Modern healthcare heavily relies on third-party vendors for various services such as IT solutions, supply chain logistics, and more. As healthcare organizations increasingly collaborate with external entities as business associates, it creates several dependencies and risks. The risk of third-party involvement is a constant concern for healthcare organizations, with high stakes. Patient safety, data security, and regulatory compliance are all crucial factors that are at risk. Therefore, having an effective third-party risk management program is not just a matter of best practice but of utmost necessity.
This blog post is a complete guide to third-party risk management (TPRM) in healthcare. It includes a detailed analysis of the challenges, strategies, and best practices for ensuring the partnerships healthcare organizations engage in do not compromise their operational integrity, patient privacy, or legal obligations. Our goal is to provide healthcare professionals, IT security experts, and administrative personnel with the necessary tools and insights to navigate this critical aspect of healthcare management.
The Landscape of TPRM in the Healthcare Industry
The healthcare industry is constantly evolving, and one of its critical concerns is Third-Party Risk Management (TPRM). TPRM involves identifying, analyzing, and controlling risks associated with external entities that provide services or products to an organization. The TPRM landscape in healthcare includes the many roles third parties play and the regulations governing those relationships. Any healthcare entity needs to understand this landscape to safeguard its operations, reputation, and, most importantly, the well-being of its patients.
Third-Party Roles in Healthcare
Third-party partnerships are crucial in the healthcare industry. They offer essential services, including clinical support, data management, and supply chain logistics. However, such partnerships also come with inherent risks. Every third-party agreement adds to healthcare providers' operational, financial, and reputational risks.
For instance, a vendor handling electronic health records (EHR) must prioritize data security due to the sensitive nature of patient information. The interconnected ecosystem of these relationships means that a failure or breach in one area can have far-reaching consequences, underscoring the importance of effective risk management strategies in this sector.
Regulatory Compliance and Standards
Navigating the complex world of regulatory compliance and standards is a challenging yet necessary part of third-party risk management in healthcare. These regulations are in place to safeguard patient data, ensure solid information security, and uphold ethical practices. Healthcare organizations must comply with many regulations, such as the Health Insurance Portability and Accountability Act (HIPAA) in the United States and the General Data Protection Regulation (GDPR) in the European Union.
Compliance with these regulations ensures legal adherence and helps build trust with patients and partners. Additionally, organizations can utilize cybersecurity frameworks like NIST to increase their security posture. These regulations require strict data protection measures, frequent audits, and transparent reporting mechanisms. As a result, healthcare providers must ensure that their third-party partners comply with these regulations and stay up-to-date on evolving standards and regulations.
Recommended Reading: Top 8 Healthcare Cybersecurity Regulations and Frameworks
Notable TPRM Incidents in Healthcare
The healthcare industry has experienced significant incidents due to poor third-party risk management. Each of these incidents serves as a stark reminder of the risks involved in the industry and the need for robust risk management practices. As a result, it is crucial to have continuous monitoring, regular audits, and a comprehensive incident response plan that includes third-party vendors in the broader security architecture of the healthcare entity.
Some notable third-party incidents in healthcare include the following:
- Quest Diagnostics Data Breach, 2019: Quest Diagnostics, a US blood testing provider, reported a potential compromise of the personal data of 11.9 million patients. The breach happened through a third-party billing firm, AMCA, which had unauthorized access to its payment system. Information exposed included personal, financial, and medical details.
- Anthem Inc. Data Breach, 2015: In 2015, hackers infiltrated Anthem Inc., a major health insurance company, and exposed the personal information of nearly 78.8 million customers. The breach was traced back to a third-party service provider, where hackers used a phishing email to install malware.
- Community Health Systems Data Breach, 2014: In 2014, Community Health Systems, one of the largest hospital networks in the United States, suffered a data breach that affected 4.5 million patients. Hackers exploited network vulnerabilities traced back to a third-party vendor's credentials. The exposed patient data included names, Social Security numbers, addresses, birthdates, and phone numbers.
Risk Identification and Assessment
Third-Party Risk Management is imporant for ensuring security in the healthcare industry. Identifying and assessing risks is the first step in developing a strong security strategy. Discovering, evaluating, and understanding the risk associated with third-party relationships is critical for maintaining operational integrity and safeguarding patient data, especially in a sensitive and heavily regulated field like healthcare. This includes the types of risks, the unique cybersecurity challenges faced by the healthcare industry, and the methods used to evaluate these risks effectively.
