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The potential of blockchain technology to achieve strategic goals, such as value-based care, is increasingly being recognized by both researchers and practitioners. However, current research and practices lack comprehensive approaches for evaluating the benefits of blockchain applications.
The goal of this study was to develop a framework for holistically assessing the performance of blockchain initiatives in providing value-based care by extending the existing balanced scorecard (BSC) evaluation framework.
Based on a review of the literature on value-based health care, blockchain technology, and methods for evaluating initiatives in disruptive technologies, we propose an extended BSC method for holistically evaluating blockchain applications in the provision of value-based health care. The proposed method extends the BSC framework, which has been extensively used to measure both financial and nonfinancial performance of organizations. The usefulness of our proposed framework is further demonstrated via a case study.
We describe the extended BSC framework, which includes five perspectives (both financial and nonfinancial) from which to assess the appropriateness and performance of blockchain initiatives in the health care domain.
The proposed framework moves us toward a holistic evaluation of both the financial and nonfinancial benefits of blockchain initiatives in the context of value-based care and its provision.
The health care sector has recently been focused on two related challenges: the transition to value-based care and the use of innovative technologies (such as blockchain technology) to facilitate the delivery of health care. The transition to value-based care, which aims to improve the value of care while providing it at a lower cost, places new demands on health care information systems (IS) [
Blockchain technology, widely celebrated as a technological revolution, is creating unprecedented hype and optimism [
As IT is increasingly becoming a strategic necessity for improving services and reducing medical errors [
The BSC, developed by Robert Kaplan and David Norton nearly two decades ago [
A myriad of seemingly promising blockchain projects are being implemented in the health care domain, often without careful consideration of the applicability of the technology [
We sought to answer the above questions through our assessment of existing evaluation frameworks and the development of a new framework that can guide the comprehensive evaluation of the value of blockchain initiatives that seek to enable the delivery of value-based care.
In the sections below, we first discuss the relevant literature on value-based health care and blockchain technology. We then assess existing evaluation frameworks and present our framework, which extends the BSC by addressing some of its limitations. Further, we customize the framework to the context of blockchain applications in health care settings. We then present an illustrative case study on the application of the framework in a pharmaceutical supply chain organization. Finally, we discuss the implications of our framework for both researchers and practitioners.
Health care value, defined as health outcomes (including quality of care achieved per dollar spent), has become a cornerstone of the strategy to restructure the US health care system [
Unlike more traditional approaches, value-based care is driven by data because providers must report to payers on specific metrics and demonstrate improvement. Providers are required to use IT systems to track and report metrics such as hospital readmissions, adverse events, population health, and patient engagement. Further, providers are incentivized to use evidence-based medicine, engage patients, upgrade health care IT, use data analytics, and receive payments electronically. When patients receive more coordinated, appropriate, and effective care, providers are rewarded. To achieve these goals, health care organizations need a digital infrastructure that facilitates the provision of comprehensive, affordable, accessible, effective, and error-free care.
While significant progress has been made in digitizing the US health care system, today’s health IT infrastructure largely remains a collection of systems that were not designed to support the transition to value-based care [
In fact, a recent study identified several gaps from the perspectives of three stakeholder groups. From the patient perspective, patients are unable to access electronic medical records from most providers, and most care providers do not provide functionalities for patients to submit patient-generated data. Only a small percentage of patients receive clinical trial information from their primary physician, and an even smaller percentage participate in biobanks [
Prior literature has also identified specific goals (eg, improving patients’ access to clinical data, improving patient’s ability to submit and access data via mobile health technology, more readily engaging patients in clinical research) for addressing the needs of each of these stakeholder groups [
Blockchain consists of blocks that hold batches of individual transactions. Each block contains a timestamp and a link to a previous block [
Iansiti and Lakhani [
Despite its technological infancy, experimental adoption and customization of blockchain technology appears to be fully underway in the health care domain [
Another salient application domain of blockchain is supply chain management in the pharmaceutical industry. Because of the immutability and traceability of blockchain, any modification of a prescription by any party in the supply chain can be detected, which, in turn, can help address the severe problem of counterfeit medications [
Blockchain technology has the potential to address some of the gaps in the current health IT ecosystem, thereby supporting the three important stakeholder groups involved in value-based care [
While blockchain offers the potential to address issues (eg, interoperability, difficulty in providing optimal personalized care due to lack of comprehensive medical records, and maintaining integrity of records) that are critical for effective value-based care [
Traditional performance measurement systems have either focused purely on financial factors, ignoring the value of nonfinancial factors [
Our comparison of the various performance measurement systems, as presented in
Organizations in multiple domains, including health care, have adopted the BSC [
The BSC measures the performance of organizations from the following four linked and balanced perspectives:
Financial: How do we increase value for our shareholders (or providers of financial resources)?
