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\title{A Case Study in Blockchain Healthcare Innovation}



\author[1]{Thomas F Heston}%
\affil[1]{Department of Medical Education and Clinical Sciences, Washington State University, Spokane, Washington USA}%


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  \date{April 22, 2026}


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\begin{abstract}
Healthcare complexity and costs can be decreased through the application
of blockchain technology to medical records and insurance companies.
Estonia has taken a leadership role in blockchain based services both in
the commercial sector and in government. The Estonian government's
innovation strategy was to create GovTech partnerships to implement
blockchain based technologies throughout the country, and become a
global leader in the technology. Starting in 2011, just 3 years after
Satoshi Nakamoto published the first description of distributed ledgers
and blockchain technology, the Estonian Government started partnering
with the private technology startup company Guardtime to use blockchains
to secure public and internal records. Then in 2016, Estonia once again
reinforced its global leadership in blockchain technology when it
announced it would use blockchain technology to secure the health
records of over a million citizens. Estonia's systematic method of
applying blockchain technologies through GovTech partnerships
demnostrates how innovation is a process. Estonia also identified early
the value of the blockchain as a disruptive platform innovation. The
application of blockchain technology to healthcare is a radical
innovation given that nearly all previous applications have been in the
financial and legal sectors.%
\end{abstract}%



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\textbf{Introduction}

Healthcare is at a crisis globally, with global demand for medical
services outpacing the ability to pay for it. As the world population
ages, the ratio of elderly people to working age people is rapidly
growing. The result is a greater need for healthcare services by the
elderly, with fewer working age people to provide financial support for
medical insurance.~ In addition, the cost of providing medical care
continues to outpace inflation, with the average global rise in medical
care projected to be 7.8\% in 2017, up from 7.3\% in 2016 and 7.5\% in
2015 {[}1{]}. These two factors, an aging population with fewer working
age people to pay for their medical costs, along with steadily
increasing costs of medical care, are creating an enormous pressure on
governments and businesses to find innovative ways to make the delivery
of health care more efficient and less costly. Advances in technology to
tame the bureaucratic burden of medical care will provide a primary
means to accomplish these goals.

A major technological breakthrough occurred in 2008 with the publication
of Satoshi Nakamoto's white paper on bitcoin {[}2{]}. Nakamoto proposed
a way to create a safe and secure system of money built upon a
distributed ledger known as the blockchain. This innovation was a
revolutionary, disruptive breakthrough. Through the use of a blockchain,
control of financial transactions could be taken away from a central,
trusted authority and instead be controlled by a decentralized, widely
distributed, and secure ledger. Estonia was one of the first countries
to recognize the vast potential of blockchain technology beyond money,
and became an early adapter in creating blockchain based governmental
systems.

\textbf{Estonia's Innovative Approach}

Estonia's government saw vast opportunities in blockchain applications
as early as 2011, shortly after introduction of the technology. Even
before that, however, Estonia laid a strong technology foundation in
1992 when Mart Laar, Estonia's prime minister at the time, committed the
country to high technology. By 1998, all Estonian schools were online,
and in 2000, Estonia declared Internet access to be a human right
{[}3{]}. With this foundation,~ Estonia has implemented innovation as a
system through the promotion of GovTech partnerships {[}4{]}. In
healthcare, Estonia has collaborated with Guardtime, a private data
security company, to secure the health records of over one million
citizens. The blockchain based proprietary Keyless Signature
Infrastructure will be utilized to insure record security and at the
same time wide availability to authorized parties {[}5{]}.

\textbf{Benefits of Introduction}

Using the blockchain to store medical records has the potential to make
private healthcare data more tamper-proof, secure, and scalable. The
distributed nature of the blockchain can ease the sharing of data among
authorized parties and bridge traditional data silos, dramatically
increasing efficiencies and improve coordination of care {[}6{]}. Costs
of medical care can be decreased through better insurance claim
coordination with treatment rendered. Data auditing is improved through
the immutable records maintained by the blockchain. The costs associated
with blockchain mining can even be offset by offering anonymized
metadata rewards for medical researchers {[}7{]}.

