Today Providence St Joseph Health, one of the largest providers of healthcare in the U.S., announced it has acquired blockchain company Lumedic, a revenue cycle management platform. The blockchain system aims to deal with claims processing and enhance interoperability between healthcare providers and payers or insurers.
Seattle-based Lumedic was founded less than a year ago by Mike Nash who was previously Director of Global Partnerships with Luxoft which was recently acquired by DXC.technology (formerly HPE, CSC, EDS). The founding story was based on Nash’s personal experience of having a preventative mole removal which he expected to be covered by his insurance. It turned out it wasn’t. Hence he decided to address the complex process in which patients, healthcare providers and insurers share information about who pays what.
Providence St Joseph Health is a not-for-profit and has 119,000-plus caregivers/employees who serve in 51 hospitals and more than 800 clinics. The organization has a presence in Alaska, California, Montana, New Mexico, Oregon, Texas and Washington.
“Providence St. Joseph Health welcomes the Lumedic team and the focus on substantially improving the coordination of financial transactions between payers and providers. By disrupting these often cumbersome processes ourselves, we strive to lower administrative costs for both parties while getting deeper insight into the financial experience of patients and the ways we can simplify the process for them,” said Rhonda Medows, Providence St. Joseph Health president of population health and chief executive officer, Ayin Health Solutions.
The announcement states that revenue cycle inefficiencies were responsible for more than $500 billion in U.S. health care costs in 2018 according to McKinsey. This is mainly the result of complexity and manual processes.
The $500 billion figure is even worse than previous estimates. In 2011 a study published in the Journal of the American Medical Association found that 34% of the cost of medical care is wasted. That’s equivalent to $1.2 trillion of 2017 spending. The same study found that administrative complexity accounts for 27% of total waste or the equivalent of $327 billion for 2017.