reforms (in cutting of the red tape), to make it one of the most attractive destinations for any industry. It has to focus more on further improvement in the infrastructure to make it a natural choice for the industry players to invest in the state.

In the end, the realization of the opportunities will depend on smooth as well as quick implementation of the scheme across India. At the outset, NHPS offers promising future for healthcare industry across the nation in general, and the five highlighted states in particular.

Ranking Methodology

  • EOS assessed attractiveness (in terms of opportunities for healthcare industry players) of all Indian states on the basis of a scorecard

  • States were ranked on selected parameters, i.e. size of the market and other factors (termed as ‘market enablers’) that are likely to influence decision-makers to prefer one state over another while planning to invest to tap the opportunities created post the launch of NHPS

  • Maximum score (awarded for first rank) for each parameter was fixed based on its relative importance (weightage); scores awarded for subsequent ranks (on each parameter) were a percentage (decreasing in accordance with the rank) of maximum score

  • The final score (and hence the overall rank) was the summation of individual scores on all parameters

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Big Data Analytics: A Revolution for the Healthcare Sector

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Big data analytics is beginning to transform the healthcare sector by forging new pathways that lead to data transparency, reduction in healthcare costs, and improved patient outcome through better quality of healthcare services. Traditionally, physicians used their clinical judgment to make treatment-related decisions but over the last few years, the trend has shifted towards evidence-based decision-making by leveraging big data analytics, which correlates massive amount of data to provide quick analysis. Big data analytics is slowly changing the way data is managed, analyzed, and leveraged. Although the big data revolution is at an initial stage of its implementation in this sector and most of its potential for innovation and value creation is yet to be realized, it has already directed the healthcare industry on a path of rapid change and improvement.

In an era where healthcare data exists across different sources and formats – such as images, videos, texts, numerical data, etc. – such an enormous amount of data is incredibly complex and difficult to sort, organize, decipher, and manage. This is where big data analytics steps in. It aids in analyzing structured and unstructured data across multiple data sources, which helps to improve accuracy of diagnosing patient conditions and matching treatments with outcomes. Applying analytics in healthcare could reduce treatment costs, forecast outbreaks of epidemics, avoid preventable diseases, and most importantly, improve quality of life through better medical services.

Big data analytics has tremendous potential to cut down the spiraling healthcare costs. Analytics could be used to reduce preventable emergency room visits and hospitalizations, eliminate unnecessary lab tests, reduce inefficiencies, and avert security breaches and frauds, among others. Some key applications of analytics in healthcare include electronic health records (EHR), predictive analysis, real-time alerting system.

The EHR marketplace, part of big data analytics for healthcare market, in the USA is dominated by suppliers such as Epic Systems (a USA-based organization that develops software for healthcare sector) which held a market share of 22% in 2015. The EHR supplier landscape is consolidated at the top end, with three leaders (Epic Systems, Cerner, and Meditech) occupying majority share of 55% in the market in 2015.

Another segment of the big data analytics for healthcare, i.e. business intelligence market dealing with business intelligence tools support several major big data functions within hospital such as predictive analysis, clinical decision support, clinical workflow optimization, population health management, and financial performance modeling, is fragmented, unlike EHR. While Epic Systems occupies a sizeable portion of the business intelligence market (25% market share), over ninety vendors accounted for further 25% combined share of suppliers operating in the market in 2015.

EOS Perspective

For the longest time, healthcare has lagged behind other industries, such as banking and retail, in the use of big data. However, healthcare sector is now ripe for big data initiatives, which have the potential to completely transform the quality of healthcare services by offering a wide array of applications for predictive analytics, evidence-based accurate treatment decision-making, potential cure for complex diseases, improving clinical documentation, among many others.

For big data analytics to fully succeed, the healthcare industry must undergo few fundamental changes, so that the stakeholders can take advantage of big data. Some issues in the industry arise from resistance to change, as healthcare providers are accustomed to making treatment decisions independently, rather than relying on automation and analytics. Healthcare professionals need to shift from standard regression-based methods to more future-oriented techniques such as predictive analytics, machine learning, and graph analytics that can improve and quicken decision-making and treatment-related judgement.

Other obstacles are structural in nature – several healthcare professionals have chosen to underinvest in information technology because of unsure returns. Additionally, some hindrances stem from the nature of the healthcare sector itself. With presence of several players in the industry, it is not easy to share data with different providers or facilities due to privacy concerns, which hinders the use of analytics on data sets.

Currently, implementation of big data technology in healthcare is limited and mostly concentrated in the USA, largely due to the high infrastructure costs and hefty initial investment. Furthermore, the human expertise required to leverage healthcare analytics lags behind. Nonetheless, healthcare professionals are beginning to understand the value of leveraging volumes of patient data and efforts are being made to overcome all barriers.

