Data breaches can be devastating for healthcare organizations. Not only do these incidents disrupt your operations, but they can also cause significant financial losses that are difficult to overcome.
Threat actors often focus their efforts on healthcare providers because of the sensitive, personal data they work with.
According to IBM Security and the Ponemon Institute, the average cost of a healthcare data breach in 2024 was $9.8 million, meaning the cost of a data breach in the healthcare industry is higher than in any other industry.
Here’s a deeper look at the cost of a healthcare data breach for healthcare organizations.
Key Takeaways
- Healthcare organizations are very vulnerable to data breaches because they collect large volumes of patient data.
- Data breaches come with direct costs such as fines and remediation, as well as indirect costs like operational disruptions.
- A data breach can continue to affect your organization financially for a long time after the initial incident.
The Direct Costs of a Healthcare Data Breach
Most data breaches cause direct financial losses, which affect your organization immediately.
Immediate Financial Impact
A number of different cyberattacks can cause direct financial fallout.
For example, ransomware attacks require organizations to pay large sums of money to recover their health records. Some data breaches could even expose company bank account information, resulting in direct financial theft.
Healthcare is one of the most highly regulated industries, which means data breaches can result in a number of additional costs. Healthcare organizations have to adhere to HIPAA and other healthcare compliance standards.
When protected health information is exposed, you will be subject to fines. HIPAA fines vary in amount based on provider intent and the severity of the case. Fines are calculated using a tiered system. Tier 1 fines start at $100 per violation, while tier 4 fines start at $50,000 per violation, with two levels in between for moderate offenses.
Remediation Costs
Healthcare data breaches don’t just affect your organization—they also affect your patients. When a patients’ records are exposed, it leaves them vulnerable to identity theft and other cybersecurity threats.
As a result, you’ll need to conduct extensive remediation after the attack, which can be costly. Healthcare organizations are generally required to reach out to those who have been affected by data breaches, which requires time and resources.
You might need to hire more customer support staff to send out notifications and handle queries from your patients. In some cases, you may even be required to notify patients by mail, which can result in significant printing costs.
In some cases, your organization may be required by law enforcement to compensate patients financially if they were affected by the data breach, which can cause even more losses.
You might also opt to provide patients with credit monitoring and identity theft support, which is an even bigger financial burden.
The Indirect Costs of a Healthcare Data Breach
Data breaches in the healthcare sector also come with a number of indirect financial costs to be aware of.
Operation Disruptions
A data breach will cause significant disruption to your operations. This will likely result in a loss of revenue.
In many cases, healthcare providers need to shut down their systems temporarily to secure their servers and prevent further damage.
When systems are shut down, you may not be able to schedule appointments, bill insurance, or even provide care to patients. This means you’ll lose out on the revenue you would have made during this time.
In severe cases, you may even need to replace some of your critical infrastructure to get back up and running again. New security investments are incredibly costly on their own, but they also take time to select and install, resulting in even more operational delays.
Over the last year, we’ve seen just how much a data breach can affect healthcare operations.
In February 2024, a cyberattack on Unitedhealth Group subsidiary Change Healthcare resulted in a large-scale outage. This prevented many hospitals and other healthcare providers across the US from processing insurance claims for nearly a month.
Increased Insurance Premiums
As with many other businesses, healthcare organizations need liability insurance to operate safely. Some healthcare providers may even have cyber liability insurance, which is specifically designed to protect you financially in the event of an attack.
Unfortunately, if your health systems experience a data breach, monthly premiums for your insurance policy could go up significantly. This increased cost could have a significant impact on your budget, particularly for smaller organizations.
Long-Term Financial Costs
The financial damage from a data breach can continue to affect your organization for years to come. Here are some of the long-term financial consequences that come from data breaches.
Loss of Patient Trust and Business
Your patients rely on you to keep their medical records and personal information safe. A data breach will result in a serious loss of trust, as patients may no longer feel comfortable working with you.
After a data breach, some of your long-term customers may decide to switch to another healthcare provider. It may also be more difficult than usual to attract new customers. Today’s consumers have more choice when it comes to healthcare services than they did in the past.
Losing reliable patients could be devastating for your businesses’ finances. In severe cases, you may need to downsize your operations due to a loss of income.
Legal Costs
Depending on the scale of the data breach, your organization and specific employees involved could face criminal penalties and other severe legal challenges.
This means you will need to hire a legal team for professional guidance. Legal professionals with experience representing healthcare firms can come with a high price tag, particularly for large-scale data breaches.
In some cases, a data breach could result in a lawsuit from those affected. If your organization is found guilty, you could be responsible for paying thousands of dollars in damages.
Reputation Damage
A data breach can result in significant damage to your organization’s reputation, which can make it difficult to maintain business and keep up with your competitors.
To address reputational damage after a data breach, many healthcare organizations need to partner with expensive PR firms to take control of their brand image. It takes time for PR strategies to work, which can result in hefty bills.
Additionally, you may need to change your marketing strategy to find new patients and rebuild trust with consumers. These added marketing costs can also put strain on your budget.
How Can an MSP Help You Prevent a Data Breach?
To avoid the devastating financial consequences of a data breach, it’s important for brands to put cybersecurity strategies in place.
A managed IT services provider, or MSP, can help you protect your patient data and prevent data breaches. MSPs offer IT and cybersecurity services on a third-party basis, providing additional technical support that you wouldn’t get in-house.
Tech Advisors can help you build an expert cybersecurity strategy to protect you from hackers and help you remain compliant. Services can be customized to meet your needs, and can be scaled up or down over time as your organization grows.
The threat of a data breach is something that should not be ignored for healthcare organizations. An MSP serves as your cybersecurity experts so you can focus on what’s most important — providing quality care for your patients.
