MSPs Mitigate Data Breach Risks for Healthcare Entities
The concentration of healthcare providers and insurers, combined with the widespread prevalence of data breaches, creates a paradox where victims often have no viable alternatives to move their business to. This problem diminishes the impact of reputational damage as a deterrent for non-compliance or poor data security practices. Let’s break it down:
1. Limited Consumer Choice in Healthcare
- Market Concentration: Many regions in the U.S. are dominated by a small number of healthcare providers, hospital systems, or insurers. For example, a handful of major players like Anthem, UnitedHealthcare, and Cigna dominate the insurance market.
- Lack of Alternatives: Even if a patient wants to change providers after a breach, they may find that:
- Competing providers in their area have also experienced breaches.
- Their insurance limits them to a specific network of providers.
- They must rely on the same insurer that was breached to cover medical costs.\n
- High Barriers to Exit: Healthcare relationships are complex. Patients often build long-term relationships with providers, making it difficult to switch, even after a breach.
2. Breaches Are the Norm, Not the Exception
- Frequency of Breaches: Data from the U.S. Department of Health and Human Services shows that millions of health records are exposed annually. Breaches occur so often that it becomes difficult to avoid impacted organizations.
- Perception of Inevitability: For many consumers, there’s an understanding that breaches are systemic, not isolated to specific companies. This diminishes the trust advantage for organizations that have not yet experienced a breach.
- Equity in Risk Exposure: Even smaller providers and insurers face the same risks, as they often rely on the same IT infrastructure or business associates as larger players.
3. Inadequate Consumer Remedies
- Limited Recourse for Victims: When PHI is exposed, patients typically:
- Receive a notice of the breach.
- Are offered identity monitoring services for a limited time (e.g., one or two years).
- Rarely receive compensation or tangible assurances of better security practices going forward.
- Long-Term Impacts: Unlike credit card fraud, which can often be resolved quickly, PHI breaches have long-lasting consequences. Health data can be used in fraudulent medical claims, for blackmail, or even in employment discrimination, and victims have little power to prevent these outcomes.
4. Lack of Accountability for the Industry
- Regulatory Gaps: As discussed earlier, the enforcement of HIPAA violations often emphasizes corrective action over punitive measures. While this helps organizations improve, it doesn’t create strong disincentives to prevent breaches.
- Cost of Non-Compliance vs. Cost of Compliance: Some organizations calculate that the cost of fully securing their systems outweighs the risk of fines or reputational harm from breaches.
- Systemic Dependencies: Many healthcare organizations rely on third-party vendors, such as billing companies or IT service providers, which may also be breached. This creates a chain of risk where accountability is diffused.
5. What Can Be Done?
To address these issues, several changes could improve the situation for consumers and the industry:
- Stronger Regulatory Enforcement: Increasing fines for breaches, particularly for repeated violations or systemic negligence, could encourage better compliance.
- Transparency Requirements: Requiring organizations to publish detailed reports on their cybersecurity practices could push providers and insurers to adopt stronger measures.
- Universal Standards for Vendors: Creating stricter standards for third-party vendors could reduce the risk of breaches in the supply chain.
- Consumer Protections: Implementing long-term identity protection and credit monitoring services as a standard remedy for victims.
- Decentralization of Healthcare IT Systems: Encouraging the use of localized or decentralized IT systems could reduce the scope of breaches.
6. MSPs’ Role in Improving Security
MSPs can play a key role in addressing systemic issues by:
- Providing high-quality IT compliance solutions to ensure healthcare clients meet and exceed HIPAA standards.
- Advocating for cybersecurity best practices with insurers, providers, and vendors to protect patient data.
- Educating clients about the long-term costs of poor security versus the benefits of robust, proactive compliance measures.
Conclusion
While the lack of practical alternatives for large healthcare providers may result in them feeling insulated from the repercussions of data breaches, this is not so for the thousands of smaller healthcare entities who face consequential risks, including reputational damage that leads directly to a loss of business. Managed Service Providers (MSPs) can play a crucial role in mitigating these threats by implementing robust security measures, ensuring compliance with regulations, and safeguarding patient data, thereby preserving the trust and viability of smaller healthcare organizations. This reality underscores the need for stronger accountability measures, better consumer protections, and industry-wide improvements in cybersecurity. MSPs can be a critical part of the solution, ensuring that healthcare organizations prioritize patient privacy and compliance in an increasingly interconnected world.
Related Reading:
OCR and HHS: Effective HIPAA Enforcers or Paper Tigers?: Despite frequent data breaches, HIPAA fines remain rare. The OCR prioritizes voluntary compliance, risk assessments, and corrective actions over punitive penalties.
Who implements and collects fines for HIPPA breaches?: The Office for Civil Rights (OCR) enforces HIPAA by investigating violations and imposing fines. Learn how penalties are determined and what factors influence them.
