Understanding Smart Contracts
Smart contracts are another high-tech, revolutionary system that claims to have the potential to completely change the current health care model.
So what is is it? How can it impact health care exactly?
What are smart contracts?
Investopedia explains smart contracts perfectly:
“Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. They render transactions traceable, transparent, and irreversible.”
Coindesk.com also adds that:
“While a standard contract outlines the terms of a relationship (usually one enforceable by law), a smart contract enforces a relationship with cryptographic code.
Put differently, smart contracts are programs that execute exactly as they are set up to by their creators.”
What can smart contracts do?
The infographic above published by Medium breaks down the potential of smart contracts pretty easily, according to their infographic, smart contracts can:
- Automate and track transactions.
- Log patient-provider relationships that associate medical record.
- Offer viewing permissions and data retrieval instructions.
- Can allow providers to add a new record associated with a particular patient.
- Create automation notifications.
- Verify the proposed record before accepting or rejecting data.
An article by coindesk.com also notes that smart contracts can:
- Function as ‘multi-signature’ accounts, so that funds are spent only when a required percentage of people agree.
- Manage agreements between users, say, if one buys insurance from the other.
- Provide utility to other contracts (similar to how a software library works).
- Store information about an application, such as domain registration information or membership records.
So how can smart contracts impact the health care industry?
Aside from eliminating obvious human error-caused and communication bottlenecks, probably the biggest impact smart contracts could have on the health care industry, is that they can completely cut out the middleman and create much needed transparency between providers, patients, insurance companies and pharmacies.
Pharmacies currently control the cost and supply of most drugs. Unfortunately, they use this power to negotiate prices with drug manufacturers and insurance companies that benefit them, and not the consumer.
Smart contacts make it possible for the entire supply and price process of drug manufacturing and distribution to be automated, completely eliminating the need for pharmacy benefit managers and pharmacies.
Seperately, in an article in HealthIT Analytics, “Ramkrishna Prakash, CEO of TrustedCare, Inc., suggests that smart contracts could make it easier for providers and payers to share the quality data required to fuel value-based reimbursements.
‘The ability to seamlessly track and manage smart contracts in which the benefits can be redeemed with significant ease provides the necessary ‘carrot’ for providers and patients to actively engage in a symbiotic collaboration,’ he wrote.
‘In contrast, if one or more participants tend to misbehave, appropriate penalties, via liabilities, can also be levied with similar ease. This ‘carrot/stick’ approach, we believe, would provide the necessary push that is needed to shift the healthcare industry from a sickness-management mindset to a wellness-lifestyle mindset.’”
Ultimately, the draw of smart contracts is putting the power back into the hands of people, the providers and patients, not corporations.
Are you excited for the adaptation of smart contracts in health care? Are there more ways you think it will impact the industry that we didn’t mention above? Tell us in the comments below!