New Ponemon Institute Study Finds Data Breaches Cost Hospitals $6 Billion; Patient Privacy in Jeopardy

Hospitals Are Not Protecting Patient Data; Healthcare Industry Lagging Behind HITECH Standards

TRAVERSE CITY, Mich. and PORTLAND, Ore., Nov. 9, 2010 /PRNewswire/ -- The latest benchmark study by Ponemon Institute, sponsored by ID Experts®, finds that data breaches of patient information cost healthcare organizations nearly $6 billion annually, and that many breaches go undetected.  The research indicates that protecting patient data is a low priority for hospitals and that organizations have little confidence in their ability to secure patient records, putting individuals at great risk for medical identity theft, financial theft and embarrassment of exposure of private information.

Today, Ponemon Institute, a privacy and information management research firm, and ID Experts, the leader in comprehensive data breach solutions, released Benchmark Study on Patient Privacy and Data Security.  For a free copy of the report and to download a graphic, visit

The passage of the HITECH Act in 2009 widened the scope of privacy and security protections under HIPAA to provide stronger safeguards for patient data.  This includes notification to patients when their information is breached.

"Our research shows that the healthcare industry is struggling to protect sensitive medical information, putting patients at risk of medical identity fraud and costing hospitals and other healthcare services companies millions in annual breach-related costs," said Dr. Larry Ponemon, chairman and founder, Ponemon Institute.  "At this point one would hope to see that healthcare organizations have improved information security practices and come into compliance with HITECH, now that it's been more than one year since it was enacted.  Instead we found enormous vulnerabilities.  The protection of patient data should be at the forefront of their efforts."

Key findings of the research:

  • Data breaches are costing the healthcare system billions.  The total economic burden created by data breaches on the healthcare industry is nearly $6 billion annually.  The impact of a data breach over a two-year period is approximately $2 million per organization and the lifetime value of a lost patient is $107,580.  The average organization had 2.4 data breach incidents over the past two years.  Major factors causing data breaches are unintentional employee action, lost or stolen computing devices and third-party error.
  • Healthcare organizations are not protecting patient data.  Organizations have little or no confidence in their ability to appropriately secure patient records (58 percent).  Healthcare organizations have inadequate resources (71 percent) and insufficient policies and procedures in place (69 percent) to prevent and quickly detect patient data loss.
  • Protecting patient data is not a priority.  Seventy percent of hospitals stated that protecting patient data is not a top priority.  Patient billing (35 percent) and medical records (26 percent) are the most susceptible to data loss or theft.  A majority of organizations have less than two staff dedicated to data protection management (67 percent).
  • HITECH has exposed the healthcare industry's lax data protection practices rather than improved the safety of patient records.  The majority (71 percent) of respondents do not believe the HITECH Act regulations have significantly changed the management practices of patient records.  The findings indicate that there is a significant number of data breaches that go undetected, and therefore unreported.

"We talk with healthcare compliance people dealing with data breach risks every day and they just can't get their arms around the problem of data exposure," said Rick Kam, president and co-founder of ID Experts.  "Unfortunately, in healthcare organizations, patient revenue trumps risk management."

Free Webinar to Discuss Findings

This study is based on in-depth field research involving interviews with 211 senior-level managers at 65 healthcare organizations.  Data was collected on actual data loss and data theft experiences.  The research is used to benchmark the current status of patient privacy at healthcare organizations today.  A free webinar Benchmark Study on Patient Privacy and Data Security with Dr. Larry Ponemon and Rick Kam will be held on Tuesday, November 16 at 1:00 p.m. ET to discuss the findings of the research in more detail.  For more information and to register, please visit

About Ponemon Institute

Ponemon Institute is dedicated to advancing responsible information and privacy management practices in business and government. To achieve this objective, the Institute conducts independent research, educates leaders from the private and public sectors and verifies the privacy and data protection practices of organizations in a variety of industries.

About ID Experts

ID Experts is the leader in comprehensive data breach solutions that deliver the most positive outcomes. The company has managed hundreds of data breach incidents, protecting millions of affected individuals, for leading healthcare organizations, corporations, financial institutions, universities and government agencies. In healthcare, the company contributes to relevant legislation and rules including HITECH and is a corporate member of HIMSS. ID Experts is active with organizations that advocate for privacy for Americans including ANSI/Identity Theft Prevention, Identity Management Standards Panel and the International Association of Privacy Professionals. For more information, visit