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The Importance Of HIPAA And What It Can Mean For Your Business

February 7, 2022

For most people, HIPAA is merely a regulation that they are vaguely familiar with from the paperwork they have to sign at their doctors’ offices. For businesses that are in or related to the healthcare industry, however, HIPAA is a crucial concern that could threaten an organization’s survival if it isn't kept up with properly.


Does your organization need to be HIPAA compliant? Why is HIPAA compliance so vital in the first place, and what could it mean for your business? Our security compliance specialists are answering all your top questions.

Does your business need to comply with HIPAA?

While this is often misunderstood, it’s important to know that HIPAA doesn’t apply to any and all health-related information. The regulation only applies to specific types of organizations based on how you do business and what contact you have with private health information.


Namely, HIPAA laws apply to specific types of organizations that HIPAA outlines as “covered entities,” including:


  • Health plans, such as health insurance companies and HMOs
  • Healthcare providers that conduct any business electronically, including billing insurance companies electronically, which is nearly all healthcare providers
  • Healthcare clearinghouses, which are organizations that receive healthcare data from other organizations and translate it into a different format


To a lesser extent, anyone who serves as a “business associate” of a covered entity also needs to be HIPAA-compliant. A business associate is typically a contractor or subcontractor that a covered entity hires who has access to private health information. A business associate doesn’t have to follow all of the HIPAA regulations, only a limited portion of them.

Why is HIPAA critical for your business?

If you fall under the categories outlined above as “covered entities” in HIPAA, then HIPAA compliance is a vital necessity for your business. There are regulatory reasons and practical reasons why your compliance needs to be a priority.

Avoid serious penalties

HIPAA is not a security standard that is well-advised, yet voluntary. It is a strict US law that must be followed by any organization that qualifies as a covered entity. If you are not compliant, you risk severe penalties issued by the Department of Health and Human Services’ Office for Civil Rights.


There are four tiers of HIPAA penalties, with Tier 1 being the least severe and Tier 4 being the most severe. The OCR can determine which tier your HIPAA violation fits into based on factors like the severity of the violation, how reasonably avoidable the violation was, how much knowledge you had of the problem, and whether you tried to correct the violation.


Each tier has maximum and minimum fines per violation. Those fines are adjusted each year to align with inflation. The current fine amounts took effect in November 2021. For the lowest three tiers, you could be fined up to more than $60,000 per violation and up to over $1.8 million per year. For Tier 4 violations, the minimum fine per violation is over $60,000 and you may be fined more than $1.8 million per violation.

Enhance overall security

HIPAA regulations are not mere formalities. They exist to make your health data more secure and protect it from both intentional and unintentional access by people who shouldn’t have access to it. This involves a variety of information security strategies that are designed to secure your network and beyond.


This means that when you implement HIPAA, you’ll be making your data more secure so you lower your chances for a data breach. Data breaches are costly of their own accord, so HIPAA regulations carry benefits beyond just avoiding legal penalties.

Preserve the trust of your patients

The healthcare industry is a highly trust-based industry. If you lose the trust of your patients or customers, they’re likely to look for a new provider or insurance carrier in a heartbeat because they don’t want to put their health at risk. HIPAA violations are a fast way to lose that essential trust, so becoming and remaining compliant is essential for keeping your patients or customers.

What could HIPAA non-compliance mean for your business?

Ultimately, all of this boils down to the fact that HIPAA non-compliance could be enough of a problem to close your business entirely. You might find yourself with penalty fines so high they could bankrupt your business. You could also quickly lose your patients or customers if the word gets out that you aren’t keeping their private health information safe. All told, not complying with HIPAA could spell the end of your business.

How to protect your business with HIPAA compliance

Can you say with certainty that your business is fully compliant with HIPAA? If not, it’s time to make your HIPAA compliance a top priority.


Getting started is simple when you use an automated compliance platform like Vanta. Vanta will conduct an in-depth scan of your system against HIPAA requirements, providing you with a clear and precise checklist of the regulations you may not comply with and giving you documentation of the regulations you do meet. Along with templates and tools to use in your compliance engineering, Vanta makes HIPAA compliance simpler so you can keep your business and your patients safe.

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