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Blockchain Transforming HealthcareJanuary 16, 2019

Ground to be covered Introduction -who we are Why the hype What blockchain is and how it’s being used Barriers to use Requirements for adoption and growth1

PNC HealthcareWho we are, what we do and why clients choose usWhy?PNCPNC helps providers and payersautomate data and dollars 25 year continuous commitment to providingsolutions to the healthcare industry Support more than 2,500 Healthcare clients Direct connections with more than 3,300 payers1 Full year 20172

The promise of Blockchain?Is blockchain technology hype or reality?A) Total HypeB) Somewhat of a HypeC) Too Soon to TellD) Getting Closer to RealityE) RealityRESULTS –3

Attendee resultsAssoc. of Financial Professionals 2018 Nat’l Conference; PNC Healthcare ClientAdvisory Board 12/2018Is Blockchain Technology Hype or Reality?Total Hype2%Somewhat of a Hype9%Too Soon to Tell32%41%Getting Closer to RealityReality17%0%5%10%15%20%25%30%35%40%45%4

2018 Deloitte survey of global blockchain expertsMBEAgreement that blockchain will disrupt their organization’s industrySurvey cconducted March –April 2018’5

2018 and 2019 — Defining Years for BlockchainHealthcare Has Attracted More Blockchain Initiatives Than Any Other SectorHealthFinancial InclusionEnergy, Climate and EnvironmentPhilanthropy, Aid and DonorsDemocracy and GovernanceAgricultureLand Rights0%5%10%15%20%25%Percentage of Catalogued InitiativesSource: Stanford University, 2018Source: IBM Institute for Business Value Analysis6

Cutting edge work using blockchain is underwayProviders and payers are evaluating it to streamline and simplifyBlockchain use case:Healthcare supply chainTamper-proof distributed ledger tech helps withefficiency, security, integrity and visibility ofpharmacy and other supply chain data. And because itdoesn't necessarily involve PHI, it may be a logical place forhospitals to start exploring.By Mike Miliard December 13, 2018The first health insurancecompany to master blockchainwill 'rule,' expert saysBlockchain will eventually connect payers not only toproviders, but to pharmacists in an end-to-end transactionfrom first encounter to post-op.Susan Morse, Sr. Editor, December 10, 20187

Transformative power of blockchainFrank Yiannas, Vice President of Food Safety for Walmart‘As fast as you can think it, wecould know it .food traceability at the speedof thought.’-8

Why healthcare is ripe for disruptionThe healthcare ecosystem needs a redesign 5.7Tby 202611%in 2017National healthcare costgrowth is unsustainable;as a responsereimbursement continuesto be reducedConsumer are demanding amore ‘retail- like experienceas their portion of the cost ofcare continue to acity in the benefit/claimpayment requirementsresults in inefficientReconcilement/auditrequirements and distrustAdministrative andprocess inefficienciesresult in significant coststo both insurers andproviders 16BAnnually 375BAnnually10

Is your organization exploring Blockchain?Do you have a project that involves blockchain technology within your Organization?A) YesB) Exploring Opportunities for ApplicationC) Not at This TimeD) Not SureRESULTS10

Majority are not actively experimentingAssoc. of Financial Professionals 2018 Nat’l Conference; PNC Healthcare Client Advisory Board 12/2018Have a Project That Involves Blockchain Technology Within Your Organization?Yes17%Exploring Opportunities for Application11%68%Not at This TimeNot Sure4%0%10%20%30%40%50%60%70%80%11

Blockchain technology is NOT cryptocurrencyBlockchain is an electronic distributed ledger technology (DLT)Bitcoin, or cryptocurrency, is adigital assetBlockchain is a distributedledger application12

Every computer has an identical record of activityShared design enables near real-time data between partiesTraditional Systems: Transactions are recorded in multiple ledgers. No record of what happens next, what came before,or the role of others in the transaction. Prone to human error and vulnerable to tampering.Blockchain Solutions: Can be shared and updated in near real-timeacross participants. Every transaction becomes part of the permanentrecord. Relevant information can be shared with othersbased on their roles and privileges.13

Blockchain properties enable transformative redesignTraceability, enhanced security, immutable record of activity and/or assetsDistributed NetworkLeverages a distributed networkof computers sharing and“hosting” the exact history ofactivity, transaction dataSecurity/PrivacyEnhances security and privacythrough encryption, cryptography,permissioned accessSingle Source of TruthProvides a single, consistent andshared view of the state of abusiness processImmutable RecordNo one unilaterally has the powerto edit transactionsProvenanceEstablishes provenance, or arecord of an entire transaction,workflow‘Smart’ ContractsAutomates transaction executionand integrate workflows14

Blockchain enables real-time, transparent, secure data fluidity andworkflows across ns/economic-perspectives/2017/715

