What is Data Privacy in Healthcare? Everything You Need to Know

Abigail Sims
August 15, 2022
What is Data Privacy in Healthcare? Everything You Need to Know
In this article

    When you visit the doctor, ask for medication, or sign up for surgery, you give healthcare organizations important data… even if you don't realize it. For example, when you sign up for an appointment to get antibiotics, you also give healthcare organizations data regarding your current diet, your health concerns, and what type of medication you’re likely to take in the near future.

    All that sensitive data must be protected both for the safety of patients and for other crucial reasons. As data privacy has risen in importance around the world, so too has healthcare data privacy become a more common topic and concern for medical patients.

    Today, let’s explore what data privacy in healthcare is, how it works, and how healthcare organizations practice it to protect their patients and their reputations.

    What does healthcare data privacy mean? 

    Healthcare data privacy includes the policies and technology used to protect sensitive health data for medical clients and patients. Healthcare data privacy only allows authorized individuals, like doctors, to see sensitive patient medical data or protected health information (PHI).

    Every medical organization – from major hospitals to small clinics to private practices – has both moral and legal obligations to keep PHI safe from potential bad actors. Many organizations and individuals may wish to gather patient medical data for a variety of reasons, including profit, ransoming, and more.

    Through practicing smart healthcare data privacy, medical organizations can protect the personal health information information of their clients and patients, as well as secure their systems against unwanted digital intrusions.

    What does data privacy for healthcare data include?

    Healthcare data privacy entails many different practices and procedures, including:

    • How hospitals and other medical facilities train their employees
    • The kinds of software used by medical organizations and facilities
    • How data is gathered, organized, and transmitted between organizations or databases
    • How patients are informed about their critical medical data
    • And more

    But just what counts as protected healthcare information? PHI includes any data related to:

    • The health and human services provided to a patient, including those services still being provided and those provided in the past
    • Patient names, addresses, and other personally identifying information such as Social Security numbers and birth dates
    • Psychological and/or medical conditions for patients
    • Prescriptions and other medical recommendations or orders for patients
    • Family medical history and genetic information for patients

    In essence, PHI data is any data that can feasibly relate to a person's health condition, medical care, or interactions with medical organizations.

    To protect this data, healthcare organizations must undertake certain steps to ensure their patients’ health information is protected at all times.

    The importance of sensitive data in healthcare

    Practically every industry must protect the sensitive data of clients and customers. But sensitive data protection is particularly important in the healthcare industry for several key reasons.

    Patient trust

    For starters, protecting patient data allows hospitals and other facilities to build trust with their patients. When patients believe that a medical organization adequately protects their data, they are more likely to return to that organization for their healthcare needs over and over.

    Note that this is important not just for a hospital or medical facility’s bottom line. It’s also important for patient safety. If, hypothetically, a patient were to avoid contacting a medical professional for fear of their sensitive data being stolen, that medical professional could be somewhat liable for any complications that might arise as a result.

    Patient trust is absolutely vital for medical organizations, including big hospitals and private practitioners. Without patient trust, it's difficult to give people the healthcare they need and to ensure that they follow professional medical recommendations. Furthermore, high patient trust is positively correlated with better healthcare outcomes.

    Patient safety

    Just as patient trust is crucial, so too is patient safety. As touched on above, healthcare organizations are responsible for the well-being of their patients. If they don’t protect and keep patient data organized, their professionals or staff members could come to incorrect conclusions, leading to wrong diagnoses, improper prescriptions, and other mistakes.

    On top of that, as mentioned earlier, patients can lose faith in healthcare organizations or facilities. If this occurs, they may not get the healthcare they need when their health is in jeopardy.

    Healthcare is rich in relationships

    But sensitive data in healthcare can provide further hazards to patients because of how it allows observers to draw relationships or meaning about its owners.

    Simply put, all health is very rich in terms of relationships. One’s microbiome, for example, not only affects how well they digest food but also things like their mood, energy level, and so on.

    This demonstrates how just a single point of healthcare data can allow an observer, criminal, or other bad actor to draw healthcare or identity-related conclusions about patients. Hypothetically, someone could steal healthcare data about a patient, learn when they were due to leave their home to go to the hospital, and use the opportunity to break into their home and steal valuables.

    Noncompliance penalties and criminal violations

    In addition, healthcare organizations face the same potential penalties for noncompliance if they fail to protect patient data adequately. In an interview with Tonic CTO Andrew Colombi, Rob Navarro states that, "Regulatory pressure is very, very real right now." According to Navarro, it wasn't nearly as intense or important around 2008.

