Mastering risk and compliance in the modern healthcare sector

Healthcare is one of the most tightly regulated industries, and for good reason. It is a sector where health and lives are at stake. 

Plus, the push toward digital-first services has reshaped healthcare globally in recent years. While it has driven greater data sharing across the industry and its supply chains, it has also exposed varying security maturity levels. This means more cyber risk challenges and an increasingly complex web of regulations.

A recent study by Sophos, a UK-based cybersecurity firm, revealed that nearly 60 per cent of healthcare organisations globally experienced a cyberattack in 2023. This number includes major medical institutions in India, such as the All India Institute of Medical Sciences (AIIMS) and the Indian Council of Medical Research (ICMR). The cyberattack on ICMR alone exposed the personally identifiable information (PII) of approximately 810 million Indians, making it potentially one of the most significant data breaches in India’s history.

Moreover, newer risks continue to emerge as the healthcare sector evolves, expanding into areas like health insurance and insurance technology. 

In this article, we look at the five key risk and compliance challenges facing the healthcare sector and strategies to overcome them.

1. Regulatory compliance 

Globally, the healthcare sector is regulated by various frameworks such as the Health Insurance Portability and Accountability Act (HIPAA), the HITECH Act, the 21st Century Cures Act, the General Data Protection Regulation (GDPR), etc. Most of these regulations focus on protecting patient data privacy, ensuring data security, controlling access to information, and safeguarding against cyber threats.

In India, key regulations include the Clinical Establishments Act, Medical Council of India guidelines, and specific laws like the Drugs and Cosmetics Act, 1940, The Consumer Protection Act, 2019, The Telemedicine Practice Guidelines, 2020 etc.

Besides these, healthcare providers are required to navigate an array of central, state, and local regulations, each of which could be frequently updated to address the evolving risk landscape. Ensuring compliance with these standards and meeting accreditation requirements is complex and demanding.

2. Enterprise risk management 

Healthcare providers must navigate a range of risks unique to their sector while ensuring strict compliance with relevant regulations. Beyond compliance, they also face risks related to patient care and safety, where any lapse can lead to severe legal, financial, and reputational damage. Risks associated with medical instruments and devices, such as potential malfunctions that impact patient care, are also a concern. 

Providers must also be vigilant against risks related to insurance claims, fraud, phantom billing, etc. Regular risk assessments are crucial to identifying and mitigating potential compliance issues and threats. 

Additionally, comprehensive incident management processes are essential for quick and effective crisis response. Effective risk management is vital for business operations, third-party risks, cybersecurity, ESG concerns, and health hazards. The healthcare industry needs to shift from a reactive, compliance-focused approach to proactive risk management to thrive better in this complex landscape.

3. Data privacy 

Patient healthcare data is confidential and must be safeguarded under strict security, privacy, and protection laws. Healthcare providers must ensure that their technology systems comply with regulatory standards.

However, protecting patient information is increasingly challenging in the face of cyber threats. Organisations must ensure that their electronic health record systems are up-to-date, secure, and compliant with regulatory standards. It is crucial that these systems not only support secure data exchanges but also maintain interoperability between different healthcare platforms while safeguarding data privacy. Keeping technology systems current and aligned with the latest security and regulatory standards is essential for protecting patient information and ensuring robust compliance.

Adding to the challenge is the ever-evolving threat landscape, where malicious actors increasingly use advanced technology to execute sophisticated attacks. 

Besides, while it is true that advanced AI technologies hold transformative potential for healthcare, their use also brings substantial risks, particularly regarding data breaches. With AI platforms handling vast amounts of sensitive information, any security vulnerabilities can be targeted by malicious actors. Healthcare providers using AI must be vigilant about these risks and adopt robust data protection measures to safeguard patient information.

4. Third-party risk management

Healthcare organisations depend on many external vendors, from cloud service providers and billing companies to medical device manufacturers and suppliers. Many of these vendors have access to sensitive healthcare data, leading to a significant security vulnerability that hackers can exploit.

In addition to security risks, healthcare providers must oversee third parties for operational and ethical issues, including potential disruptions to medical services, anti-money laundering (AML) practices, bribery, and other malpractices. Vendors must comply with data protection and privacy regulations, and healthcare organisations are responsible for ensuring that their partners adhere to these regulations and maintain robust risk management practices.

5. Constant monitoring and reporting

In a dynamic regulatory environment of healthcare, providers must ensure rigorous and error-free compliance. Continuous monitoring is essential to manage evolving regulations effectively. Healthcare organisations must stay updated on regulatory changes and quickly integrate new rules into their existing practices and controls.

Automated and ongoing risk assessments are necessary for real-time evaluations and timely decision-making. This requires solid internal controls to manage risks and ensure compliance. Automated processes should be in place to onboard new third parties and conduct due diligence to prevent compliance gaps. Regular digitised audits and continuous monitoring of compliance processes are also vital.

Maintaining detailed compliance reports, security event logs, and consistent communication with regulatory authorities are critical responsibilities for healthcare organisations.

Key takeaways 

Adopting a streamlined approach to governance, risk, and compliance (GRC) in the highly regulated healthcare sector is mission-critical. With advanced solutions, healthcare organisations can improve their ability to manage regulatory compliance, enterprise risks, including cyber and third-party risks, and internal audits. This leads to enhanced risk visibility, faster response to emerging risks, and more informed decision-making.

These solutions can enable organisations to automate the management of regulatory changes, digitalise their GRC activities across various operational lines, and enhance cyber resilience.