OCR Fines Are the Least of Your Worries in a HIPAA Related Breach

Posted on August 27, 2014 I Written By

The following is a guest blog post by Art Gross, Founder of HIPAA Secure Now!.
Art Gross Headshot
Ask any medical professional about their biggest concern for protecting patient information and they will probably tell you about the threat of a random audit conducted by the Office of Civil Rights (OCR). OCR is tasked with enforcing HIPAA regulations and has the ability to hand out fines up to $1.5 million per violation for a HIPAA breach and failing to comply with HIPAA regulations.

With recent fines of $4.8 million handed out to New York and Presbyterian Hospital and $1.7 million fine to Concentra Health Services, physicians have good reason to worry.  These massive fines were levied not as the result of a random audit, but for the mandatory reporting of patient data breaches to the Department of Health and Human Services (HHS), and the investigation that followed.  So physicians need to reconsider where their real concerns should lie.

Ponemon Study

The 2013 Cost of a Data Breach Study by the Ponemon Institute calculated lost or stolen patient records at $233 per record. Let’s take a look at how quickly the cost of a HIPAA breach can add up:

# of Records Breached Cost
1 $233
10 $2,330
100 $23,300
1,000 $233,000




The cost of the recent Community Health Systems 4.5 million patient records breach could cost more than $1 billion!

Whether a medical provider loses 1,000 or 10,000 patient records the financial impact could easily set back the organization or even put it out of business.  But the “hidden cost” of a HIPAA breach that shouldn’t be overlooked is the damage to the provider’s reputation, lost trust from patients and the resulting sharp decline in revenues.

Lost patient records sparks negative publicity.  Take Phoenix Cardiac Surgery (PCS) for example. The Arizona medical practice with five physicians got slapped with a $100,000 fine for a HIPAA breach in 2012. A current search on Google returns the practice’s website plus 28 links to negative news stories related to the HIPAA fine. The consequences? A patient searching a referred cardiac surgeon from PCS finds the negative publicity and decides to continue searching for another surgeon. Or, an existing patient of PCS decides to look for another medical practice that takes every measure to safeguard his privacy.

Other Cost Factors

Beyond revenue loss and a damaged reputation are the direct overhead costs associated with a breach. The cost of discovering and stopping a breach may involve IT services, forensic investigative services to determine which systems and patients were affected, and legal counsel if patients file a lawsuit. There are also hard costs associated with notifying patients affected by the breach, including time spent to pull together their contact information, mailing out notifications and providing toll-free inbound phone numbers to handle complaints. Most organizations also provide identity and credit monitoring services for affected patients. All of these expenses add up, not to mention the cost of lost productivity due to the diverted attention of employees tasked with managing these processes.

Today it’s not uncommon for laptops, tablets and USB drives with patient records to disappear.  Or, for crime rings to hack into EHR systems to steal patient information and commit tax fraud, and for meth dealers to steal patient identities to obtain prescriptions.  If a large hospital system can lose 4.5 million patient records think how easy it is for a hacker to grab thousands of patient records from smaller medical practices and turn them into cash. The threat of a HIPAA breach has never been greater and all organizations should take heed.

Risk Assessment as a First Step

Healthcare organizations, particularly smaller medical practices, should perform a HIPAA risk assessment to look at where patient information is stored and accessed, and how the organization protects that information. It examines the risks of a breach and recommends steps to lower them. Without performing a risk assessment an organization may be lulled into a false sense of security, mistakenly believing they won’t suffer the consequences of a HIPAA breach.  At $233 per lost or stolen record that could be a costly miscalculation.

About Art Gross

Art Gross co-founded Entegration, Inc. in 2000 and serves as President and CEO. As Entegration’s medical clients adopted EHR technology Gross recognized the need to help them protect patient data and comply with complex HIPAA security regulations. Leveraging his experience supporting medical practices, in-depth knowledge of HIPAA compliance and security, and IT technology, Gross started his second company HIPAA Secure Now! to focus on the unique IT requirements of medical practices.  Email Art at artg@hippasecurenow.com.

Full Disclosure: HIPAA Secure Now! is an advertiser on EMR and HIPAA.