Healthcare is one of the most highly regulated industries, and for good reason: health and lives are at stake.
Moreover, healthcare has been undergoing global transformation in recent years with a drive towards digital-first services, which has encouraged greater data sharing across industries and supply chains, but also revealed uneven levels of security maturity, meaning an increased cyber risk challenge and an increasingly complex web of regulations.
A recent study by UK-based cybersecurity firm Sophos revealed that around 60% of healthcare institutions around the world will experience cyberattacks in 2023. This figure includes some of India’s premier healthcare institutions, such as the All India Institute of Medical Sciences (AIIMS) and the Indian Council of Medical Research (ICMR). The cyberattack on ICMR alone could expose personally identifiable information (PII) of around 810 million Indians, making it one of the most significant data breaches in Indian history.
Additionally, as the healthcare sector evolves and expands into areas such as health insurance and insurtech, new risks continue to emerge.
In this article, we discuss five major risk and compliance challenges facing the healthcare industry and strategies to overcome them.
1. Regulatory Compliance
Globally, the healthcare sector is regulated by various frameworks such as the Health Insurance Portability and Accountability Act (HIPAA), HITECH Act, 21st Century Cures Act, General Data Protection Regulation (GDPR), etc. Most of these regulations focus on protecting the privacy of patient data, ensuring data security, controlling access to information, and protecting against cyber threats.
In India, key regulations include the Clinical Establishments Act, Medical Council of India guidelines, and specific laws such as the Drugs and Cosmetics Act, 1940, the Consumer Protection Act, 2019, and the Telemedicine Practice Guidelines, 2020.
In addition to these, healthcare providers must comply with a variety of federal, state, and local regulations that may be frequently updated to address the changing risk landscape. Ensuring compliance with these standards and meeting accreditation requirements is a complex and demanding task.
2. Enterprise Risk Management
Healthcare providers must address a variety of risks specific to their field while strictly adhering to relevant regulations. Beyond compliance, they also face risks related to patient care and safety, where any non-compliance could lead to significant legal, financial and reputational damage. Risks associated with medical devices and equipment are also a concern, including potential failures that could impact patient care.
Providers must also be aware of risks associated with claims management, fraud, false claims, etc. Regular risk assessments are essential to identify and mitigate potential compliance issues and threats.
Additionally, a comprehensive incident management process is essential for rapid and effective crisis response. Effective risk management is essential for business operations, third-party risks, cybersecurity, ESG concerns, and health hazards. The healthcare industry needs to move from a reactive, compliance-focused approach to proactive risk management to thrive in this complex landscape.
3. Data Privacy
Patient health data is sensitive and must be protected under strict security, privacy and protection laws. Healthcare providers must ensure their technology systems comply with regulatory standards.
However, in the face of cyber threats, protecting patient information is becoming increasingly difficult. Organizations must ensure that their electronic health record systems are up to date, secure, and compliant with regulatory standards. It is critical that these systems not only support secure data exchange, but also maintain interoperability between different healthcare platforms while protecting data privacy. Keeping technology systems up to date and compliant with the latest security and regulatory standards is essential to protecting patient information and ensuring robust compliance.
The threat landscape is constantly changing, with malicious actors increasingly using advanced technology to carry out sophisticated attacks.
Moreover, while advanced AI technologies have the potential to transform healthcare, their use also comes with significant risks, especially when it comes to data breaches. AI platforms handle vast amounts of sensitive information, making security vulnerabilities a potential target for malicious actors. Healthcare providers who use AI must be vigilant against these risks and adopt strong data protection measures to safeguard patient information.
4. Third Party Risk Management
Healthcare organizations rely on many external vendors, from cloud service providers and billing companies to medical equipment manufacturers and suppliers. Many of these vendors have access to sensitive medical data, creating significant security vulnerabilities that hackers can exploit.
In addition to security risks, healthcare providers must monitor third parties for operational and ethical issues, such as potential disruptions to healthcare services, anti-money laundering (AML) practices, bribery, and other wrongdoing. Vendors must comply with data protection and privacy regulations, and healthcare organizations are responsible for ensuring their partners comply with these regulations and maintain robust risk management practices.
5. Ongoing monitoring and reporting
The healthcare regulatory environment is constantly changing, requiring providers to ensure rigorous and error-free compliance. Continuous monitoring is essential to effectively manage evolving regulations. Healthcare organizations need to stay current on regulatory changes and quickly integrate new rules into existing practices and controls.
Real-time assessment and timely decision-making require automated, continuous risk assessment, which in turn requires strong internal controls to manage risk and ensure compliance. Automated processes must be in place to onboard new third parties and conduct due diligence to prevent compliance gaps. Regular digital audits and continuous monitoring of compliance processes are also essential.
Maintaining detailed compliance reports, security event logs, and maintaining consistent communication with regulators are key responsibilities for healthcare organizations.
Key Takeaways
In the highly regulated healthcare sector, adopting a streamlined approach to governance, risk, and compliance (GRC) is crucial. Advanced solutions can help healthcare organizations improve their ability to manage regulatory compliance, enterprise risks such as cyber and third-party risks, and internal audits. This can lead to greater visibility into risks, faster response to emerging risks, and more informed decision-making.
These solutions enable organizations to automate regulatory change management, digitize GRC activities across lines of business, and strengthen cyber resilience.
