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Healthcare Data Breach Costs Remain Highest at $408 Per Record

July 13, 2018
by Heather Landi
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The global average cost of a data breach is up 6.4 percent over the previous year to $3.86 million
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The cost of a data breach for healthcare organizations continues to rise, from $380 per record last year to $408 per record this year, as the healthcare industry also continues to incur the highest cost for data breaches compared to any other industry, according to a new study from IBM Security and the Ponemon Institute.

The global average cost of a data breach is up 6.4 percent over the previous year to $3.86 million, according to the 2018 Cost of a Data Breach study. The average cost for each lost or stolen record containing sensitive and confidential information, globally and across all industries, also increased by 4.8 percent year over year to $148. And, the 2018 cost of a data breach compares to $3.50 million in 2014, representing nearly a 10 percent net increase over the past five years of the study.

For the eighth year in a row, healthcare organizations had the highest costs associated with data breaches – costing them $408 per lost or stolen record – nearly three times higher than the cross-industry average ($148). The next highest industry was financial services with an average of $206 per lost or stolen record. You can read about last year's study here.

The 2018 Cost of a Data Breach Study, sponsored by IBM Security and conducted by the Ponemon Institute, is based on a survey of more than 2,200 IT, data, protection and compliance professionals from 477 companies in 15 countries. For the first time, this year the study also calculated the costs associated with "mega breaches" ranging from 1 million to 50 million records lost, projecting that these breaches cost companies between $40 million and $350 million respectively.

"While highly publicized data breaches often report losses in the millions, these numbers are highly variable and often focused on a few specific costs which are easily quantified," Wendi Whitmore, Global Lead for IBM X-Force Incident Response and Intelligence Services (IRIS, said in a statement. "The truth is there are many hidden expenses which must be taken into account, such as reputational damage, customer turnover, and operational costs. Knowing where the costs lie, and how to reduce them, can help companies invest their resources more strategically and lower the huge financial risks at stake."

The study looks at abnormal churn rates among industries, or the greater than expected loss of customers following a data breach incident. The healthcare industry had the highest abnormal churn rate among 17 industries, at 6.7 percent, compared to the average of 3.4 percent. The report notes that customers have high expectations for the protection of their data in highly regulated industries, such as healthcare and financial services. When these organizations have a data breach, customers’ trust will decline and they will try to find a substitute, the report states.

The study also compared the cost of data breaches in different regions, finding that data breaches are the costliest in the U.S. and the Middle East, and least costly in Brazil and India.  U.S. companies experienced the highest average cost of a breach at $7.91 million, followed by the Middle East at $5.31 million. The lowest total cost of a breach was $1.24 million in Brazil, followed by $1.77 million in India.

One major factor impacting the cost of a data breach in the U.S. was the reported cost of lost business, which was $4.2 million—more than the total average cost of a breach globally, and more than double the amount of "lost business costs" compared to any other region surveyed, according to the study. One major factor impacting lost business costs is customer turnover in the aftermath of a breach; in fact a recent IBM / Harris poll report found that 75 percent of consumers in the U.S. say that they will not do business with companies that they do not trust to protect their data.

In the past five years, the amount of mega breaches (breaches of more than 1 million records) has nearly doubled—from just nine mega breaches in 2013, to 16 mega breaches in 2017. Based on analysis of 11 companies experiencing a mega breach over the past two years, this year's report used statistical modelling to project the cost of breaches ranging from 1 million to 50 million compromised records.  Key findings include that the average cost of a data breach of 1 million compromised records is nearly $40 million dollars. At 50 million records, the estimated total cost of a breach is $350 million dollars.

What’s more, the vast majority of these breaches (10 out of 11) stemmed from malicious and criminal attacks (as opposed to system glitches or human error). And, the average time to detect and contain a mega breach was 365 days—almost 100 days longer than a smaller scale breach (266 days).

For mega breaches, the biggest expense category was costs associated with lost business, which was estimated at nearly $118 million for breaches of 50 million records—almost a third of the total cost of a breach this size.