\textbf{Critical Success Factors}

The success of the Estonian medical record blockchain project will
depend upon its ability to keep medical records private while at the
same time widely available to medical providers and insurance companies.
Estonia has already successfully setup a process of routinely searching
for new blockchain applications, and selected a strategic partner in the
private sector (Guardtime). Implementation of their e-health initiative
has been supported by Estonia's Health Information System Act of 2007
and the Government Regulatory Act of Health Information Exchange in 2008
{[}8{]}. They have demostrated value capture by applying lessons learned
to their larger eEstonia range of services, which include eTaxes,
eElections, and eSchools. While they have become arguably the most
successful country to implement a blockchain based health record system,
life expectancy ranks only 40th out of 194 member states of the World
Health Organization {[}9{]}. The ultimate success or failure of their
eHealth initiative will be reflected in their ability to improve the
average citizen's life expectancy from it's current 77.6 years.~

\textbf{Challenges and Risks}

The blockchain platform for the development of secure, immutable, and
easily accessible medical records has great potential but also great
challenges. As the world becomes more digitally and socially connected,
there is a growing need for global solutions to health. Scaling a
national blockain based electronic medical record to the global
community will require broad acceptance of protocols for the coding of
medical information. Incentizising individuals, healthcare providers,
medical systems, and insurance companies to adopt a single system will
likely be prohibitively expensive. It is possible that the development
of blockchain based electronic medical records will proceed along
similar lines as cryptocurrency, starting with a single coin (Bitcoin in
2009) then rapidly expanding to 4331+ coins by 2017 {[}10{]}. While such
a large diversity in cryptocurrency may be desireable, a single
blockchain for medical records would provide tremendous benefits in
terms of medical research, the financing of medical services, and the
advancement of global health.

\textbf{References}

1. Willis Towers Watson (2017) 2017 Global Medical Trends Survey Report.
In: Willis Towers Watson.
\url{https://www.willistowerswatson.com/en/insights/2017/05/2017-global-medical-trends-survey-report}.
Accessed 14 Jun 2017

2. Nakamoto S (2008) Bitcoin: A Peer-to-Peer Electronic Cash
System.~\url{https://bitcoin.org/bitcoin.pdf}. Accessed 13 Nov 2017.~

3. (2013) How did Estonia become a leader in technology? In: The
Economist.
\url{http://www.economist.com/blogs/economist-explains/2013/07/economist-explains-21}.
Accessed 16 Jun 2017

4. Naumoff A (2017) Power to the People: Blockchain Replaces Government
in Europe. In: The Cointelegraph.
\url{https://cointelegraph.com/news/power-to-the-people-blockchain-replaces-government-in-europe}.
Accessed 16 Jun 2017

5. Das R (2017) Does Blockchain Have A Place In Healthcare? In: Forbes.
\url{https://www.forbes.com/sites/reenitadas/2017/05/08/does-blockchain-have-a-place-in-healthcare/\#44d2b3df1c31}.
Accessed 14 Jun 2017

6. De Meijer CR (2017) Blockchain in Healthcare: make the Industry
better. In: Finextra Research.
\url{https://www.finextra.com/blogposting/13801/blockchain-in-healthcare-make-the-industry-better}.
Accessed 12 Jun 2017

7. Ekblaw A, Azaria A (2016) MedRec: Medical Data Management on the
Blockchain. In: PubPub. \url{https://www.pubpub.org/pub/medrec}.
Accessed 13 Jun 2017

8. World Health Organization (2016) Electronic Health Records. From
Innovation to Implementation - eHealth in the WHO European Region. World
Health Organization, Denmark, p 22

9. World Health Organization (2016) World health statistics 2016:
monitoring health for the SDGs, sustainable development goals. World
Health Organization, Geneva,
Switzerland.~\url{http://apps.who.int/iris/bitstream/10665/206498/1/9789241565264\_eng.pdf}~Accessed
13 Nov 2017.

10. List of all traded alternative cryptocurrencies with blocks,
difficulty, hashrate and marketcap.
\url{https://www.cryptocoincharts.info/coins/info}. Accessed 17 Jun 2017

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