Identifying Potential Third-Party Risks
Identifying potential risks associated with third-party vendors is the first and most crucial step in third-party risk management. Identifying these risks is crucial for proactive management in the healthcare industry, where patient information and care are paramount.
The risks associated with third-party vendors in healthcare can be varied and diverse, ranging from high-risk data breaches and non-compliance with regulations to operational risks and damage to the organization's reputation. Key areas of risk include:
- Data Security
- Compliance with Healthcare Standards (resulting in financial risk for non-compliance)
- Continuity of Critical Services
To identify and manage these risks, healthcare organizations must understand the nature of the vendor's services, the data they access, and the potential criticality of their actions or failures on the organization's operations and obligations.
Cybersecurity Challenges in Healthcare
The healthcare industry is highly susceptible to cybersecurity risks, making evaluating potential digital risks in third-party relationships crucial. Cybercriminals frequently target healthcare organizations due to the large amount of protected health information (PHI) they possess. Common cybersecurity challenges include:
Even if a hospital or healthcare facility has secure cybersecurity measures, third-party vendors can become vulnerable—providing attackers with an entry point into otherwise secure systems. The interconnectedness of digital healthcare services further complicates this issue. If one system is breached, it can have ripple effects across multiple platforms and services. Therefore, it is crucial to understand third-party security to maintain patient trust and comply with data protection regulations.
Risk Assessment Methods
Effective vendor risk assessment is crucial for identifying and quantifying the risks associated with third-party vendors in the healthcare industry. The risk assessment process occurs throughout the vendor lifecycle, from onboarding through offboarding, and involves a systematic approach, including identifying, analyzing, and evaluating risks. Organizations can also avoid emerging threats by keeping up with the latest cybersecurity trends and continuously updating risk assessment methodologies in their TPRM program.
Other third-party risk assessment methods include:
- Conduct thorough due diligence before onboarding vendors
- Continuous monitoring of vendor activities
- Conduct regular security audits
- Leverage tools like risk-scoring systems and Vendor Risk Management checklists.
- Maintain transparent communication with vendors regarding security requirements and expectations.
Top 10 TPRM strategies to protect patient data in healthcare
Below are the top 10 TPRM strategies for protecting patient data in healthcare. Organizations should audit these strategies against their current TPRM capabilities and implement some or all to enhance their overall TPRM program and protect patient data.
1. Due diligence and vendor assessments
Third-party risk management is crucial for healthcare organizations to protect patient data. Entities should perform due diligence and vendor risk assessments before partnering with third-party vendors and throughout the vendor lifecycle. These assessments should include a review of the vendors' compliance certifications (such as HIPAA), security policies, and historical incident records to ensure their data security practices align with organizational standards.
Conduct regular third-party risk assessments to provide ongoing oversight. These risk assessments include security questionnaires, performance reviews, and penetration testing to identify and address vulnerabilities. These strategies ensure that third parties consistently adhere to regulatory standards when handling sensitive patient data. Ultimately, this strategy helps reduce the risk of data breaches and ensures a robust security posture for healthcare organizations.
2. Contractual agreements
Safeguarding patient data includes forming contractual agreements or service-level agreements (SLAs) with vendors that explicitly define the information security practices, compliance requirements, and data protection standards expected of them. The contracts should specifically mention clauses related to breach notification timelines, encryption standards, access control, and the right to audit.
By establishing clear responsibilities, consequences, and remediation measures for non-compliance or a breach, healthcare organizations can hold vendors and business associates accountable while mitigating risks. These comprehensive contracts can legally ensure that third-party vendors align their security practices with the organization's data protection goals, thus minimizing vulnerabilities and enhancing patient data security.
3. Access control
Access control is a crucial strategy in third-party risk management to safeguard patient data in health systems. By applying the principle of least privilege, organizations limit third-party vendors to only the necessary access required to perform their functions, thereby minimizing the exposure of sensitive information.
Role-based access control (RBAC) grants permissions based on job responsibilities, ensuring each user has appropriate access levels. In addition, multi-factor authentication (MFA) adds an extra layer of security to verify users, while logging and monitoring tools help identify any unauthorized access attempts.
