Issues and Challenges Faced by the Healthcare Industry in Managing Privacy and Security of PHI and SPI

Jul 8, 2026

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Introduction

The healthcare industry across the world is undergoing a rapid digital transformation. Technology is evidently reshaping the design and delivery of healthcare services through AI-assisted diagnostics, remote patient monitoring, interoperable health systems and digital therapeutics. However, this transformation has enabled healthcare organisations to possess the patient’s most sensitive personal data.

In recent years, there has been a rapid increase in cyberattacks across the healthcare sector. The 2024 cyberattack on Change Healthcare, disrupted healthcare operations in the whole US. This incident exposed the vulnerabilities that exist within interconnected healthcare ecosystems. Healthcare data is largely permanent, which cannot be replaced following a breach, unlike financial information, which can often be replaced following a breach.

Medical histories, genetic information, biometric identifiers, diagnostic reports, and treatment records cannot simply be reissued or modified once compromised. Therefore, unauthorised access to such information can have long-lasting implications, including identity theft, insurance fraud, discrimination, reputational harm, and loss of patient trust.

The sensitivity of healthcare data has pushed regulators in various jurisdictions to make stringent obligations for organisations processing health-related information. Health Insurance Portability and Accountability Act (HIPAA), the General Data Protection Regulation (GDPR), and India’s Digital Personal Data Protection Act, 2023 (DPDP Act) are some major statutory frameworks impose significant accountabilities on healthcare entities to ensure the confidentiality, integrity, and availability of patient’s personal data. Healthcare organisations must navigate a framework to digital threats, evolving technologies, regulatory obligations, and operational challenges.

Need for Healthcare Data Protection

The healthcare record of an individual may include an individual’s physical and mental health conditions, treatment history, medications, genetic predispositions, insurance information, and other extremely sensitive details, which if exposed may leave a person vulnerable. Cybercriminals frequently target healthcare records because these records can be misused for identity theft, insurance fraud, financial fraud, social engineering attacks, and extortion. Healthcare data largely remains relevant throughout the lifetime of an individual. Therefore, it is in high demand across the illicit markets.

The rapid expansion of digital health technologies has increased the attack surface within healthcare ecosystems. Hospitals, laboratories, insurers, pharmacies, telemedicine providers, wearable device manufacturers, and AI developers regularly exchange health-related information to facilitate patient care. Such data sharing certainly improves efficiency and healthcare outcomes. However, it also gives rise to the risk of unauthorised access, data leakage, and cyberattacks. Healthcare organisations must implement stronger privacy and security safeguards than those required for many other categories of personal information.

Key Privacy and Security Challenges in Managing PHI and SPI

Escalation of Cybersecurity Threats: Cybercriminals consistently target the healthcare sector because they understand that healthcare organisations depend heavily on uninterrupted access to patient information and clinical systems, making them particularly susceptible to ransomware attacks. Such attacks can disrupt healthcare services by restricting access to electronic health records, delaying medical procedures, and interrupting critical clinical workflows.
Legacy Systems and Outdated Infrastructure: Many healthcare institutions still depend on technologies, which are outdated. These technologies were not designed to tackle advanced cybersecurity threats. Hospitals are operating with aging medical devices, unsupported software applications, and outdated network architectures. Such systems frequently suffer from unpatched vulnerabilities, inadequate authentication mechanisms, limited encryption capabilities, poor integration with modern security solutions, and increased susceptibility to cyberattacks.
Insider Threats and Human Error: All privacy incidents in the healthcare sectors do not always originate from external attackers. Healthcare organisations also face insider threats arising and human error from employee negligence, unauthorised access, misuse of privileges, and inadvertent disclosures.
Third-Party and Supply Chain Risks: Modern healthcare ecosystems largely depend on third-party vendors and service providers. Cloud service providers, telemedicine platforms, billing vendors, healthcare analytics companies, AI developers, and medical device manufacturers often process sensitive patient information on behalf of healthcare organisations. These partnerships certainly facilitate innovation and efficiency. However, they also introduce significant privacy and security risks. 
Challenges in Consent and Patient Rights Management: Management of patient consent has become extremely complex because healthcare data is widely shared across healthcare providers, insurers, research institutions, and technology platforms. Patients are often unaware of the full extent to which their information is collected, used, and shared. 
AI and Emerging Technology Risks: Artificial Intelligence is rapidly transforming healthcare through applications such as predictive analytics, clinical decision support systems, medical imaging analysis, drug discovery, and personalised treatment recommendations. However, these technologies are largely built upon large datasets containing PHI and SPI, creating unique privacy and security concerns.

Regulatory Mechanism

Healthcare organisations function within a complex regulatory structure. These structures may be characterised by overlapping privacy, cybersecurity, and healthcare-specific obligations. There are various key frameworks, which include:

Health Insurance Portability and Accountability Act (HIPAA): This Act provides requirements for safeguarding Protected Health Information (PHI) through administrative, physical, and technical safeguards while granting individuals certain rights regarding their health information.
General Data Protection Regulation (GDPR): The GDPR classifies health data as a special category of personal data and imposes enhanced obligations concerning lawful processing, transparency, security, accountability, and international data transfers.
DPDP Act, 2023: India’s DPDP Act establishes obligations regarding lawful processing, data security, accountability, and the protection of personal data, including health-related information processed by healthcare organisations.

Organisations operating across various countries must carefully navigate differing compliance requirements to ensure consistent privacy and security practices.

Best Practices for Strengthening Healthcare Privacy and Security

Healthcare organisations can adopt these practices to strengthen their privacy frameworks:

Implementation of Privacy-by-Design: Healthcare organisations can integrate privacy-by-design model into their systems, processes, and technologies. This will be instrumental in mitigating risks and ensure compliance throughout the data lifecycle.
Role-Based Access Controls (RBAC): The employees should be given restricted access to PHI and SPI based on job responsibilities. It will minimise unauthorised access and ensure employees only access information necessary for their roles.
Multi-Factor Authentication (MFA): It requires multiple forms of verification, which reduces the risk of compromised credentials and enhances protection against unauthorised system access.
Data Encryption at Rest and in Transit: Encryption of sensitive health data during storage and transmission will be helpful in protecting information from interception, unauthorised disclosure, and cyberattacks.
Regular Privacy and Security Assessments: Regular assessments should be conducted to identify vulnerabilities, evaluate compliance gaps, and strengthen organisational preparedness against emerging privacy and cybersecurity risks.
Employee Awareness Training: Regular training initiatives will equip employees of the organisation to recognise phishing attempts, handle sensitive information responsibly, and comply with organisational privacy and security policies.

The integration of privacy and security considerations throughout the data lifecycle is very essential for reducing risk and maintaining regulatory compliance.

Conclusion

Healthcare organisations are essentially required to adopt an advanced and risk-based approach to privacy governance due to rapid increase in cyberattacks, insider threats, third-party dependencies, AI-driven processing, and evolving regulatory obligations. Organisations will have to prioritise the protection of PHI and SPI to maintain patient trust, strengthen operational resilience, and meet evolving compliance expectations.