(Hint: It’s more than bad PR)
Cyberattacks in healthcare are no longer hypothetical. Ransomware and data breaches are now so frequent that industry leaders must consider not just the likelihood of an attack, but when it will happen. According to projections, ransomware will cost its victims $265 billion annually by 2031, and attacks will occur every two seconds.
In healthcare, the stakes are higher due to the critical nature of patient care and sensitive data. For organizations that aren’t prepared, the ramifications can go beyond being the next headline.
From financial ruin to operational shutdowns, the potentially devastating impacts of cyberattacks can bring healthcare organizations to the brink of collapse. However, with knowledge of what’s at stake and by making the right investments, executives can mitigate risk and protect their organizations from the worst-case scenario.
Cyberattacks can be business-ending
To many executives’ surprise, it’s not the headlines highlighting security breaches and stolen data that result in losing patients and, therefore, revenue. It’s the overwhelming expense that comes with a cyberattack — including ransom payments, interoperability and legal and compliance fees — that many organizations are unable to recover from.
Financial consequences
While no executive wants to be on the receiving end of bad PR, the greater risk is the direct financial impact of a ransomware attack. In 2023, the average cost to recover from such an attack was $1.82 million, an increase from $1.4 million the year before. These costs go beyond ransom payments, stretching into business downtime and employee productivity losses. For healthcare providers, the situation can become even more dire due to the critical role that patient data plays in operations.
Chris Swartz, Solutions Architect, ISG Healthcare Division, highlights the urgency of this issue. “If your account receivable systems are down and you can’t get money in the door, how long can you stay afloat? How long can you keep your doors open if you’re not bringing in revenue? And then, how long are your employees going to stick around if you can’t write checks?”
For healthcare providers, a ransomware attack means more than just a halt in operations — it threatens the very survival of the organization. Without the ability to process claims or access patient information, revenue streams dry up, leaving many hospitals in financial jeopardy.
Operational disruptions
When a hospital’s systems go offline the entire organization suffers, from medical professionals to administrative staff. Walter Hirsekorn, Cyber Security expert at ISG Technology, shares a stark reality.
“If your data is gone and you didn’t have it backed up, you’re basically out of business.”
Real-world examples show that loss of critical data has led healthcare providers to be forced to:
- Divert ambulances
- Reschedule surgeries
- Cancel appointments
- Withhold medications
- Delay treatments
These disruptions compromise patient care, and the organization faces potential legal issues and significant financial consequences.
However, the hidden costs of cyberattacks go beyond these immediate disruptions. Downtime can stretch into weeks, with 53% of organizations reporting that it took a month or more to recover from ransomware. Revenue is lost during this period, and the effort to regain normal operations can strain staff and resources.
According to Hirsekorn, this is a major factor that can cripple healthcare organizations. “Even if people still need your doctors, the real question is: Can you financially recover from a ransomware attack? Were your systems properly backed up so you can get the data back? That’s when your reputation — and survival — comes into question.”
Hirsekorn added that small and mid-sized healthcare organizations under the financial pressure of a cyberattack often end up getting acquired by a conglomerate in order to survive.
Legal, compliance and insurance issues
Beyond the immediate financial and operational impacts, healthcare providers also face legal and compliance issues after a cyberattack, including:
- Regulatory fines
- Lawsuits
- Settlements
All of these can add to the mounting costs of a breach. Additionally, compliance with industry standards such as HIPAA becomes increasingly difficult after an attack, especially when patient data is compromised.
Chris Swartz points out another critical challenge: working with cyber insurance providers. Many healthcare organizations may be unaware that certain actions, if not handled correctly, can result in denied claims.
“If they make decisions outside of their policy, they may not get paid on their claims. Leaning on a true partner, like a managed service provider, can help healthcare organizations stay in compliance with their insurance policies,” says Swartz.
This underscores the need for expert guidance — not just in preventing attacks, but in navigating the aftermath — so organizations don’t face further financial losses due to technicalities in their insurance coverage.
Why some healthcare organizations struggle to invest in security
It’s often said that prevention is cheaper than recovery, yet many healthcare organizations continue to underfund their cybersecurity efforts. According to Swartz, smaller hospitals in particular neglect basic security measures like multi-factor authentication (MFA) and off-site backups until they experience a breach. It’s only after an attack that the necessary funds are suddenly made available, which is a costly way to learn a hard lesson.
“It’s unfortunate that many healthcare organizations wait for an event to take place before they’re willing to invest the money that’s needed,” says Swartz.
By investing in proactive measures, they can protect themselves from the devastating consequences of an attack and avoid paying the higher price of recovery.
Strategies to prove (and improve) cybersecurity ROI
An astonishing 50% of healthcare organizations don’t have a cyber incident response plan. And while cybersecurity can seem expensive, there are ways to maximize return on investment (ROI) by focusing on preventative measures. Here are a few strategies that can help:
- Benchmark your IT maturity level: Take the time to survey your technology, processes, and personnel expertise to identify gaps and areas of improvement.
- Multi-factor authentication (MFA): Adding an extra layer of security makes it significantly harder for attackers to gain access to systems.
- Zero-trust solutions: These systems only trust applications that have been validated, ensuring that no unauthorized software can run on critical systems.
- Off-site backups: Backing up data off site ensures that if primary systems are compromised, an organization can restore operations quickly.
- Disaster recovery planning: Every healthcare organization should have a tested disaster recovery plan in place. This plan should define how much data loss is acceptable and how long the organization can afford to be offline.
- Enlist the help of experts: Bringing in the expertise of managed IT services can ensure your organization is ready to protect itself from cyberattacks and has the proper safeguards in place so that in the event of an attack, damage (and financial loss) is limited.
Be prepared with the help of managed IT services
For healthcare organizations, working with a managed IT service provider like ISG Technology is a critical step in not only preventing breaches, but also when navigating the complexities of recovery if a breach does occur.
Managed IT services bring expertise and best practices to the table, guiding organizations through compliance, legal issues, insurance claims, and recovery.
“In real-time attacks, we help our clients get their systems back up and running quickly,” says Swartz. “We’ve developed an internal playbook that helps our healthcare clients navigate insurance, legal, and compliance issues, ensuring they recover as quickly and efficiently as possible.”
By leveraging managed IT services, healthcare providers can reduce the impact of cyberattacks, safeguard their data, and continue providing critical care to patients without enduring devastating financial losses.
Mitigate risk before you become a headline
The hidden costs of being unprepared for a cyberattack can be devastating for healthcare organizations. And as concerning as it may be to have your reputation damaged by being the next ransomware headline, the real concern should be surviving the financial impact of a breach. By investing in preventative cybersecurity measures and working with a managed IT service provider like ISG Technology, healthcare organizations can protect themselves from these risks and ensure long-term financial stability.
Schedule a consultation with an ISG HealthTech team member today to learn more about how they help safeguard your organization’s future.