Customer: How well do we satisfy our customers’ needs?
Internal: How well do we perform key internal operational processes? To satisfy our customers, in what processes must we excel?
Learning and growth: Are we able to sustain innovation, change, and continual improvement? Do we have the basic infrastructure in place to improve, create, value, and achieve our mission?
Some limitations of the traditional BSC have received attention in the literature [
Proposed framework for evaluating blockchain initiatives for value-based care.
By integrating financial measures with other crucial performance indicators concerning patients, organizational learning, growth and innovation, internal processes, and external perspectives, this extended BSC framework offers health care organizations a comprehensive view of the performance of blockchain applications.
In this study we adopted a for-profit health care organization’s view, as a majority of current blockchain implementations are in for-profit organizations.
From a value-based perspective, one of the key questions health care organizations should ask is: "How do health care organizations use blockchain applications to generate more profits at lower cost?" Typically, the focus of the financial perspective in the BSC has been on traditional financial metrics such as ROI and net income. In the context of value-based health care, patient-centric metrics such as gross revenue, adjusted cost per discharge, in-patient or out-patient revenue mix, contract allowances, discounts as a percentage of operating patient revenue [
The auditability and traceability features of blockchain enable more secure and efficient revenue management. As it does not require an intermediary, blockchain can support health care financing tasks, such as automatic claims processing using smart contracts [
From a value-based care perspective, one of the key questions health care organizations should ask is: "How can we improve our service to customers and satisfy customer needs via blockchain applications?" Improving the performance of health care information systems that support the provision of effective and efficient care to patients is critical for achieving this goal. The patient-centric care paradigm requires the sharing of patients’ EHRs, which raises issues such as privacy, confidentiality, integrity, availability, and security [
From a value-based care perspective, one of the key questions that health care organizations should ask is: "What internal processes can blockchain improve to satisfy our customers and the population in general?" Effective internal business processes are critical for providing products and services that satisfy health care organizations’ customers’ needs in a fiscally responsible manner. These effective processes can be reliable indicators of future financial and operational success [
A variety of internal processes are candidates for improvements using blockchain technology. Using smart contracts, organizations can encode internal logic (eg, validating identity and tracking the participation of various stakeholders. such as patients and health providers), which will enhance service quality. Service quality can be reflected in measures such as reductions in diagnostic errors, readmission rates, and data security incidents, all of which lower costs. Value for customers can also be improved by instituting newer internal processes, such as Hitech service (eg, digitization of wellness check in Mount Sinai’s Lab 100 [
From a value-based care perspective, one of the key questions health care organizations should ask is: "How can we leverage external partnerships to create value while ensuring regulatory compliance, thus satisfying our customers and the general population?" Creating effective partnerships with external stakeholders (eg, payers, accreditation bodies) while remaining compliant with regulations is critical for value creation. These partnerships enable health care organizations to supply products and services that satisfy customer needs in a fiscally and legally responsible manner.
Some multi-level, privacy-preserving. location-sharing blockchain applications (eg, BMPLS) enable interoperability with external systems, thereby enabling access to multi-dimensional medical charts from various stakeholders that can improve long-term medical care at a low cost. Through external partnerships, these health care organizations can seek to create value by taking a proactive role in providing care to their customers (say, by tracking customers’ lifestyle and suggesting changes). Naturally, such partnerships can enable future financial and operational success through service innovation, which can help build deeper long-term relationships with customers. Additionally, having access to multi-dimensional population health data will enable health care providers to design outreach services that benefit the community as a whole. Blockchain solutions may also include smart contracts that help meet security and privacy mandates. Further, through the standardization of smart contracts at both the provider’s and the external partner’s end, interoperability of medical systems for value creation can be achieved.
From a value-based care perspective, one of the key questions health care organizations should ask is: "How can we use blockchain applications to improve the learning capabilities that lead to growth and innovation?" Blockchain applications can help health care organizations reassess their resources, from employee capabilities to health care delivery processes, and align them to the organization’s strategy.
Blockchain enables health care stakeholders to learn and to improve their services, thereby enhancing their competitiveness and sustainability. The systems interoperability enabled by blockchain technology can help health care professionals learn about opportunities to innovate their services. Blockchain technology also supports organizations in reassessing existing processes and resources and identifying opportunities for improvement. For example, auditability and traceability improved by blockchain can help streamline insurance claim processes and make them easier to manage. Blockchain can also significantly reduce administration costs and potentially eliminate some intermediaries that were previously needed for data integration. Aggregated health care data can help health care organizations reconfigure their procedures and innovate medical services for patients. With enhanced traceability and transparency supported by blockchain, organizations can learn how to optimize the health care supply chain.
