Understanding the Consequences of Healthcare Data Breaches
Understanding the Consequences of Healthcare Data Breaches
Healthcare data breaches incur significant consequences. These breaches impact a provider’s finances and reputation, in addition to legal penalties. The average lifecycle cost of a healthcare data breach rose from $10.1 million in 2022 to $10.9 million in 2023, making it the costliest across all industries, according to IBM. Cybersecurity breaches, including ransom attacks, are rising, with a 53.3 percent increase in healthcare data breach costs since 2020.
Nick Youmans, Ph.D., CFO at YES, wrote about the true financial impact of data breaches for the Journal of AHIMA. Below is a summary of his analysis, which you can read in full on the Journal of AHIMA’s website.
The Costs of Healthcare Data Breaches
Youmans’ analysis covered these key components of healthcare data breach costs:
- The lifecycle cost of breaches averages around $10.9 million, considering factors like ransom payments, downtime, and loss of business.
- Global average cost of ransom payments increased from $4.54 million in 2022 to $5.13 million in 2023, with 42 percent of affected entities admitting to paying ransom.
- Healthcare entities face fines and settlements for HIPAA violations, with an average fine of just under $100,000 per penalized breach in 2022.
- Providers have to deal with legal costs and consulting fees associated with legal advisors, cybersecurity specialists, and consultants for breach response and litigation.
- Data breaches erode patient confidence, tarnish brand image, and impact long-term patient and shareholder loyalty.
- Operational disruptions and reputational damage can lead to profit leaks, affecting wages, salaries, and business prospects.
- Cybersecurity insurance may increase premiums post-breach due to perceived heightened risk.
- Resources would need to be allocated to remediate breaches and address compliance intricacies.
- There are additional costs associated with notifying affected individuals, establishing call centers, and providing credit monitoring services.
More Resources on Healthcare Data Breaches
The wide-reaching fiscal and reputational implications highlight the importance of robust cybersecurity strategies and breach response plans for healthcare entities. In the end, consumers, especially patients, bear the ultimate cost of data breaches as they become vulnerable to harm, and recovery cost inflation impacts hospital charges.
Read the complete analysis on the cost of data breaches on the Journal of AHIMA’s website here.
Additional information on healthcare data breaches and cybersecurity can be found here:
