WASHINGTON – Lack of resources, lack of internal control over patient information and lack of training leaves many healthcare organizations ill-prepared to address privacy and security risks and medical fraud, according to a new report by the Deloitte Center for Health Solutions.

The report urges healthcare leaders to act now to protect patient data, protect their brand and avoid costly penalties associated with security breaches.

“As the healthcare industry transitions to widespread adoption of electronic health records, clinical data warehousing, home monitoring and remote medicine, there may be greater probability of data breaches, potentially resulting in data fraud and medical identity theft,” said Paul Keckley, executive director of the Deloitte Center for Health Solutions. “Medical fraud is a serious issue, and 67 percent of consumers we polled believe fraud has a major influence on driving up the overall cost of healthcare.”

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The report, Privacy and Security in Health Care: A Fresh Look, identifies the risks associated with privacy and security breaches in healthcare. It offers guidance about preparedness for health plans, life science organizations, health information technology solutions providers and federal and state health agencies, to help minimize potential privacy and security threats as health reform drives increased exchange of online health information.

Deloitte identifies some of the reasons why preparedness for privacy and security risk is inadequate at some health care organizations, including lack of internal resources (human resources and capital); lack of internal control over patient information; lack of upper management support; outdated policies and procedures or non-adherence to existing ones; and inadequate personnel training.

“The cost of a security breach can be damaging not only to a company’s bottom line, but also to the reputation of its brand,” said Russ Rudish, vice chairman and U.S. healthcare provider industry leader at Deloitte. “As healthcare organizations adopt new technologies that leverage health information, it is also imperative that they conduct a senior management-led, board-approved audit of privacy and security risk, and plan to make enhancements in support of current policies, rules and regulations.”

Privacy and security regulations have historically focused on internal security processes, however in the new normal, culpability has been expanded to downstream entities, according to the report. As healthcare delivery transitions to performance-based compensation, increased transparency, and increased use of EHRs and personal health records, new privacy and security rules, regulations, laws and standards will be added in each sector.

Deloitte’s report outlines a basic approach for healthcare industry stakeholders to assess their current preparedness across three key areas:

• Risk Management – Help identify and assess data security risks to develop appropriate security controls to mitigate or avoid risk. This allows health care organizations to make informed decisions on how to allocate security resources to improve data protection.
• Security and Privacy Program – Develop and implement policies, procedures and training needs to mitigate or avoid risk. This helps create a baseline for standards to secure handling of sensitive patient information and awareness of privacy and security procedures across the organization.
• Compliance – Verify organization conformance to its policies and standards. This helps reduce organizational risk; creates customer trust and confidence in an organization’s protection of personal health information; and reduces potential for financial penalties due to reasonable cause or willful neglect.

[See also: Experts guide HIMSS attendees through the privacy maze.]

Reflecting the importance of safeguarding consumers’ personal health information, the Deloitte Center for Health Solutions 2010 Consumer Survey found that while more than half (57 percent) of consumers want access to an online PHR connected to their doctor’s office, one-third (33 percent) are concerned about privacy and security of an online PHR.

“Healthcare industry stakeholders should act now to prevent compromising sensitive patient data, preserve brand value and avoid substantial financial penalties for violations,” concluded Keckley. “By building in technology to prevent, monitor and remedy data breaches and setting aside operating funds to implement safeguards, the healthcare industry can confront and contain this growing challenge while also addressing the needs of their patients to help improve the quality of care.”