Data Breach Consequences: Impact and Cost Analysis

The collection of patient health information is a crucial part of delivering quality healthcare services to patients. It enables healthcare organizations and professionals to deliver accurate and effective care by starting with a proper diagnosis. The organizations that collect the data are responsible for ensuring the protection of such data as mandated by the law. A data breach happens with more frequency than most would think, and many of these happen unintentionally. It's important to understand the consequences of a data breach to improve your existing security controls and avoid unintentional violations.


Important Data Breach Statistics

A look into the data health breach statistics will give you an insight into the frequency and severity of its occurrence. Moreover, it will help you understand the most common causes for such violations so you can devise ways to prevent them.

Below are some of the important statistics that are published in the HIPAA Journal:

  • From 2009 to 2021, the number of data breach cases has been steadily on the rise.

  • The year 2015 recorded the highest number of individuals affected by healthcare data breaches. The number of affected individuals reached nearly 120 million.

  • The highest average data breach size from 2009 to 2021 was in the year 2015, with more than 400,000 cases.

  • The median data breach size in 2021 was 4,128 cases.

  • The most common type of breaches over the same 12-year period are hacking and IT incidents.

  • The number of healthcare hacking incidents has also continuously grown between 2009 and 2021. From only 8 hacking incidents in 2010, the total number of hacking incidents in 2021 was 528.

Data Breach Consequences for Healthcare Entities


Data Breach Consequences for Healthcare Entities

A data breach is the external exposure of confidential patient health information. There are several causes for this incident such as hacking by unauthorized parties with the malicious intent of stealing information. However, not all data breaches are external as they can also be a result of an employee's unauthorized disclosure of patient information to other employees or those outside of the organization.

Why is the healthcare industry a target for hackers? This is because the organizations hold sensitive patient information such as personal, financial, and medical data. These data can be used in various ways or sold to third-party organizations for considerable compensation. It can also be used for conducting criminal activities. Therefore, the HIPAA law is serious about enforcing the data breach policies in order to avoid harmful consequences.

With the rising number and increasing threat of hacking incidents, organizations need to reflect on the consequences of data breaches.


Cost Analysis of Data Breaches

The financial impact of a data breach is one of the main areas of discussion. A breach financially impacts the offending healthcare organization and the patients. According to this Experian report, the average cost of each compromised healthcare record is $211. This amount does not even take into account the potential fines that the organization will have to pay for the breach based on the HIPAA Security Rule.

Speaking of the fines, healthcare organizations involved in the data breach face potential criminal and civil monetary penalties. The maximum fine for a data breach is $1.5 million per year. These costs can add up quickly, particularly when the organization faces lawsuits from the patients whose data were compromised during the breach.

There are also added costs involving hardware and software upgrades. These measures are part of the commitment to avoid future security breaches and to close any security gaps.


Legal Obligations After a Data Breach

The legal complications add to the cost that healthcare organizations must face in the event of a breach. As part of your legal obligation, you must notify the affected parties about the breach. This notification requirement of the HIPAA Breach Rule provides the details for the legal actions that must be taken following federal standards.

Upon the discovery of a breach, the healthcare organization must notify each individual affected by the unsecured patient health information. The notification must detail the event that happened (date of the breach and the date of the discovery, if possible), the type of breached information, and the steps taken to address the breach and prevent potential harm. The organization should also provide contact procedures for individuals who are affected by the data breach.

The healthcare organization must notify the media if the breach exceeds 500 affected individuals. The organization must also notify the US Department of Health and Human Services. The notice should be given through e-mail or written notice (or both).

There is a timeline to follow for providing the required notices. For example, the healthcare entity must notify affected individuals and other applicable parties within 60 calendar days from the date of the discovery. This timeline also applies to business associates.

Legal Obligations After a Data Breach


Loss of Patient Trust

The laws exist to safeguard patient health information and prevent unnecessary access to confidential information. But perhaps the biggest consequence of a data breach is the loss of patient trust in the organization. Reputational harm is difficult to recover from, no matter how big or small the breach was. Therefore, hospitals and healthcare entities should never take privacy issues lightly.

Regardless of how well an organization responds to the data breach, or how well it assures patients that the same incident will not occur again in the future, there is no way to deal with the patient's loss of trust. The reputation fallout is one of the inevitable consequences of a data breach.

The consequences reiterate the value of security and monitoring tools in healthcare organizations. Technology has greatly improved over the years and has been designed to mitigate the risk of a potential data breach. There are healthcare compliance tools and programs that you can implement at every level of your organization to ensure that there are no weak areas. A regular assessment is also a must to avoid potential theft of patient health information, whether caused by internal or external parties.

Taking a proactive step is always recommended. As mentioned above, even the best response procedure is not equal to preventing data breaches, if you want to maintain your patient's trust and confidence.