The BSC does not explicitly consider the interactions and trade-offs between perspectives. In dynamic environments, correctly identifying and addressing trade-offs between perspectives can help organizations accurately evaluate the target system and develop effective incentives to improve overall organizational performance. Focusing on the financial perspective alone may motivate organizations to reduce nonfinancial investments that could produce long-term benefits. In particular, if a nonfinancial perspective has no contemporaneously congruent relationship with financial perspective, managers may reduce investments that improve performance in other areas for short-term benefits.
Our approach suggests that in addition to evaluating value-based care with respect to each perspective, health care organizations need to examine the interrelationship among the five perspectives. For example, efforts to improve the efficiency of internal processes (eg, improving quality process within a unit) with blockchain applications can help health care organizations enhance their learning capabilities (eg, creating quality management processes at the organizational level).
While developing relevant key metrics for each perspective (see
What follows is a case study applying the BSC framework to the implementation of a blockchain in health care. PharmaChain Inc is a business unit that manages aviation and trucking transportation within the supply chain journey for pharmaceuticals. PharmaChain Inc prides itself on maintaining pharmaceutical supply chain industry certification to handle high-value, temperature-sensitive cargo. The highest impact of blockchain implementation is providing greater visibility and transparency, thereby ensuring the safe transportation of life-saving pharmaceuticals. Business leaders suggest that this blockchain application use case, managing aviation and trucking of pharmaceutical products from manufacturers to health care providers, serves as an example of PharmaChain Inc’s commitment to pursuing high impact innovation.
While stakeholders often have varying perspectives and goals, this use case illustrates significant benefits for two important stakeholder groups, namely, customers and providers. The varying stakeholder goals within supply chains results in operational complexity when the process is desynchronized. Blockchain technology helps standardize stakeholder interactions, contributing mutual benefit to the provider and the customer. Standardization of interactions, in turn, reduces human intervention and results in accrual of added business value to all stakeholders. See
Case study: Application of developed framework in the pharmaceutical supply chain.
Customers are at the center of all decisions at PharmaChain Inc. PharmaChain Inc is committed to customer service and innovation, and these two values guide its decision to strengthen its pharmaceutical transportation services. The blockchain solution enables customers to track and trace their temperature-regulated pharmaceutical products, thereby increasing consumer confidence. As an additional benefit, the organization receives positive media attention regarding its commitment to safely transporting pharmaceutical products, which positively strengthens the company’s relationship with its customer base. Thus, the customer gains real-time access via mobile device or desktop computer to trustworthy information via the blockchain, and the need to contact customer service, which can be time consuming for the customer and costly for the company, is removed.
PharmaChain Inc explores various parts of the internal and external process to solve customer challenges. Blockchain aids in the reduction of lags in the internal processes between temperature measurement and timely corrective actions. Those lags may have otherwise resulted in increased liability, loss of product efficacy, and product destruction. This implementation facilitates the monitoring of the pharmaceutical products’ exposure to undesirable conditions (such as temperature extremes and delays in transit).
Conversely, blockchain delivers external process improvements leveraged to resolve legal and compliance issues more rapidly, ultimately allowing lifesaving medicine to reach patients more quickly by eliminating customary hold times in customs. A blockchain initiative was selected to improve visibility and facilitate trust among stakeholders (eg, manufacturers, distributors, transporters, government agencies, and pharmacies). If the freight forwarders do not produce and submit customs approval forms in a timely fashion, the pharmaceutical products cannot be released, with the duration of the hold potentially affecting the quality of the product and negatively affecting the customer experience. A trusted blockchain minimizes the standard 4- to 8-hour hold duration necessary to verify the validity of the customs approval submitted by the freight forwarder, and improved compliance also helps increase trust among external partners.
Blockchain applications support PharmaChain Inc in improving its learning capabilities by enabling it to analyze its business processes and optimize them. The learning capabilities can be extended beyond pharmaceutical products, resulting in organizational efficiencies. The growth opportunity within blockchain applications is enabling traceability along the supply chain journey. Traceability helps reduce fraud in the pharmaceutical supply chain, which is a major societal benefit. Encouraged by the success of the initiative, the organization is deploying blockchain across multiple business products, especially for high value activities and products like pet transportation and food items.