    Organizations and legislation like HIPAA and the GDPR impose heavy fines and penalties on healthcare organizations that fail to protect patient medical information properly. Several organizations have already seen the consequences of running afoul of HIPAA in particular:

    • For example, the Advocate Health Care Network had to pay a penalty of $5.5 million when 4 million healthcare records were stolen
    • CardioNet had to pay a $2.5 million fine when they misunderstood HIPAA requirements, which resulted in them breaching the law
    • The Feinstein Institute paid $3.9 million when they stole protected health information from 13,000 research participants

    For many medical organizations, these fines are heavy enough that they can impact business operations and future financial stability. Even worse, failing to protect key medical information could sometimes result in criminal violations.

    There are technically four levels of noncompliance penalties that medical facilities and organizations may be charged with:

    • Tier 1 violations occur by accident or without direct fault. For example, a clinic is unable to avoid the healthcare data privacy violation even if they follow the rules properly
    • Tier 2 violations occur when a medical entity should have known about a potential violation but could not have prevented it, even if they took action to stop it
    • Tier 3 violations occur when medical organizations willfully neglect data privacy protection rules
    • Tier 4 violations occur when an organization willfully neglects data privacy protection rules and does not attempt to correct the violation after the fact or after being made aware of its repercussions

    While none of these violations are technically criminal, successive violations can open up healthcare facilities to greater regulatory problems, higher fines, and overall loss of patient trust. Once medical patients learn that an organization doesn’t protect their data, they are unlikely to turn to that organization for health care needs.

    Healthcare data regulation

    Healthcare data regulation is a growing and ever-important field. It has been a staple of the industry for several decades, and it's becoming more crowded and more complex with each passing year to account for increasingly difficult data privacy protection challenges.


    The first major measure to provide protection for patient data in healthcare was the Health Insurance Portability and Accountability Act or HIPAA. The Health Insurance Portability and Accountability Act was originally passed in 1996 and it sought to create standards to protect identifiable health information and prevent it from being stolen or used without patient permission.

    Prior to the passing of HIPAA, medical practices followed different state or federal healthcare data privacy laws, resulting in a patchwork system of data privacy policies. Unfortunately, this allowed patient information to be distributed to organizations without that patient’s knowledge, and sometimes to organizations that had no impact on patient’s medical care or treatments. In other words, it allowed private medical data to be abused.

    For example, health insurance companies could give loan officers or organizations patient healthcare information prior to HIPAA. The loan officer could then make a loan decision based on an applicant’s healthcare information, even if it had nothing to do with their loan application.

    HIPAA was a major step forward in the battle for data privacy regulation, as it gave patients more control over their medical records. For instance, it allowed patients to transfer records from one health plan or healthcare provider to another with relative ease without having to worry about that data being exposed or stolen by someone else.

    HIPAA includes both a privacy rule and security rule:

    • The privacy rule states exactly who has access to a person’s medical records or healthcare data and explains what they can do with that data
    • The security rule states that all health organizations have to work hard to keep patient data secure and do adequate due diligence. It also specifically focuses on electronically transmitted healthcare information as opposed to orally shared or paper-based data


    The GDPR or General Data Protection Regulation is an EU regulation focusing on data privacy and protection standards. It applies to all organizations within the EU, in addition to any organizations that do business with EU citizens.

    In effect, it also affects many American healthcare organizations and businesses, especially those that acquire supplies or professional assistance from EU doctors and healthcare facilities.

    The GDPR imposes a strict set of standards for data privacy regulations and security practices. It strives to ensure that all sensitive data across many industries is kept safe at all times. If companies fail to adhere to these regulatory standards, they could face heavy fines and penalties.

    Health Information Technology for Economic and Clinical Health Act

    In addition to the above regulations, the Health Information Technology for Economic and Clinical Health Act or HITECH has added even more regulatory meat to the bones of healthcare data privacy protection.

    It was signed in 2009 and meant to encourage healthcare facilities to adopt EHR or electronic health records technologies. EHRs are crucial for ensuring patient data privacy since:

    • They make it easier for authorized healthcare providers to access medical records
    • They make it harder for healthcare records to be misplaced or blatantly stolen by someone in person

    However, EHR use has led to many healthcare organizations having to divert resources to digital security measures. If organizations don’t comply with the above regulations, they can be fined heavily.

    Telehealth Privacy

    Telehealth or telecommunications healthcare technology lets patients see or communicate with their medical providers if they can't go into the office, particularly for mental health treatments. For example, a doctor may meet with a patient using videoconferencing software rather than having the patient come to them in person.

    Telehealth services are highly convenient, but they also introduce the possibility of data theft or security problems. To that end, telehealth technology providers must usually have high-security standards and take steps to secure patient medical data, even if they don't know that they have come into medical data in the first place.

    As telehealth visits become more common, expect to see increased regulations and security frameworks erected around this technology.

    Challenges of healthcare data privacy

    Healthcare data privacy, for all its importance, does face several major challenges.

    For starters, modern digital attacks like malware, ransomware, and trojan horse attacks pose significant threats to digitally interconnected hospital systems. All it takes is one employee opening a suspicious email for a malware virus to enter a medical facility’s network. Then it can potentially breach other security barriers and access patient data for the purposes of selling it, stealing it, or corrupting it.