Healthcare professionals are beginning to understand the value of leveraging volumes of patient data and efforts are being made to overcome all barriers.

Big data has the potential to completely revamp the healthcare sector, in the same way it has transformed several other industries. Besides reducing costs, big data initiatives could save many lives and improve patient outcomes. Pharmaceutical industry experts, payers, and providers are slowly starting to analyze big data to obtain insights. Although such efforts are in the preliminary stages, collectively they could help the industry to tackle issues such as variability in quality of healthcare and growing healthcare spend. Healthcare stakeholders who decide to invest in data capabilities and promote data transparency will not only achieve a competitive edge but will also lead the healthcare industry into a new era.

*Brief description of healthcare organizations – refer to the infographic

  1. USA-based healthcare organizations – MemorialCare Hospital, Parkland Hospital, Beaufort Memorial Hospital, Kaiser Permanente, Emory University Hospital, and UnitedHealthcare
  2. Israel-based organization providing technology/analytical solutions for the healthcare sector –Zebra Medical Vision
  3. USA-based companies providing software, hardware, and technology solutions and services for the healthcare sector – Epic Systems, Cerner, and Meditech
  4. USA-based provider of information technology solution, owned by Xerox – Affiliated Computer Services
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Infographic: Understanding the Cost Dynamics of 3D Printed Drugs

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Medical industry needs no introduction to 3D printing technology, which has found usage in applications varying from custom prosthetics to surgical procedures. And with the US Food and Drug Administration (FDA) approving the sale of Spritam (in 2016 across USA), a drug used in preventing seizures, produced by Aprecia Pharmaceuticals using 3D printing, this commercial use of 3D printing technology embodies a momentous development in the field of printing drugs. The deployment of this technology offers certain benefits, but also comes at a cost, and affects the cost dynamics of producing a drug.

Cost savings offered by 3D printing technology are massive. Making drugs using printers will gradually reduce the processing equipment required, allowing the final product to be printed on one versatile machine, saving thousands of dollars. Going a step ahead, pharma companies will provide the base products for printing of the medicines at clinics and pharmacies, which means that the investment in production and storage facilities at the pharma company’s end will decline as the physical making of the drug will be shifted closer to the end-user. The technology will also help save on packaging and labelling costs along with bringing down logistics expenses.

However, as 3D printing capabilities develop further and as the cost of printing drugs falls, increasing easy accessibility to these drugs, it will become imperative to address safety and regulatory concerns associated with this technology.

While making drugs with 3D printing technology could be a game changer for the medical industry, it also comes with a potential threat of counterfeit and illegal drugs. As drugs production will be shifted from centralized location of pharma companies, which are able to ensure more controlled and supervised production processes, drugs will be printed at numerous clinics and pharmacies, and hence strict regulations need to be adopted and methods of production need to be appropriately controlled. Unified safety procedures and quality control measures need to be developed so that patients can be assured of the quality of the products.

The immense potential offered by this technology is increasingly materializing through commercialization in developed markets. However, as massive financial inputs from pharma companies paired with research grants and support by governments are still required, it is fair to believe that this technology is still far out from the reach of the less developed parts of the world, at least in the foreseeable future.

3D printed drugs

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Indian Nutraceuticals – Potentially Rich Market Momentarily Disrupted by Frail Policies

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Over the past few years, consumption of diet supplements and functional foods and beverages has seen a rise in India, fueled by an increasing health awareness and a slow shift towards preventative health care. India’s nutraceutical sector offers tremendous opportunities, a fact that has led to the emergence of various players offering wide range of nutritional products. Other than nutraceutical companies, a mass of pharmaceutical and FMCG companies has entered the market leading the dietary supplement and the functional food and beverage category. India’s future in nutraceuticals industry looks promising, however, there is an immediate need for regulatory clarity and cost efficiency to streamline the otherwise progressing sector.

Currently, the USA, Japan, and Europe account for more than 90% of the total global nutraceutical market. But with these markets attaining maturity, the focus of nutraceutical players is shifting towards developing economies, especially those across Asia Pacific, including India. Indian market holds only a 2% market share of the global nutraceutical market and its estimated valuation stands at around US$4 billion as of 2017. It is expected to reach US$10 billion by 2022, increasing at a CAGR of 21% over the period of five years. The high potential of the Indian nutraceutical sector is propelled by the growing awareness of healthy lifestyle and the benefits of a balanced and nutritious diet in Indian population (especially in its urban section). India’s promise to remain a growing market, at least in the near time, also lies in the increasing income of the country’s vast middle class.

It’s not all nice and easy

While India may seem to be a favorable location for nutraceutical players to enter because of the rising urban income and increasing health consciousness, setting up new business here is not easy. Nutraceutical companies have the opportunity to develop and offer wide range of nutritive products for the populace but face challenges in broadening their reach in the local market.