Implementing stringent access controls ensures that only authorized personnel handle protected health information (PHI), reducing the likelihood of healthcare data breaches and ensuring regulatory compliance.
4. Continuous monitoring
Continuous monitoring is another critical aspect of third-party risk management that healthcare organizations can implement to safeguard patient data. This ongoing monitoring involves regularly auditing service providers' activities, keeping track of access logs, and scanning for potential vulnerabilities to identify security threats early.
Vendor monitoring tools can utilize automation to analyze behavior patterns and flag suspicious activity, triggering real-time alerts and swift responses to unauthorized data access. Periodic assessments and penetration testing further ensure that third-party security measures remain effective. By adopting a proactive approach through continuous monitoring, healthcare organizations can promptly identify and resolve risks, ensuring compliance with data protection standards and minimizing the chances of security breaches.
5. Fourth-party risk management
Fourth-party risk management is an important aspect of third-party risk management for healthcare organizations that want to protect their patients’ data. This approach involves identifying and evaluating the vendors that third parties rely on, also known as fourth parties, to ensure that they comply with strict data security standards.
By understanding the complete supply chain, healthcare organizations can assess how data moves through the ecosystem and where vulnerabilities might occur. Establishing clear communication channels and requiring contractual agreements that cascade security requirements down to fourth parties are crucial steps. Regular assessments and audits should be conducted to verify compliance and identify potential risks.
By implementing fourth-party risk management, healthcare organizations can ensure that security measures extend beyond their direct third-party vendors, effectively reducing the risks of data breaches and safeguarding sensitive patient information throughout the entire network.
6. Security awareness training
Security awareness training ensures that healthcare organizations and vendors protect patient data effectively. The training educates third-party staff on recognizing and responding to healthcare cybersecurity threats like phishing, social engineering, and malware. These threats often target healthcare systems due to the value of sensitive patient information.
Employees can also learn about organizational policies, regulatory requirements, and best practices for handling protected health information (PHI). Regular refresher courses and assessments help reinforce this knowledge and keep personnel updated on emerging threats. By integrating a culture of security awareness through comprehensive training, healthcare organizations can significantly reduce the risk of data breaches and ensure that all parties involved are vigilant and compliant.
7. Encryption
Encryption is a vital TPRM strategy to secure patient data in healthcare. It ensures that sensitive information, whether in transit or at rest, is only accessible to authorized users. By using strong encryption protocols like the Advanced Encryption Standard (AES), healthcare organizations can protect data exchanged with third-party vendors from being read or tampered with by unauthorized entities.
End-to-end encryption ensures that data remains secure from the point of origin to the intended destination, while encrypted backups provide an additional layer of safety. Proper encryption practices, robust key management, and periodic audits prevent breaches and help maintain compliance with data protection regulations like HIPAA. This security control significantly reduces the risks posed by third parties, ensuring that patient data remains confidential even during a security incident.
8. Data minimization
Data minimization is a highly effective strategy for managing third-party risks in the healthcare industry. This strategy involves limiting the amount of patient data shared with third-party vendors by only providing the minimum necessary data required for them to perform their specific services.
This approach helps to reduce the risks of unauthorized access and data breaches, which aligns with privacy regulations such as HIPAA. Additionally, healthcare organizations can employ data anonymization or pseudonymization techniques to ensure malicious users cannot easily trace sensitive patient information back to an individual. Healthcare organizations can enhance patient data security by adopting data minimization practices while effectively leveraging third-party services.
9. Regulatory compliance
Regulatory compliance is essential to third-party risk management in healthcare. Vendor compliance management plays a critical role in maintaining the security of patient data by ensuring third-party vendors adhere to strict industry standards, like HIPAA and the GDPR.
These frameworks enforce specific practices like encryption, breach notification, and data minimization to safeguard sensitive patient information. Healthcare organizations can use contracts and regular audits to verify that third-party vendors have implemented the required safeguards and maintain compliance. By aligning with these regulations and enforcing them across their vendor network, healthcare organizations can protect patient data and mitigate the risks of fines, reputational damage, and loss of trust.
