While there’s a lot of hype over blockchain in healthcare, some who work in the industry say that the product pitches so far are little more than pipe dreams.

The comments come as blockchain technology has become increasingly touted as a solution that could streamline everything from electronic health record (EHR) management to medical insurance, reducing complexity in a system that remains frustrating for consumers and participants alike.

But new interviews suggest that, while well-meaning, entrepreneurs exploring these applications aren’t quite showcasing why the technology is a match for industry problems.

“It’s just not possible for the healthcare industry to be real time as it relates to claims,” said Dr Alyssa Hoverson Schott, a physician at Sanford Health who started this conversation at the Distributed Health conference earlier this month.

Hoverson Schott sees about 39 patients per day, inputting medical visit and procedural codes for each patient in between visits.

“There’s often not time right then to input the codes,” she said.

These codes are then sent to insurance providers who review the claim and negotiate down the bill. This negotiation process, which goes back and forth between the hospital and the insurance provider, can go on for 90 days.

The real problem? Those offering tech solutions to the industry don’t actually understand the day-to-day flow of providing healthcare, Hoverson Schott argued.

She told CoinDesk:

That’s not to say she doesn’t believe blockchain can solve problems in healthcare, rather she questions whether startups can succeed without collaborating with the traditional industry. Her interest is also personal, as her husband, a senior business analyst at Experian, has developed an interest in the technology.

Despite the concerns of industry incumbents, however, her story shows how blockchain has become more than a business solution, but a social phenomenon that continues to spread.

This expansion has led to interest from other healthcare veterans like Dr Jonathan Holt, a once practicing physician that now focuses on his two startups: SeqTech Diagnostics (which carries out genetic testing on food) and TranSendX, a blockchain for healthcare interoperability aimed to bring patients more control of their medical records.

Yet, Holt sees an opportunity to parlay his expertise into a new venture. He argued that healthcare providers, like financial institutions, have incentives for keeping patient information private and in their control.

And Holt isn’t alone in his belief that healthcare providers will continue to be cautious about new systems for housing their data, as they can incur huge fines for exposing patient health records – fines big enough to bankrupt some healthcare institutions.

During the conference, tech entrepreneurs were met with this kind of skepticism when presenting such ideas.

Yet another reason healthcare providers are hesitant about blockchain technology is because they’ve put a significant amount of time and money into their existing architecture. Just as the financial services industry likely won’t rip and strip away legacy systems completely, healthcare providers would also rather see updates instead of overhauls.

Adding to this, most hospitals are now transitioning to electronic health record (EHR) software.

As part of the American Recovery and Reinvestment Act, the government mandated that healthcare providers show “meaningful use” of EHR by the beginning of 2014.

“Other innovation screeches to a halt,” said Holt about the transition from paper to digital, adding:

Instead of focusing on EHRs and insurance claims, Michael Gucci, a practicing emergency room physician and founder of Bitcoin Fortress Ventures, thinks blockchain entrepreneurs would have a better chance disrupting medication provenance first.

While counterfeit medication isn’t as much of a problem in the US, in developing countries it’s a huge dilemma, he said. The issue costs the industry hundreds of billions of dollars per year and results in thousands of deaths annually, according to a 2014 American Health and Drug Benefits report.

And there are already companies working towards this practical solution, he said, pointing to Block Verify out of the UK. The company has been working on several provenance pilots that allow medical professionals and consumers to scan a QR-code on a bottle of pills to ping the blockchain to verify the integrity.

In terms of streamlining the insurance claims process and the transfer of EHRs between providers, that’s probably 10 to 15 years off, Gucci said.

“Hospitals aren’t going to implement any huge changes right away. It’s going to happen in small steps,” he said.

This aligns with Holt’s thoughts that blockchain entrepreneurs should develop systems of data integrity and provenance, but for simpler problems.

One example is Saavha, a blockchain startup verifying the integrity of healthcare scheduling. This is particularly interesting in light of the Veterans’ Affairs (VA) scandal of 2014 and the VA’s continuing problems with falsified waiting lists.

It’s also a problem one US Congressman’s proposal argues distributed ledger technology could solve.

The VA even has a more stringent regulatory burden than most other hospitals, said Holt. Much of its data has to be encrypted on a hard drive under lock and key in a cage with 24/7 video surveillance, he said. And yet, the information was still manipulated.

“The attention is on these big issues because everyone loves the sexiness of solving a big problem,” said Mathew Rose, a practicing junior doctor in Ireland and co-founder at Saavha. “But if you think throughout history, anything that was an immense problem, it was easier to solve the little problems inside that big problem.”

Look at the development of medicine, for example. Part of the reason medical science has advanced so far is because every medical researcher works on a part of the problem, Rose said. In cancer research, some doctors focus on practices for removing tumors, while others focus on inhibiting blood supply, while still others investigate what role proteins play.

In Saavha’s implementation, a hash of the appointment data is stored on the blockchain so it can be proven that the data wasn’t changed retrospectively. The problem also circumvents one of the core criticisms about blockchains – that they are inherently slow databases that aren’t good at storing of large amounts of data,.

By focusing on data integrity, EHRs can store a hash on a blockchain to prove the validity of information stored elsewhere, likely in centralized repositories that exist today.

There is, however, an argument to be made that these centralized databases could benefit from other less immediately viable applications of blockchain.

Adrian Gropper, CTO at the non-profit group Patient Privacy Rights, thinks these centralized stores of data need to be scaled down immensely. Today, there are centralized healthcare databases containing between 5 million and 10 million patients, he said.

“We’ve created a 10 million patient honeypot [for fraudsters] where something on the order of 50,000 people on staff at these hospitals have access to those records. And these systems are totally opaque to the user,” Gropper said.

This already is a big problem for the industry. Last year, fraudsters pulled off the largest healthcare hack in history on Anthem, exposing more than 78 million customers. And in March, MedStar Systems, a clinical information system of 10 hospitals was hacked and had to take its system offline.

This is a situation that’s likely to continue, since some estimates show healthcare data is almost 100 times more valuable than stolen credit card information.

“The only hope for actually managing this kind of personal-level information is to distribute it back out to a diverse group of holders, and blockchain is going to play a central role in this,” said Gropper, who is building a patient-centered health record platform on blockchain technology called HIE of One.

In his mind, the blockchain acts as storage for identity data, a hash of a timestamped document and the payment record.

Further, he says centralized healthcare databases should be smaller, housing only the records only one doctor or maybe one community. Transfer of data is in the hands of patients, with HIE of One using User-Managed Access (UMA) as its access control standard.

Lofty ambitions aside, the healthcare industry looks likely to take its time in experimenting and implementing the technology.

In place of a large disruption is likely to be a cautious, piecemeal approach that might arguably be the safer, preferable option for the aspects of healthcare that may adopt blockchain applications over time.

Rose argued that, in this light, technology solutions also need to take a backseat to patient security, which he said remains the industry’s core mandate.

He explained:

Doctor image via Shutterstock