The study also examines factors which increase or decrease the cost of the breach, finding that costs are heavily impacted by the amount of time spent containing a data breach, as well as investments in technologies that speed response time. The average time to identify a data breach in the study was 197 days, and the average time to contain a data breach once identified was 69 days. Companies who contained a breach in less than 30 days saved over $1 million compared to those that took more than 30 days ($3.09 million vs. $4.25 million average total).

The amount of lost or stolen records also impacts the cost of a breach, costing $148 per lost or stolen record on average. The study examined several factors which increase or decrease this cost and found that having an incident response team was the top cost saving factor, reducing the cost by $14 per compromised record. The use of an AI platform for cybersecurity reduced the cost by $8 per lost or stolen record, according to the study, and companies that indicated a "rush to notify" had a higher cost by $5 per lost or stolen record.

The report also examined the effect of security automation tools which use artificial intelligence, machine learning, analytics and orchestration to augment or replace human intervention in the identification and containment of a breach. The analysis found that organizations that had extensively deployed automated security technologies saved over $1.5 million on the total cost of a breach ($2.88 million, compared to $4.43 million for those who had not deployed security automation).

"The goal of our research is to demonstrate the value of good data protection practices, and the factors that make a tangible difference in what a company pays to resolve a data breach," Dr. Larry Ponemon, chairman and founder of Ponemon Institute, said in a statement. "While data breach costs have been rising steadily over the history of the study, we see positive signs of cost savings through the use of newer technologies as well as proper planning for incident response, which can significantly reduce these costs."

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Assessing the New Cybersecurity Practices Publication: Why Small and Medium-Sized Care Organizations Have Reason to Rejoice

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A new set of voluntary cybersecurity practices just released by HHS offers practical advice and conceptual supports that fill information gaps
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How helpful will the new set of voluntary cybersecurity practices that the Department of Health and Human Services (HHS) released in late December, be, to the leaders of patient care organizations? Only time will tell, as part of the value of the release will only be made manifest as the leaders of patient care organizations move forward to implement some of those practices, and the potential success of such implementations is in some way measured and benchmarked.

But the release is a first start, at least. As Healthcare Informatics Associate Editor Heather Landi reported on January 2, HHS released the set of practices in the form of a publication “that marks the culmination of a two-year effort that brought together over 150 cybersecurity and healthcare experts from industry and the government under the Healthcare and Public Health (HPH) Sector Critical Infrastructure Security and Resilience Public-Private Partnership.”

“Cybersecurity is everyone’s responsibility. It is the responsibility of every organization working in healthcare and public health.  In all of our efforts, we must recognize and leverage the value of partnerships among government and industry stakeholders to tackle the shared problems collaboratively,” Janet Vogel, HHS Acting Chief Information Security Officer (CISO), said in a statement published with the release of the new publication.

Health Industry Cybersecurity Practices: Managing Threats and Protecting Patients (HICP), the primary publication of the Cybersecurity Act of 2015, Section 405(d) Task Group, aims to raise awareness, provide vetted cybersecurity practices, and move organizations towards consistency in mitigating the current most pertinent cybersecurity threats to the sector,” HHS officials stated. “It seeks to aid healthcare and public health organizations to develop meaningful cybersecurity objectives and outcomes. The publication includes a main document, two technical volumes, and resources and templates.”

The overall publication consists of several sections, the first being the HICP, which “examines cybersecurity threats and vulnerabilities that affect the healthcare industry. It explores five current threats and presents 10 practices to mitigate those threats; “Technical Volume 1: Cybersecurity Practices for Small Health Care Organizations,” which offers cybersecurity practices for small healthcare organizations; “Technical Volume 2: Cybersecurity Practices for Medium and Large Health Care Organizations”; the “Resources and Templates” portion, which “includes a variety of cybersecurity resources and templates for end users to reference”; and a Cybersecurity Practices Assessments Toolkit, which “helps organizations prioritize their cyber threats and develop their own action plans using the assessment methodology outlined in the Resources and Templates volume”—that last section being still under development as of Jan. 2.

