A recent report by risk advisory firm Kroll (Kroll Data Breach Outlook 2025: Healthcare Most Breached Industry) reveals that healthcare has become the most frequently breached industry, accounting for 23% of all data breaches—up from 18% in 2023. Kroll also noted weak incident response practices, which not only amplify the damage of breaches but also make healthcare an even more attractive target for cybercriminals.
A High-Risk Industry with Compliance Gaps
The healthcare sector remains alarmingly vulnerable, primarily due to widespread non-compliance with HIPAA security regulations. According to the latest government data, 94% of healthcare organizations fail to fully comply with HIPAA (HHS.gov). While most providers meet HIPAA’s privacy requirements, compliance with the Security Rule—which governs risk management and cybersecurity—is significantly lacking.
A key component of the Security Rule is the HIPAA Risk Assessment, an annual evaluation performed by qualified professionals. This assessment:
✔ Identifies threats and vulnerabilities
✔ Assesses likelihood and impact
✔ Assigns risk scores based on severity, probability, and compliance implications (45 CFR § 164.308(a)(1)(ii)(A))
The results are then presented to senior leadership, ensuring executives understand their organization’s security risks. This proactive approach allows healthcare leaders to address vulnerabilities before they escalate, just as they would any other business challenge.
The Dangers of Interconnectivity in Healthcare
HIPAA compliance is not just a legal requirement—it is a critical risk management strategy. The healthcare industry is highly interconnected, meaning a breach in one organization can jeopardize multiple entities. Consider these common scenarios:
- A dentist’s office connected to a third-party billing provider
- A skilled nursing facility integrating its electronic health records (EHR) with a laboratory system
- A smart scale automatically transmitting patient data to an EHR
- A pharmacy’s e-prescribe system linking to broader healthcare networks
Each of these connections introduces cybersecurity risks. As demonstrated by the massive Change Healthcare breach, cybercriminals can exploit a single weak link to compromise an entire network. To reduce these risks, healthcare organizations must prioritize internal HIPAA risk assessments and rigorously evaluate third-party vendors.
Cyber-Risk Insurance: No Longer a Guaranteed Safety Net
Many healthcare organizations have relied on cyber-risk insurance as a safety net, assuming it would shift liability to insurers. However, insurers have become more selective, increasingly demanding:
✔ Evidence of strong security controls
✔ HIPAA Risk Assessments
✔ Third-party security audits before approving or renewing coverage
Organizations that fail to meet security requirements may find it difficult to secure coverage or may face substantially higher premiums.
Even Small Providers Face Serious Consequences
HIPAA enforcement actions aren’t limited to large hospitals or major breaches. Small healthcare providers, including solo practitioners, have faced fines and penalties for compliance failures.
🔹 Dr. Donald Brockley, D.D.M., a solo dental practitioner in Pennsylvania, faced enforcement action for failing to provide a patient with access to their medical records (Source).
🔹 According to ProPublica, small-scale breaches—sometimes affecting just one or two patients—are becoming increasingly common and can cause significant harm (Source).
Non-Compliance and Breaches Damage More Than Just Finances
Even if a provider has not experienced a data breach, HIPAA non-compliance can still result in fines, regulatory scrutiny, and loss of trust. Take Metropolitan Community Health Services (Metro), which operates as Agape Health Services in North Carolina:
In 2020, Metro agreed to a $25,000 settlement with the Office for Civil Rights (OCR) due to multiple HIPAA Security Rule violations. Metro failed to:
- Conduct a comprehensive risk analysis to assess vulnerabilities in patient data security (Source).
- Implement risk management and audit controls, leaving the organization vulnerable to security threats (Source).
- Maintain HIPAA-compliant policies and procedures to ensure security compliance (Source).
Reputation Damage is a Major Concern
Beyond financial penalties, a breach or compliance violation can severely damage an organization’s reputation. Patients expect their sensitive health information to be protected, and when a breach occurs, trust is difficult to regain.
- A single breach can drive patients away, leading to lost revenue and credibility.
- Negative media coverage can harm a provider’s standing within the community.
- Business partnerships may be affected, as vendors and insurers become wary of working with non-compliant organizations.
In today’s digital landscape, maintaining trust is as critical as ensuring compliance. Healthcare leaders must recognize that cybersecurity is not just an IT issue—it’s a fundamental business risk.
Securing Healthcare in a Digital World
With technology playing an increasingly central role in patient care, HIPAA Risk Assessments and robust security controls are more critical than ever. Healthcare organizations must take a proactive approach to:
✔ Protect patient data
✔ Secure their networks
✔ Stay compliant with evolving regulations
At MBA, we specialize in HIPAA compliance and information security. Our team has successfully implemented security frameworks across healthcare and other industries, and we can help ensure your organization meets regulatory requirements.