“Smart Contracts” unlock the full power of BlockchainAgreement terms are codified enabling auto-execution when validatedWhat are SmartContracts?What is their role?A Smart Contract is a computerizedtransaction protocol that executes andenforces the terms of an agreement.Like traditional contracts, Smart Contractsdefine the operating rules and penaltiesbetween parties around an agreement.Unlike traditional contracts, SmartContracts also automatically enforcethose obligations.What is their valueproposition?Process, workflow and transactions automation.Allow parties to interact directly, eliminating theneed for a “middle man” or additionalcommunication to validate that activities are beingcarried out according to defined terms.16

Auto-validation and term execution streamlines work processesShared environment and consensus builds “trust” environment17

Blockchain and smart contracts are being actively deployed in otherindustries. The future is now.International cross-border paymentsTrade and shipping supply chainFood traceability farm to tableProperty & Casualty insurance consortiumSecurities trading and settlement platform for theAustralian Securities Exchange18

Blockchain may be targeted to a number of healthcare’s illsWhich factors do you think will drive blockchain adoption?A) Reducing Costs and Operational InefficienciesB) Potential for New Revenue StreamsC) Meeting Regulatory Compliance ObligationsD) Potential Competitive AdvantageE) OtherRESULTS19

Cost reduction is in the cross hairs for initial useAssoc. of Financial Professionals 2018 Nat’l Conference; PNC Healthcare Client Advisory Board 12/2018Which Factors Do You Think Will Drive Blockchain Adoption?46%Reducing Costs and Operational InefficienciesPotential for New Revenue Streams16%Meeting Regulatory Compliance Obligations24%Potential Competitive 20

Blockchain technology will revolutionize the business of healthcareSmart Contracts enablestraight-through healthcaretransaction processing(STP)Mutualized infrastructurereduces operational costsand reliance on legacysystemsAn immutable, crossorganizational singlesource of truth radicallyimproves stakeholderinteractionsReal-time sharing ofinformation leveragingpermissioned access toenhance securityA modern, highly secureand scalable platformincreases operationalcertainty21

Smart contracts to streamline transactions in healthcareOpportunity for real-time authority application and multi-party transparency- Current State Benefit, Claim and Payment TransactionsBene CheckBene CheckBene ResponseBene ResponseClaimHealthcare nce CompanyRemitBankClaimPayments22

A shared network powered by smart contracts could create transparency,reduce costs, and improve experience for all stakeholders.What If ? Providers, Insurers, Banks and other stakeholderswere on a distributed, shared, and permissionednetwork As an ‘event’ (transaction) occurs information iscommitted to the ledger Visibility and transparency are achieved withoutsacrificing security Smart contracts are utilized to model policies andcontracts between stakeholders enabling straightthrough processing Administrative waste is eliminated through a singlesource of truth and machine executable smartcontracts23

Barriers to use need to be identified and resolvedWhat is the Biggest Barrier to Adopting Blockchain Technology?A) RegulatoryB) Performance/ScalabilityC) Maturity of TechnologyD) InteroperabilityE) No Clear Business CaseF) OtherRESULTS24

Regulated industries concerned with ‘maturity’ and ROICross industry global point to regulation, legacy systems, security & ROIWhat is the Biggest Barrier to Adopting Blockchain 5%Maturity of TechnologyInteroperability4%No Clear Business Case31%Other4%0%5%10%15%20%25%30%35%40%45%50%25

Platforms are becoming production hardenedScaling to industry volumes, complexity and security is underway Production grade solutions beingdeployed in other industries Platforms continue to develop & evolve Smart contract languages becomingincreasingly sophisticated Permissioned vs Public networks On / Off chain data Platform design trade-offs26

HIPAA privacy and security requirements remainDesign and implementation decisions will determine complianceAs with any technology, platform design, implementation and participation decisions willlikely determine if and how Privacy and Security standards are metOn-chain vs Off-chain dataPermissioned vs PublicDeployment model27

Concern with selecting ‘the wrong’ platform?Interoperability between blockchain platforms is already being worked onAccenture Proposed Interoperability ModelSource: n/integration-ecosystems28

In defined use cases across industries blockchain is proving its valueWhen Will Your Organization be Ready to Examine the Value and Eventually Use Blockchain Technology?A) Actively Exploring NowB) Six MonthsC) One YearD) Two YearsE) Too Early to TellRESULTS29

Opinions are somewhat split – ‘too early’ and ‘using/within the year’Assoc. of Financial Professionals 2018 Nat’l Conference; PNC Healthcare Client Advisory Board 12/2018When do you Think Your Organization Will be Ready To Examine the Value and Eventually UseBlockchain Technology?Actively Exploring Now18%Six Months42%4% 1 yearOne Year20%Two Years12%46%Too Early to Tell0%10%20%30%40%50%30

Blockchain requires a NETWORK, likely co-opetitionEven the best designed blockchain solutions will fail without a networkNetwork conomic-perspectives/2017/731

74% of global organizations are or will join consortiaModicum of consortia activity in US Healthcare – Synaptic Alliance32

Blockchain’s promise to transform healthcare businessWhere do we go from here? Great hype and promise but the market remains “split” likely because businesstransformation is required Significant experimentation across industries with Healthcare having had the greatestamount of activity ‘COOPETITION’ and network formation is critical IF the healthcare industry is to reapthe transformational promise of blockchain33