The lack of consistent regulation and standardization of nutraceutical products is one of the key challenges faced by nutraceuticals producers in India. Product cycle in the nutraceutical industry is regulated by strict guidelines through each phase of product development, from the selection of raw materials to the packaging stage. FSSAI (Food Safety and Standards Authority of India) issues regulations on licensing and registration of business, packing and labelling, food products standard, additives, etc. However, irregularities in laid guidelines for registration of nutraceuticals, permitted additives, and packaging often create problems for companies to get product approval quickly leading to costly delays. The most common concern that nutraceutical manufacturers face is the lack of clear differentiation between raw materials, additives, or colors categorized as permitted to use in a pharma drug or a nutraceutical product. What is more, some colors and additives commonly used in food do not find place in the list of permitted additives for nutraceuticals under the regulations. Similarly, any product packaged and marketed in the form of a gelatin capsule is considered as a drug and not necessarily a nutraceutical or dietary product, regardless of its function and indication. Thus, it is necessary to have regulations for permitted additives, product registration, product approval, and pricing specifically for nutraceuticals. In the light of the rapid growth of this segment in India, it is imperative to treat this segment as a separate entity and have clear product definitions and production guidelines.

Another challenge for producers is to arrive at the right pricing for their products in the local market. Though the demand for nutraceuticals is expected to rise considerably, the high prices of nutraceuticals limit their adoption in the Indian market. Nutraceutical producers try to recover their R&D costs in a short span of time by putting a high price tag on their products, but in a price-sensitive market such as India, high costs associated with producing nutraceuticals (or putting high margins on products) is a major restraining factor. Also, affording health products, which cost much more than some of the basic food items, is a key concern for majority of Indian population.

Moreover, with the introduction of GST (Goods & Services Tax) in July 2016 (we talked about it in our article GST Likely to Become India’s Biggest Tax Reform in August 2016), nutraceuticals and other health supplements are subject to 18% tax (with few categories even taxed at 28%), making these products considerably more expensive than before (when they were taxed at 12%). High taxes associated with nutraceutical products could also affect the entry of new players in the market as these new players would be pressed to launch their products at lower prices in order to get a slice of the market. This could only be achieved by either lowering the cost of production or accepting a lower margin, and both of these options might make the new players apprehensive about entering the market now.

Nutraceuticals in India

Evolving competitive landscape

Pharmaceutical and FMCG companies dominate the nutraceutical market with very few pure play nutraceutical companies. Key players in the Indian market consist of both domestic and multinational players. While MNCs such as Amway, GSK, Abbott, and Danone are focusing more on regional penetration, domestic players such as ITC, Dabur, Himalaya, and Patanjali are launching new products to reach out to newer segments. The range of dietary supplements that accounts for about a third of the nutraceuticals market in India is captured by pharmaceutical companies. Meanwhile, there has also been a compelling change in consumer preferences towards functional foods and beverages. These consumables have nutritional and disease preventing qualities and are mainly catered to by the companies in the FMCG domain. The market for functional products is most likely to see a higher growth than the dietary supplements owing to the increasing number of people being affected by lifestyle diseases.

EOS Perspective

FSSAI is keen to introduce amendments to the existing regulations pertaining to nutraceuticals and dietary supplements, so much so that a set of new and (allegedly) consistent regulations and standardization procedures for nutraceutical products are to be implemented in January 2018. This raises hopes that the nutraceutical companies will be able to produce, distribute, and sell products within a clearer framework pertaining to permissible ingredients, labeling, etc., in nutraceutical products. The regulations also include an exhaustive list of ingredients, which are permissible in nutraceutical products, enabling players to introduce new products in the Indian market.

Apart from restructuring the regulations, there is also an urgent need to reduce the price of these products to make them accessible to consumers across many income levels, across the country. Currently, the penetration of nutraceuticals in urban India is 22.5% but this rate stands only at 6.3% in rural parts of the country. Urban consumers, though are aware of the benefits of nutraceuticals and often have higher disposable income, are somewhat reluctant to add these products in their monthly budgets on a regular basis, unless required, due to exorbitant prices. Making these products available at more competitive prices could enable players to capture a good share of urban Indian market over a short span of time.