For PharmaChain Inc, pharmaceuticals represent one of its highest grossing revenue centers among all its shipping products. With a supply chain industry ripe for innovation, PharmaChain Inc accepts that a financial investment must be made to realize the key benefits of blockchain technology. Blockchain technology reduces the risk of theft and fraud as pharmaceutical products move through multiple warehouses along the supply chain, thus justifying the financial investment. The blockchain solution implemented by PharmaChain Inc positively impacts customer service and internal and external processes, increasing reliability and thereby reducing long-term costs. The risk of theft is minimized due to the automation of security controls, facilitated by the blockchain implementation. In addition, the cost of physical tracking of shipments is also minimized. The organization anticipates a lift of 10% in pharmaceutical sales over an 18-month period due to the initiative.
Transparency is one of the key characteristics of blockchain that helps to facilitate value within health care. Transparency helps ensure the authenticity of the pharmaceutical products while providing a lone source of the truth for the pharmacy supply chain network. However, transparency comes with tradeoffs between the value-based perspectives. For example, transparency replaces the concept of
Thus, PharmaChain Inc needs to continuously balance competing demands to improve internal operations and to innovate. Blockchain innovations require financial and human capital investments, which compete with the demands to improve existing internal systems. Thus, at least in the short term, increased quality of services provided to the customer (for example, via the ability to track and trace pharmaceutical products) may negatively affect the financial metrics. However, the benefits are expected to significantly increase financial performance in the long term as the blockchain technology enables PharmaChain Inc to offer superior services in comparison to its competition, thus providing PharmaChain Inc the opportunity to strengthen its competitive position in the industry.
Thus, we provide a comprehensive framework that can be used to evaluate blockchain implementation in the value-based health care context, and our study contributes to research streams on blockchain technology, the balanced scorecard framework, and value-based care.
First, our framework can help decision makers in health care organizations evaluate the feasibility and utility of various blockchain proposals that seek to address the health IT chasm reported in prior research [
In addition, our study extends the BSC framework by emphasizing the importance of the external perspective within the health care domain. The health care domain is a dynamic environment marked by changing regulations as well as competitive forces that are charting the course of the industry more rapidly than ever before. Regulatory compliance and value-based provision of services and products are two salient considerations in the health care industry. While value can be created through external partnerships, interoperability among IT systems and regulatory compliance are two areas of concern that constrain such partnerships. Blockchain’s inherent characteristics, such as transparency, immutability, and traceability, facilitate interoperability and enable health care organizations to both cocreate value with their external stakeholders and comply with regulations. Considering the influence of the external environment on a health care organization’s existence, our framework enables the examination of the external perspective when evaluating the performance of blockchain-based HIT solutions.
Third, with their emphasis on value-based care, health care organizations need to develop integrated health care IT infrastructure that can improve services and reduce medical errors. Blockchain, with its inherent trust- and security-promoting qualities, has the potential to significantly affect various areas of value provision for patients in health care. While many performance evaluation solutions exist, our study demonstrates the unique aspects of BSC in evaluating IT initiatives for enabling value-based care. The BSC framework enables the consideration of both financial and nonfinancial dimensions of IT initiatives in the short term as well as the long term. When compared with other performance evaluation solutions (such as Zachman’s framework, the HCI framework, or the technology-centric framework), our extended BSC framework facilitates consideration of the external perspective. It also defines and assesses performance against operational metrics for each of the five critical perspectives. In addition, our approach highlights the importance of the interrelationships among the perspectives, thus offering another critical extension of the BSC approach. The BSC, however, is limited in its ability to build intuitive and interactive systems like those that HCI and other frameworks provide. Thus, we recommend combining the BSC approach with other appropriate framework(s) to meet an organization’s unique needs.
Finally, our case study illustrates how the proposed framework can be utilized to evaluate a health care blockchain application in the for-profit sector. Our approach can also be extended to not-for-profit organizations, which prioritize social goals over financial goals. In such organizations, the financial perspective can be modified to focus on financial sustainability by establishing metrics such as cost reduction, revenue growth, and cost of stakeholder engagement. Similarly, the customer perspective may be widened to include additional stakeholders, such as donors, funding sources, community, volunteers, and employees, that are critical to such organizations [
How blockchain can empower value-based care.
Assessment of performance evaluation frameworks.
Metrics (KPIs) per perspectives.
Relationship matrix among perspectives.
Blockchain-Based Multi-level Privacy-Preserving Location Sharing Scheme
Balanced Scorecard
electronic health record
European Foundation Quality Management Excellence Model
European General Data Protection Regulation
human-computer interaction
Health Information Technology
Information Systems
Information Technology
Office of the National Coordinator for Health Information Technology
return on investment
total quality management
None declared.