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HIPAA: The Costs of Compliance vs. Non-Compliance

The costs of HIPAA compliance can be high. Today, we’ll take a look at the necessary expenditures required to maintain HIPAA compliance. While the costs of compliance might be high, the costs of non-compliance may be much higher.

Estimated Costs of HIPAA Compliance

In a revealing article on Medical News, Dr. Kim-Lien Nguyen reports that the cost of HIPAA compliance approximately amounts to $8.3 billion per year.

Scaling down to the individual level, each practitioner in our nation spends approximately $35,000 each year to maintain the health information technology necessary to keep a digital hold on HIPAA.

Note that these figures are estimates; however, the real costs cannot necessarily be approximated because there are always unknown amounts of burden on personnel and general stress associated with compliance.

The costs in this regard are unclear, considering the fraught issues relating to the “bureaucracy” that the act might impose upon patients and medical staff. Consider the issues that arise when patients and medical staff are trying to give each other access to important medical information.

Factors Influencing Monetary Cost

Considering the wide range of organizations that must operate within the realm of the HIPAA Act, it becomes evident that each scenario is unique with regard to cost.

The specific type of organization can determine its cost of compliance. For example, consider the differing risk levels of a healthcare clearinghouse compared to a community hospital. Both organizations are subject to risk, yet each has different factors influencing its needs with regards to protecting information.

Along those same lines, the size of the organization will affect the cost of compliance.

Typically, a larger organization is more unwieldy, with more moving parts and requiring extra resources devoted to compliance. Larger organizations unfortunately contain more potential points of “exploitation” with all these moving parts. There’s a greater amount of potential vulnerabilities that might arise in the processes, programs, and workforce of a sizable organization.

The cost of HIPAA compliance will also vary based on an organization’s culture. A hesitant culture—one that’s been slow to adopt new processes and procedures—may simply have more distance to scale in an effort to keep up with the changes. This culture might be scrambling to deal with updates to the way that things are done. Additionally, some hesitant cultures—looking to keep things small—might not consider the need to hire sufficient personnel dedicated to the cause of compliance.

Some organizations might also find themselves behind the curve when it comes to their technological environment. The types of firewalls, servers, and computing systems in play at an organization can influence its vulnerabilities.

The Cost of a Breach

Although the cost of being proactive about HIPAA security is certainly high, the cost of being reactive is infinitely higher.

It’s essential to have a medical security provider in place.

Consider the cost of just one violation per year: approximately $1.5 million. Now, add in the FTC fines, which are $16,000 per violation, and you’ve just raised the stakes even further. Be sure to factor in the cost of the state attorney general, which can amount to over $6.5 million.

Other potential expenses in the case of a violation include class action lawsuits, lawyers’ fees, cost of ID theft/credit monitoring for patients, repairs to existing technology, changes of business associates, and more.

Of course, a security violation can also wreak havoc on the reputation of a practice. Consider the monetary loss of over 40% of patients to a practice, which can occur when a practice is no longer trusted and respected in the community.

It’s of the utmost importance to have trusted medical security providers in place to prevent a possible breach.

Avoiding the Dangerous Costs

HIPAA compliance might come with a cost, yet the costs of ignoring healthcare information security are much higher.

Having the right security and compliance systems in place will make all the difference in the financial security of any organization that deals with medical records.

Looking for security and compliance services for HIPAA, PCI and more? We have offices in Fort Lauderdale, Orlando, New York City, Long Island, and Los Angeles.

Contact a technical advisor today to provide you with the support you need.

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