There are also considerable opportunities beyond the urban segment, as population in rural parts of the country represents a huge untapped potential for nutraceuticals sales. Financial capabilities of rural consumers are surely much lower than of their urban counterparts, but this does not mean that the rural market should be ignored altogether, as this segment can offer considerable sales volume, especially that the incidence of undernutrition in rural population is higher than in urban areas. This market, however, should be approached with a different tactic. Players should consider expanding their reach in this segment with simpler, lower-priced, generic products and with products on which they can afford cutting their margins the most. It is important that they also broaden their distribution reach to make their products available in local dispensaries in rural areas, and work with local healthcare providers to drive awareness and demand for nutraceutical supplementation. But in order to really get a firm grip on the rural segment, the pricing should be much more attractive, and this could be potentially achieved by working with the government, local authorities, and healthcare organizations to launch initiatives in the form of subsidies, tax rebates, or other co-payment forms to allow to bring the product price significantly down. Obviously, this might be difficult to achieve in the near term, as public entities are unlikely to see this as a priority in assigning funds. So till this changes, it appears that a refurbishment of the regulatory framework is going to be the only turning point in the growth route that the nutraceutical players can hope for.

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Blockchain Technology – Next Frontier in Healthcare?

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Blockchain, an innovation underlying the Bitcoin cryptocurrency, is a distributed ledger technology enabling transparent and secure data sharing in real time. The buzz around blockchain technology has spread far beyond finance sector, the technology’s original application area. In fact, think tanks globally are exploring and testing the potential use of blockchain technology to ease current pain points in healthcare and pharmaceutical industries.

Blockchain Technology – Next Frontier in Healthcare? by EOS Intelligence

EOS Perspective

Blockchain-managed information exchange ensures data security, transparency, integrity, and reliability. These attributes have the potential to address several healthcare industry challenges associated with interoperability, data security and privacy, insurance claims processing, clinical trials credibility, and drugs counterfeiting, among others. As a result, blockchain technology is quickly gaining ground among industry stakeholders.

An IBM study (released in 2016) based on survey of 200 healthcare executives – both providers and payers in 16 countries – indicated that 72% of the respondents were planning to deploy blockchain technology-based solutions by 2020. The survey emphasized that the industry pioneers have great confidence in application of blockchain technology with about 16% of the respondents planning to have commercial blockchain solution operational in 2017. Another survey commissioned by Deloitte in 2016 involving 308 executives at the US companies (from various industry segments) with US$500 million or more in annual revenue indicated that 35% of the respondents from healthcare and life sciences industry plan to deploy blockchain solutions in 2017. These surveys suggest that healthcare industry have set high expectations from and is ready to embrace blockchain technology.

 

Blockchain Technology – Next Frontier in Healthcare? by EOS Intelligence

Though blockchain promises to offer several unique solutions, industry players need to be cautious about some obstacles associated with adoption of this technology.

Blockchain technology is a relatively new concept for healthcare domain. There are high risks of dealing with immature and untested technology. A report released by Tierion (a US-based blockchain start-up) in 2016 indicated that healthcare data is prime target of cybercriminals as patient health records sell at US$20 compared with US$1 per credit card number.

Moreover, healthcare organizations need to comply with stringent rules and regulations pertaining to patient data privacy and security to avoid steep penalties. Even though the blockchain technology is expected to provide better security against data breach, the adopters need to be cautious until the capabilities of blockchain technology are proven in real-time environment.

Even though the blockchain technology is expected to provide better security against data breach, the adopters need to be cautious until the capabilities of blockchain technology are proven in real-time environment.

Since blockchain technology is still in the stage of development, the costs and risks associated with its implementation in practicality are largely unknown. Moreover, in absence of real-world business cases, it is difficult to forecast the operating costs as well as potential technology post-implementation roadblocks. This might create some hesitation among the industry players to adopt this new technology as there is little clarity on return on investments.

Full digitization of healthcare data is imperative for successful deployment of blockchain technology. However, it is observed that even some of the developed nations have not been able to achieve 100% digitization till date. For instance, 2015 Commonwealth Fund’s International Survey of Primary Care Physicians indicated that about 84% of physicians in the USA use some form of electronic health record system, while in other countries, such as Germany, France, Canada, and Switzerland, these figures are even lower – 84%, 75%, 73%, and 54%, respectively. These shares can surely be expected to be incomparably lower in less developed and developing countries.

Explore our other Perspectives on blockchain

Furthermore, the implementation of blockchain solutions would require significant changes to, or complete transformation of, existing systems. In order to integrate blockchain software in legacy systems, all forms of data would need to be standardized to ensure compatibility. Considering large volumes of healthcare data, which is now being produced in the range of petabytes, the transition would be a major challenge.

Implementation of blockchain solutions would require significant changes to, or complete transformation of, existing systems. In order to integrate blockchain software in legacy systems, all forms of data would need to be standardized to ensure compatibility

In view of these risks and challenges, we believe that the time is not ripe for the healthcare industry to readily adopt blockchain solutions at a large scale. Rather than rushing to adopt blockchain solutions, the technology should be thoroughly tested before deployment. There is no doubt that the application of blockchain technology has the potential to impact healthcare industry in several positive ways, however, in absence of real-world business cases, it seems too early to estimate the scale of impact and risk.

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