As Landi reported, “The HICP publication aims to provide cybersecurity practices for this vast, diverse, and open sector to ultimately improve the security and safety of patients. The main document of the publication explores the five most relevant and current threats to the industry. It also recommends 10 cybersecurity practices to help mitigate these threats.”

What’s more, she wrote, “The main document presents real-life events and statistics that demonstrate the financial and patient care impacts of cyber incidents.  It also lays out a call to action for all industry stakeholders, from C-suite executives and healthcare practitioners to IT security professionals, that protective and preventive measures must be taken now. The publication also includes two technical volumes geared for IT and IT security professionals, one focusing on cybersecurity practices for small healthcare organizations, and one focused on practices for medium and large healthcare organizations.”

Among the salient statistics reported in the HICP:

  • Fifty-eight percent of malware attack victims are small businesses.
  • In 2017, cyber-attacks cost small and medium-sized businesses an average of $2.2 million.
  • Sixty of small businesses go out of business within six months of an attack.
  • And, 90 percent of small businesses do not use any data protection at all for company and customer information.

How does that translate into impacts on smaller healthcare organizations? Among other incidents, the HICP notes that:

  • A popular orthopedic practice announced that its computer system was hacked via breach of a software vendor’s log-in credentials. This breach put just under a half-million people at risk of identity theft. Of those, 500 patient profiles appeared for sale on the dark web. The information for sale included names, addresses, social security numbers, and other personally identifiable information (PII). Although not posted for sale, pertinent PHI such as X-ray results and medical diagnoses were also stolen.

 

  • A rural hospital had to replace its entire computer network after a ransomware cyber-attack froze the hospital’s electronic health record (EHR) system. Doctors were unable to review their patients’ medical histories or transmit laboratory and pharmacy orders. Officials were unable to restore essential services and could not pay the ransom for the return of their system. After consultations with the Federal Bureau of Investigation and cybersecurity experts, hospital officials made the difficult decision to replace the entire system.
  •  

Of particular practicality is some of the very basic advice given to the leaders of smaller healthcare organizations. To wit: “Doctors and nurses know that hand sanitizing is critical to prevent the spread of germs. That does not mean health care workers wash up as often as they should. Similarly, we know that cybersecurity practices reduce the risk of cyber-attacks and data breaches. Just as we are able to protect our patients from infection, we should all work towards protecting patient data to allow physicians and caregivers to trust the data and systems that enable quality health care. Just as health care professionals must wash their hands before caring for patients, health care organizations must practice good ‘cyber hygiene’ in today’s digital world, including it as a part of daily universal precautions,” the HICP notes. “Like the simple act of hand-washing, a culture of cyber-awareness does not have to be complicated or expensive for a small organization. It must simply be effective at enabling organization members to protect information that is critical to the organization’s patients and operations. Your organization’s vigilance against cyber-attacks will increase concurrently with your and your workforce’s knowledge of cybersecurity. This knowledge will enable you to advance to the next series of cybersecurity Practices, expanding your organization’s awareness of and ability to thwart cyber threats.”

Meanwhile, both smaller and larger patient care organizations will benefit from the technical supports, including a Security Risk Assessment Tool, a set of recommendations on medical devices and cybersecurity, and an incident response risk management handbook.

What this set of resources does is to fill a gap between theory and technical practice in a key area. Will it shift the entire landscape of cybersecurity for patient care organizations? No, that would be a far-too-ambitious goal. But the healthcare IT leaders of smaller and medium-sized patient care organizations in particular, will welcome practice advice and supports, as they move forward in their journeys around cybersecurity. Any such journey is inherently challenging, and federal publications and resources like these will be of real value in moving patient care organization HIT leaders forward.

 

 

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HHS Releases Voluntary Healthcare Cybersecurity Practices

January 2, 2019
by Heather Landi, Associate Editor
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In late December, the Department of Health and Human Services (HHS) released voluntary cybersecurity practices to the healthcare industry with the aim of providing practice guidelines to cost-effectively reduce cybersecurity risks.

