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September 27, 2022

4 challenges in decentralized healthcare

What are the benefits and drawbacks of a decentralized health system?
challenges in decentralized healthcare

Over the past few decades, healthcare organizations have shifted towards adopting a decentralized model. In 2020, however, the adoption of decentralized clinical trials became an immediate necessity due to the pandemic. In turn, clinical operations are exceedingly important when recruiting new patients and managing trials. But the speed at which these tactics were adopted was also confronted with challenges in decentralized healthcare.

Overburdened hospitals had to pivot their operations to meet the increasing patient demand for digital health services. Governments empowered decision-making bodies on local, state, and national levels. And biopharmaceutical research teams created a decentralized information system to quickly steer the global scientific community toward safe and effective vaccines. In turn, many organizations are facing the difficulties that come with decentralization.

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So, what are the benefits and drawbacks of a decentralized health system? Below, let’s define decentralization and examine its impacts on the healthcare system.

What is decentralized healthcare?

To start, let’s clarify the differences between centralization and decentralization within the healthcare system:

  • Centralization – Centralization is the systematic methodology wherein a small percentage of individuals maintain decision-making power and management. These decisions are passed down the management chain, allowing the flow of information to spread down and out. Centralization involves a clear and rigid hierarchy. People who operate within the lower levels of the system typically don’t have much say in the policies they follow, although many of these policies directly impact their workflows and patient care plans.
  • Decentralization – Opposite to centralization, decentralization disperses decision-making authority throughout a system. In turn, people operating at the lower levels of the system have more influence over organizational operations and policies. For this reason, decentralized systems can respond quickly to sudden changes in the market—they can also avoid some inefficiencies that can arise from too much bureaucracy.

When it comes to healthcare, decentralization delegates decisions and responsibilities to lower levels of management. In some cases, this may be local governments. In other cases, this may be the patients themselves. As a simple example of decentralization, state or city governments can create healthcare service policies that benefit their populace rather than having one federal policy from the national government.

While centralized systems may enjoy greater consistency and economies of scale, they may not be as responsive to the unique needs of the people they serve – leaving organizations in a bad posture should there be a major shift in global geopolitics (e.g., the effects of the COVID-19 pandemic).

What are the challenges of decentralized healthcare?

If an organization in the health sector is considering a more profound switch to a decentralization methodology, it’s essential to understand the challenges and risks associated with the process. Many countries have deployed a decentralized form of healthcare through hybrid clinical trials and digital clinical trials, allowing organizations to model their challenges, then develop more effective decision-making to improve patient care.

Countries that have adopted decentralized healthcare as a core tenet—including the United States, the United Kingdom, Spain, Italy, Chile, India, Nepal, and more – have experienced four primary challenges:

  • Poorly-optimized policy design – Policy design severely impacts the transition from a centralized to a decentralized model. This makes sense – policy design outlines which decisions and programs will be passed down to local entities and which will remain under central control. Getting these determinations right can make or break a decentralized healthcare system.
  • Incompatible policies between local and national entities – Even if there’s a proper allocation of policies—this doesn’t prevent friction between local and national healthcare standards. For example, in the U.S., the Dobbs v. Jackson decision overturned Roe v. Wade, leaving many organizations (and individuals) with inadequate support and direction. These tensions can be amplified by the fact that local officials may change offices frequently. When this happens, their healthcare systems may experience sudden swings in policy. Additionally, these issues can heighten when centralized policies guarantee services or benefits above what local entities can afford. For instance, in the Philippines, healthcare staff were promised benefits under central labor agreements that their local governments couldn’t provide.
  • Inadequate funding – For a decentralized healthcare system to work, it needs both adequate funding and the proper allocation of those funds. It also needs to set budget minimums for crucial services. Unfortunately, some decentralized systems have faced financial gaps when the promised policies aren’t feasible from a fiscal perspective. Zambia and South Africa suffered from two fiscally inadequate policies and left their healthcare systems struggling to provide sufficient care for their populace.
  • Inadequate management – When a healthcare system transitions to decentralization, many people are placed into positions of authority without proper training. For instance, local healthcare managers may not have enough experience to make serious decisions about systematic policies. When this transition happens too quickly, the new governing bodies can often enact poor policies unintentionally.

