How Healthcare and Life Sciences Companies Can Benefit from Blockchain

How Healthcare and Life Sciences Companies Can Benefit from Blockchain

“The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption.” – Clayton Christensen

Most agree that Distributed Ledger – Blockchain (DLBC) technology has the ability to transform how data is managed and shared. The ability to timestamp records in an open and ongoing peer-to-peer network, while maintaining tamperproof copies of that data, is the core of the value proposition. (For primer on DLBC, please see this and this and that YouTube.)

Over the last few years, significant investment and commercialization has started for various Distributed Ledger and Blockchain (DLBC) software startups. An analysis of venture funding into such startups conducted in late 2016 by Technical University of Munich, shows that the vast majority of funding is being directed towards finance, insurance, and information-communication systems startups.

Such studies are valuable for market insight. What it tells us about our Healthcare and Life Sciences sector is not good news. Only 0.4 percent of venture funding is being directed toward Healthcare and Life Science DLBC startups. That is disproportionally low given the overall economic impact of our sectors. Granted, Healthcare and Life Science industries are often slower to adopt new information system technologies. Historically, we know adoption is driven by compliance. However, such low investment numbers also point to a lack of understanding within Healthcare and Life Sciences of the potential benefits of DLBC technology. The Healthcare and Life Science industries simply may not be aware of potential use cases. We can do better.


The Strategic IT Grid is a traditional method used to facilitate alignment between IT Strategy and Business Goals. Obviously, each organization is different, but when broadly looking at Healthcare and Life Sciences, and plotting known capabilities and pain points, we can begin to understand where and how our industry can start to approach DLBC.

Our method to address our knowledge gaps and potentially jump-start investigations for our industry:
• Employ a value-based framework that contextually grounds the discussion
• Investigate dynamics between industry-challenges and potential-solutions
• Surface opportunities

Business Necessity Capabilities: These are capabilities that enable ‘keeping the lights on.’ Companies are routinely assessing these for automation and outsourcing. Suppliers and vendors are fairly interchangeable.
Essential Capabilities: These are capabilities that are absolutely necessary to run the business and loss of which would have a devastating financial impact. Suppliers and vendors are fairly interchangeable, but the relationships are long-term and trusted. Replacement costs may be low.
Strategic Support Capabilities: These are capabilities that allow the organization to compete and win in the marketplace, but may not be costly to replace. This is a dynamic category of capabilities in which IT is constantly looking for disruptors and an advantage. Suppliers and vendors are fewer, relationships are long-term and trusted. Replacement cost low, but loss would be a significant business impact
Advantage Capabilities: These capabilities are often customized or bespoke solutions that perfectly fit and help enable and differentiate the organization. Suppliers and vendors few, relationships long-term and trusted. High replacement costs and loss impact.


There are perennial challenges that face our industry that routinely show up as pain points and areas of investment in business and IT portfolios. These challenges often have at their root issues with sets of capabilities. Mapping these against the Strategic IT Grid and how DLBC may offer a new and disruptive capability, some interesting insights start to emerge.

The value of DLBC efforts and the competitive advantage that they may offer are worth investing in proofs-of-concept, acquisitive growth of known providers, or investing internally. Prioritization could fall across the following areas for Healthcare and Life Sciences companies:

• Companies that have medical devices, securing IoT data may be a good start for trying out a DLBC project.
• For those that have existing long-term vendor relationships they trust, and those vendors also can field expertise in DLBC, securing and tracking product and claims data via DLBC is the next logical step.
• Areas that may require more forethought and investigation before investing are around transactional data that supports both product development and have an external (extra-organizational) dependency.

Despite early hype and the (over) focus on the arbitrage opportunities of cryptocurrencies, savvy business and IT leaders in Healthcare and Life Sciences are starting to lay the foundation for unlocking the value of DLBC.

Phone: 312-602-4000
222 W. Adams
Chicago, IL 60606
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