The “Health Industry Cybersecurity Practices (HICP): Managing Threats and Protecting Patients” publication aims to provide guidance to healthcare organizations of all types and sizes, ranging from local clinics to large hospital systems.

The industry-led effort was in response to a mandate set forth by the Cybersecurity Act of 2015 Section 405(d), to develop practical cybersecurity guidelines to cost-effectively reduce cybersecurity risks for the healthcare industry.

According to HHS, the publication marks the culmination of a two-year effort that brought together over 150 cybersecurity and healthcare experts from industry and the government under the Healthcare and Public Health (HPH) Sector Critical Infrastructure Security and Resilience Public-Private Partnership.

“Cybersecurity is everyone’s responsibility. It is the responsibility of every organization working in healthcare and public health.  In all of our efforts, we must recognize and leverage the value of partnerships among government and industry stakeholders to tackle the shared problems collaboratively,” Janet Vogel, HHS Acting Chief Information Security Officer (CISO), said in a statement.

While technologies are vital to the healthcare industry and help provide life-saving treatments and improve patient care, these same technologies are vulnerable to myriad attacks from adversaries, ranging from criminals and hacktivists to nation-states, according to HHS. These technologies can be exploited to gain access to personal patient data or render entire hospital systems inoperable. Recent cyber-attacks against the nation’s healthcare industry continue to highlight the importance of ensuring these technologies are safe and secure.

“The healthcare industry is truly a varied digital ecosystem. We heard loud and clear through this process that providers need actionable and practical advice, tailored to their needs, to manage modern cyber threats. That is exactly what this resource delivers; recommendations stratified by the size of the organization, written for both the clinician as well as the IT subject matter expert,” Erik Decker, industry co-lead and Chief Information Security and Privacy Officer for the University of Chicago Medicine, said in a statement.

The HICP publication aims to provide cybersecurity practices for this vast, diverse, and open sector to ultimately improve the security and safety of patients. The main document of the publication explores the five most relevant and current threats to the industry. It also recommends 10 cybersecurity practices to help mitigate these threats.

The main document presents real-life events and statistics that demonstrate the financial and patient care impacts of cyber incidents.  It also lays out a call to action for all industry stakeholders, from C-suite executives and healthcare practitioners to IT security professionals, that protective and preventive measures must be taken now. The publication also includes two technical volumes geared for IT and IT security professionals, one focusing on cybersecurity practices for small healthcare organizations, and one focused on practices for medium and large healthcare organizations.

 

Related Insights For: Cybersecurity

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CynergisTek, Protenus Partner on Privacy Monitoring Programs

December 26, 2018
by Heather Landi, Associate Editor
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CynergisTek, Inc., an Austin, Texas-based healthcare cybersecurity firm, is partnering with Protenus, a healthcare compliance analytics company, to combine the companies’ technology tools and services with a focus on patient privacy monitoring programs.

The partnership will grant health systems access to Protenus’ analytics platform that leverages artificial intelligence to gather data related to potential patient privacy risks, along with CynergisTek’s patient privacy monitoring services.

According to the Protenus research, insider incidents accounted for 23 percent of all breaches that occurred at health systems in Q3 2018. This figure will only continue increasing, indicating that now more than ever, health systems need a cost-effective solution to meet the daily challenges of managing patient privacy.

To address this need, CynergisTek and Protenus formed a preferred partnership to combine CynergisTek’s healthcare consulting experience and privacy programs with Protenus’ healthcare analytics technology to offer health systems both the people, processes, and technology components of a strong patient privacy monitoring program, according to the companies.

“As health systems face mounting challenges in creating and maintaining robust patient privacy monitoring programs, we identified a need to partner with a company offering complementary services so that health systems can act on the insights uncovered by our analytics,” Nick Culbertson, CEO and co-founder of Protenus, said in a statement.

 “Data privacy is evolving as a dominate theme in conversations, both in healthcare and other industries, and health systems need to take an end-to-end approach to patient privacy to truly address this complex and mission-critical challenge,” Mac McMillan, CEO and president of CynergisTek, said in a statement.

 

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