In short, decentralization doesn’t guarantee positive outcomes. If it’s not enacted carefully, it can ultimately harm the system and the patient’s ability to receive quality care. That said, there’s a reason why countries and healthcare organizations have been moving toward decentralization.

What are the benefits of decentralized healthcare?

While centralized healthcare systems are skilled at providing consistent care across diverse communities, decentralized healthcare systems can customize care to meet the specific needs of their populations. This is one of the core pillars of decentralization – personalization.

However, advocates for decentralization don’t stop there, the other benefits of decentralized healthcare include:

  • Faster decision-making – When the decision-makers shape policies near the patients and healthcare workers, they can make more informed decisions about care and coverage faster than if they were further removed. This speed and agility can be especially useful during emergencies.
  • Reduction in health program costs – Customizing care according to local communities’ needs can significantly reduce costs. What’s more, community members may be more inclined to support financing initiatives for local healthcare programs when they can clearly see where the money goes.
  • Fewer inequalities – In a centralized healthcare system, specific communities often receive insufficient care options. Because there aren’t policies dedicated to supporting their unique geography and demographics, they’re often left without care tailored to their needs. Decentralization offers more people the ability to connect with the care they need—helping to eliminate inequality in the healthcare system.

What are the benefits of blockchain technology in healthcare?

At this point, decentralized healthcare has been discussed through the lens of governance. However, that’s not the only layer of decentralization taking place. Blockchain technology is decentralizing many administrative aspects of healthcare.

Blockchain technology allows data about transactions to be stored securely, permanently, and accurately. It doesn’t require any third-party intervention. In other words, healthcare information can safely be decentralized.

Here’s how blockchain technology can enhance many aspects of healthcare administration:

  • It can reduce the need for repetitive intake paperwork – Blockchain technology can give patients direct ownership over their medical records. Patients’ medical records are currently stored across various healthcare providers’ offices. Some records may be outdated, while others may be incomplete. Patients often need to fill out receptive intake forms whenever they visit a new healthcare provider. Unfortunately, some patients may leave out crucial data, such as their medications, that may have dangerous interactions. While electronic medical records are more common, they still place the ownership and management of data in the hands of healthcare professionals rather than their patients. Blockchain can turn these tables. When patients’ appointment data is stored on the blockchain, they can maintain their medical records and share them with every healthcare professional they visit.
  • It can improve coordination and quality of care – Another advantage of transferring medical record ownership to patients is that it enables them to share the most detailed, up-to-date information about their health with medical professionals. For example, the care team at a hospital can view a patient’s newfound drug allergies, even when a patient has forgotten the specifics. In turn, patients can receive better-informed, higher-quality care.
  • It can enhance patient cost transparency – When all healthcare visits are recorded on the blockchain ledger, patients can research how much their care services cost at that time. As a result, they can ensure they’re not overcharged when receiving their medical bill.
  • It can upgrade payment efficiency for healthcare providers – Collecting payments as a healthcare provider can be notoriously tricky. Fortunately, the blockchain can effortlessly tie together medical appointments with their financial transactions, ensuring that healthcare providers are paid promptly.

How to overcome challenges of decentralization

While decentralization has its pros and cons, many countries are already enthusiastically pursuing it. In turn, it’s essential for healthcare professionals to proactively create solutions to the incoming challenges.

Some of these challenges can be resolved with the right tools.

For example, insights management software can provide healthcare and other life science professionals the insights they need to decentralize their operations while remaining compliant concerning patient data. With the right tools, organizations can make faster, smarter decisions around governance and ensure all teams are updated on critical information. Learn more about insights management in our blog series.

NIH. Decentralised versus centralised governance of health services.
Investopedia. Blockchain Facts: What Is It, How It Works, and How It Can Be Used.
Supreme Court of the United States. Dobbs, State Health Officer of the Mississippi Department of Health v. Jackson Women’s Health Organization. Decentralization & Health Care.

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