Criminal attacks now surpass accidental breaches in healthcare

Data breaches caused by criminals outnumbered accidental ones for the first time, according to Ponemon's fifth annual benchmark study of privacy and security in the healthcare industry

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Data breaches caused by criminals outnumbered accidental ones for the first time, according to Ponemon's fifth annual benchmark study of privacy and security in the healthcare industry.

"Over the five years, the percentage of incidents that occur due to criminal attacks versus negligence has increased by 125 percent," said Larry Ponemon, chairman and founder at Ponemon Institute.

Over the past two years, 91 percent of healthcare organizations reported at least one breach, 39 percent reported two to five data breaches, and 40 percent had more than five data breaches.

And that could be an undercounting, he added.

"A lot of the organizations we study lacked confidence in their ability to know about all the data breaches that existed in their organization," he said.

The total cost of the breaches adds up to $6 billion a year, with an average economic impact of $2,134,800 per organization.

There has been a corresponding effect on individual healthcare consumers, as well.

According to Ponemon, medical identity theft nearly doubled in five years, from 1.4 million adult victims to over 2.3 million in 2014.

One reason? Stealing medical information is more valuable than credit cards or Social Security Numbers.

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According to the World Privacy Forum, the former has a street value of around $50 -- compared to a street value of $1 for the latter. And the average profit per record is $20,000 -- compared to just $2,000 for regular identity theft.

Medical records can be used for billing fraud, for medical identity theft, and for purchasing drugs for resale. Plus, the criminal activity takes much longer to be discovered and the only upper limit, per record, are the limits of the health insurance policy.

But despite the fact that healthcare is now a prime target for criminals, the industry as a whole isn't prepared to deal with the threat.

More than half of healthcare organizations said that they don’t believe their incident response process has adequate funding and resources, and one-third of respondents don’t have an incident response process in place. In addition, the majority of them fail to perform a risk assessment for security incidents, despite the federal mandate to do so, according to the report.

When a breach does occur, two-thirds of organizations do not offer any protection services for the affected patients.

The Ponemon study looked beyond data breaches to other kinds of security incidents, as well, such as phishing attacks and malware, and also surveyed third-party organizations that handle sensitive patient data.

Of the healthcare organizations, 65 percent said they had at least one security incident involving electronic information over the past 24 months -- but 87 percent of third-party business associates said they'd had one.

"Business associates really don't have the best practices piece of the puzzle down," said Rick Kam, president and co-founder at ID Experts, which sponsored the survey. "Some of these organizations may not understand the processes or may lack resources."

Rick Kam, president and co-founder at ID Experts

They're also not doing the required risk assessments, he added. While 50 percent of healthcare organizations perform a risk assessment after each electronic data breach, only 42 percent of business associates do so.

"There are small signs of hope," said Ponemon. "Healthcare organizations, in general, are more cognizant of data breaches, and are putting more resources in it."

For example, when his company first started doing the study five years ago, it was common to hear people say, "What's medical identity theft?"

Today, he said, there's a high level of awareness of the problem.

Copyright © 2015 IDG Communications, Inc.

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