    Furthermore, patients who requested their data to be sent to them may not be counted on to keep their data safe. Due to the rise of telehealth software and technology, this risk is likely to increase in the future, especially as people talk openly about their health or transmit unencrypted information over email.

    In addition, healthcare data privacy measures and technology must keep up with evolving viruses and hacker strategies. As time goes on, malware viruses, for example, continue to evolve in complexity. Digital security solutions must also grow and become stronger.

    How to solve data privacy in healthcare

    Although data privacy in healthcare is a key concern for many, there are ways to solve the above challenges. Many of these security solutions should be leveraged in conjunction with each other for maximum results.

    Differential Privacy

    One of the most innovative and modern solutions to healthcare data privacy has been the implementation of differential privacy algorithms. In a nutshell, differential privacy is a mathematical framework that concretely defines privacy. More importantly, differential privacy as a concept can be applied to algorithms. Those algorithms, in turn, can collect, categorize, and “mask” private patient medical data to be used and sent elsewhere.

    In theory, differential privacy algorithms and technology enable healthcare providers to freely share patient data without having to worry about that data, including identifiable information, being used against their patients. Differential privacy is already being adopted by many other organizations and industries, like FinTech.

    However, differential privacy does have its detractors. By its nature, differential privacy reduces the accuracy and therefore usability of patient data. By distorting data, analysts can use it less effectively, which may lead to more inefficient analysis results.

    Still, many are hopeful about how differential privacy can improve medical data security across the board, especially as it is refined and better understood. As Andrew Colombi states in his interview with Rob Navarro, differential privacy "creates a workable mathematical definition of privacy," which can be invaluable when designing new ways to securely transmit and analyze patient data.

    User Trustworthiness Analysis

    However, medical organizations can also practice better data privacy in healthcare by taking additional steps to analyze user trustworthiness. Simply put, by preventing sensitive patient data from being accessed by untrained or new staff, they lower the likelihood that that data will be leaked or stolen, accidentally or intentionally.

    In contrast, experienced doctors, authorized personnel, and other licensed individuals can access patient data and be trusted that they won’t abuse it and that they won’t leave the proverbial door open for cybercriminals.

    By engaging in greater user trustworthiness analysis, and by being more careful about who they give the keys to patient data to, medical facilities can lower the likelihood of major data breaches in the future.

    Breach Risk Analysis

    Similarly, performing regular breach risk analyses can help healthcare facilities and private healthcare providers guarantee better security for their patients. For instance, every healthcare facility needs strong antivirus software for all of its digital platforms and applications.

    Good antivirus software prevents malware and other digital threats from affecting healthcare systems or from stealing private patient data. Regular breach risk analyses, carried out by white hat hackers or security firms, can help hospitals shore up their digital defenses and lower the likelihood of a security breach occurring later.

    However, breach risk analysis must be performed regularly, as digital threats continually evolve. This oftentimes involves updating antivirus software and other digital security measures as soon as possible.

    Employee Training

    Good employee training is the cornerstone of all digital security. For example, if a hospital receptionist leaves their ID badge lying around, a person could theoretically use that ID badge to get into sensitive hospital systems and cause major issues.

    Good employee training on matters like digital hygiene (i.e., not opening unidentified or suspicious-looking emails) and being mindful of security threats in the real world can do wonders for bolstering patient data privacy results. It has a major impact on overall cybersecurity for organizations.

    Many healthcare organizations opt for group employee seminars and training sessions. These training sessions teach employees how to better spot digital threats and how to make sure that they don’t increase the risk to patient data through their behaviors both on the clock and off.

    Regulation Compliance and Updates

    Lastly, healthcare organizations must remain abreast of all regulatory standards, compliance requirements, and regulation updates. HIPAA may not have been recently updated, but future regulations could easily appear, impacting nationwide and worldwide healthcare security standards.

    By staying abreast of HIPAA compliance requirements and regulation updates, healthcare organizations won’t be caught off guard and won’t find that their security policies are woefully behind the times.

    The future of data privacy in healthcare

    Ultimately, data privacy will never stop being a key concern in healthcare. So long as medical data – and the various relationships it can hint at – is available for taking, it will also need to be protected from bad actors or cybercriminals.

    Fortunately, tools like Tonic now allow organizations to use “fake” data – data that looks, feels, and acts just like real production data – for tests, communications, and business plans safely and securely. With Tonic’s customized data generators, data masking capabilities, and other innovative features, healthcare organizations and other enterprises alike will be better able to keep the sensitive data of their customers and clients safe no matter what.

    Abigail Sims
    As a reformed writer now deep in the marketing machine, Abigail can (and will) create narrative-driven content for any technical vertical. With five years of experience telling brand stories for tech startups and small businesses, she thrives at the intersection of complex data and creative communication.

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