Data Breaches Cost Hospitals $6 Billion Per Year

November 09, 2010 CS Staff

TRAVERSE CITY, Mich. and PORTLAND, Ore. – A recent study by the Ponemon Institute finds that data breaches of patient information cost healthcare organizations nearly $6 billion annually, and that many breaches go undetected. The research indicates that protecting patient data is a low priority for hospitals and that organizations have little confidence in their ability to secure patient records, putting individuals at great risk for medical identity theft, financial theft and embarrassment of exposure of private information. The study was sponsored by sponsored by ID Experts.

The passage of the HITECH Act in 2009 widened the scope of privacy and security protections under HIPAA to provide stronger safeguards for patient data. This includes notification to patients when their information is breached.

“Our research shows that the healthcare industry is struggling to protect sensitive medical information, putting patients at risk of medical identity fraud and costing hospitals and other healthcare services companies millions in annual breach-related costs,” said Dr. Larry Ponemon, chairman and founder, Ponemon Institute. “At this point one would hope to see that healthcare organizations have improved information security practices and come into compliance with HITECH, now that it’s been more than one year since it was enacted. Instead we found enormous vulnerabilities. The protection of patient data should be at the forefront of their efforts.”

Key findings of the research:

Data breaches are costing the healthcare system billions. The total economic burden created by data breaches on the healthcare industry is nearly $6 billion annually. The impact of a data breach over a two-year period is approximately $2 million per organization and the lifetime value of a lost patient is $107,580. The average organization had 2.4 data breach incidents over the past two years. Major factors causing data breaches are unintentional employee action, lost or stolen computing devices and third-party error.
Healthcare organizations are not protecting patient data. Organizations have little or no confidence in their ability to appropriately secure patient records (58 percent). Healthcare organizations have inadequate resources (71 percent) and insufficient policies and procedures in place (69 percent) to prevent and quickly detect patient data loss.
Protecting patient data is not a priority. Seventy percent of hospitals stated that protecting patient data is not a top priority. Patient billing (35 percent) and medical records (26 percent) are the most susceptible to data loss or theft. A majority of organizations have less than two staff dedicated to data protection management (67 percent).
HITECH has exposed the healthcare industry’s lax data protection practices rather than improved the safety of patient records. The majority (71 percent) of respondents do not believe the HITECH Act regulations have significantly changed the management practices of patient records. The findings indicate that there is a significant number of data breaches that go undetected, and therefore unreported.

“We talk with healthcare compliance people dealing with data breach risks every day and they just can’t get their arms around the problem of data exposure,” said Rick Kam, president and co-founder of ID Experts. “Unfortunately, in healthcare organizations, patient revenue trumps risk management.”

Read the full press release.

Review the study.

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