10. Cyber resilience
Cyber resilience in healthcare third-party risk management includes both incident response and contingency planning. Incident response planning offers a structured framework to respond to breaches swiftly, minimizing the exposure of sensitive patient data. This involves collaborating with third-party vendors to define roles, communication channels, and responsibilities during security incidents. The plan outlines containment, eradication, and recovery steps while ensuring compliance with regulations like HIPAA. Regular simulations with third parties refine the plan, close gaps, and improve coordination. A well-developed incident response plan helps minimize the impact of breaches, notify affected individuals promptly, and restore secure operations quickly.
Monitoring and Responding to Third-Party Risks
Effective monitoring and incident response mechanisms are vital in managing Third-Party Risk Management in healthcare. Remaining vigilant and adopting proactive strategies to manage third-party risks is extremely important for any healthcare organization. Practices such as continuous monitoring and developing robust incident response and breach management strategies help organizations feel more secure should they encounter a third-party incident.
Ultimately, these practices are essential for promptly detecting, responding to, and mitigating the impact of any security incidents or breaches, thereby protecting healthcare operations and patient data.
Risks and Vulnerability Management
Healthcare organizations are taking proactive steps to mitigate third-party risks. They are identifying risks and vulnerabilities and implementing strategies to remediate them before they turn into threats. This multi-faceted approach involves regular and rigorous patch management to address software vulnerabilities and enforce robust compliance and security standards for third-party vendors.
Healthcare organizations are also leveraging advanced technologies, such as automated monitoring systems and AI-driven anomaly detection tools, to stay ahead of potential risks. Ongoing staff training and emergency preparedness drills ensure readiness and resilience. These measures help to patch existing vulnerabilities and build a more secure and responsive infrastructure capable of preemptively addressing risks in the evolving healthcare landscape.
Continuous Monitoring
Continuous monitoring ensures the ongoing security and compliance of third-party vendors in the healthcare sector. The cybersecurity landscape of healthcare can shift day to day, and risks can evolve rapidly. Therefore, continuous monitoring of third-party vendors is essential.
This involves regularly assessing the vendor's compliance with agreed-upon security standards and contractual obligations. Monitoring can include automation streamlining tools, periodic security audits, review of compliance reports, and real-time surveillance of network activities. It's also important to stay aware of changes in the vendor's business environment, such as mergers, acquisitions, or leadership changes, which could impact their risk profile. Regular communication with vendors and stakeholders to discuss any concerns or changes in risk status is equally important.
Incident Response and Breach Management Strategies
The most effective way to prevent data breaches is through proper preparation. However, even the most prepared organizations must be equipped to handle third-party data breaches and other security incidents.
A well-defined incident response and breach management strategy can help effectively address any security incidents involving third-party vendors in the healthcare industry. An effective incident response strategy should include the following:
- Roles, responsibilities, and actions that need to be taken in the event of a security breach
- Immediate steps for containment
- Assessment of the incident’s impact
- Notification procedures (internal and external)
- Remediation measures
- Communication channels with third-party vendors for quick information exchange
The strategy should also include post-incident analysis to identify lessons learned and opportunities for improving security practices. Regular drills and simulations involving internal teams and third-party vendors can help ensure readiness and refine the response strategy. Additionally, having a breach management plan that complies with legal and regulatory requirements, such as HIPAA's breach notification rules, is critical for maintaining legal compliance and patient trust.
How UpGuard Helps Healthcare Organizations Meet TPRM Requirements
UpGuard offers healthcare organizations comprehensive risk assessment tools to identify and mitigate potential cybersecurity vulnerabilities and support for third-party risk management programs. The platform provides two options, BreachSight and Vendor Risk, to evaluate the security performance of users or their vendors. Based on the assessment results, practical workflows can be developed to reduce the attack surfaces and enhance security.
For healthcare providers specifically, UpGuard is an excellent option that also emphasizes the following:
- Continuous Monitoring: Conduct continuous cyber and business monitoring to reveal potential vendor risks and inform prioritization and risk awareness
- Healthcare Regulatory Compliance: Protect confidential clinical and patient data from modern cyber threats and ransomware
- Patient Data Protection: Healthcare organizations are responsible for safeguarding valuable patient data, making it a target for cyber attackers
- Vendor Risk Management: UpGuard helps you assess, remediate, and manage third-party risks across your healthcare vendors
