Third-party data breaches are growing in prominence across the healthcare sector. In 2022, 55% of healthcare organizations suffered a third-party data breach, exposing the personal healthcare data of millions of individuals to malicious actors.

To combat this, healthcare organizations must implement third-party risk management strategies as part of HIPAA requirements to protect patient data and prevent these devastating data breaches. A comprehensive TPRM program will prevent data breaches, enhance an organization’s overall cybersecurity posture, and prevent other cyber attacks.

This blog explores why healthcare organizations must implement third-party risk management and utilize TPRM strategies to prevent third-party data breaches and protect patient and health data.

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Why do healthcare organizations need third-party risk management?

In the modern healthcare landscape, healthcare organizations increasingly rely on third-party vendors to provide critical services, from managing electronic health records (EHRs) to telehealth, billing, and supply chain logistics.

However, this dependence introduces significant risks to patient data security and operational continuity. Therefore, it is crucial to have an effective third-party risk management strategy in place to protect sensitive information, ensure regulatory compliance, and safeguard the organization against evolving cyber threats.

By implementing a comprehensive TPRM approach, healthcare organizations can mitigate vulnerabilities, maintain their reputation, and deliver uninterrupted care. Additional reasons healthcare organizations need comprehensive third-party risk management include:

  • Sensitive data: Healthcare organizations handle sensitive patient information protected by HIPAA (in the U.S.) and GDPR (in Europe). Many third-party vendors require access to this data to perform their functions, so their security practices must align with the organization's standards.
  • Regulatory compliance: Many jurisdictions have strict regulatory requirements for data protection, especially regarding health information. Third parties must comply with these standards to avoid fines, lawsuits, and reputational damage.
  • Operational risks: Third-party disruptions can impact essential services like electronic health records (EHRs), billing, and telehealth. TPRM reduces risks that could affect patient care or operational continuity.
  • Supply chain vulnerabilities: Vulnerabilities in the supply chain can expose organizations to cyber attacks. Third-party vendors are a potential entry point for malware or ransomware that might compromise patient data or systems.
  • Reputation protection: Data breaches involving third parties can harm a healthcare organization's reputation. Third-party risk management reduces the likelihood of incidents that could affect public trust.
  • Complex technology ecosystem: Healthcare is becoming increasingly reliant on technology. Numerous third-party vendors offer specialized services like cloud computing and medical devices, necessitating coordinated security management.
  • Evolving threats: Cyber threats are constantly evolving, and organizations need to perform regular risk assessments to identify new risks and strengthen defenses accordingly.
  • Financial risks: The economic impact of data breaches can be significant, involving recovery costs, compensation, and fines. Effective TPRM reduces these financial risks.
  • Patient safety: Ensuring accurate and available patient records is crucial for clinical data providers to avoid treatment errors that could impact patient safety.

Third-party data breaches in healthcare

Data breaches in healthcare have become increasingly prominent due to the sensitive nature of patient data and the complex ecosystem involving third-party vendors. Several large-scale breaches have shaken the healthcare industry in recent years, emphasizing the importance of robust third-party risk management programs.

Recent third-party data breaches in healthcare include:

  • Cerebral (2023): Cerebral, a telehealth startup, reported a data breach that impacted over 3.1 million individuals due to improper data sharing with third-party advertisers through tracking pixels. This breach involved disclosing protected health information (PHI) such as names, contact details, and treatment information.
  • NationsBenefits (2023): NationsBenefits, which administers supplemental benefits for Medicare Advantage plans, suffered a data breach that exposed over 3 million individuals' information due to a vulnerability in its managed file transfer software. The breach involved unauthorized access to personal details such as names, dates of birth, and health plan data.
  • Advocate Aurora Health (2022): Advocate Aurora Health experienced a breach in which the use of Google and Facebook tracking pixels inadvertently disclosed the data of 3 million patients. The tracking pixels that exposed Advocate Aurora Health collected appointment dates, locations, and insurance details from patients logged into Google or Facebook accounts.
  • OneTouchPoint (2022): OneTouchPoint, a mailing and printing vendor, discovered a breach involving unauthorized server access. The breach affected over 30 major healthcare providers using OneTouchPoint and exposed patient names, assessment data, and other sensitive information.
  • Eye Care Leaders (2021): Eye Care Leaders, a provider of electronic medical record (EMR) systems, experienced unauthorized system access affecting at least 2 million individuals. Texas Tech University Health Sciences Center reported data exposure for over 1.3 million patients due to this breach. The incident involved extensive data theft, including names, contact information, Social Security numbers, and health insurance details.

Top 10 TPRM strategies to protect patient data in healthcare

Healthcare entities should build their third-party risk management program according to their specific goals and needs but also consider the nature of vendor relationships in their third-party ecosystem. Suppose vendors handle a large amount of patient data in their work. In that case, healthcare organizations should consider implementing specific TPRM strategies to protect patient data and prevent third-party data breaches.

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.

Contingency planning complements incident response by ensuring patient data remains secure even during disruptions. It involves detailed backup plans, alternative workflows, and failover systems with third-party vendors. Conducting business impact analyses and regularly testing contingency plans enables organizations to refine their strategies for natural disasters, cyberattacks, and vendor failures. Transparent communication channels and clearly defined roles among internal teams and third parties ensure healthcare organizations can swiftly recover critical operations while keeping patient data secure. Together, these strategies establish robust cyber resilience in healthcare, enabling swift and effective recovery from disruptions.

How UpGuard helps healthcare organizations protect patient data

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, your security team can develop practical workflows to reduce 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

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