Healthcare Data Breaches Costs Industry $4 Billion by Year's End, 2020 Will Be Worse Reports New Black Book Survey

TAMPA, Fla., Nov. 4, 2019 /PRNewswire/ -- Black Book Market Research LLC surveyed over 2,876 security professionals from 733 provider organizations to identify gaps, vulnerabilities and deficiencies that persist in keeping hospitals and physicians proverbial sitting ducks for data breaches and cyberattacks. 96% of IT professionals agreed with the sentiments that data attackers are outpacing their medical enterprises, holding providers at a disadvantage in responding to vulnerabilities.

A fragmented mix of 415 vendors offering data security services, core products and solutions, software, consulting and outsourcing received user feedback including large IT companies, mid and small security vendors and start-ups in the polling period Q4 2018 to Q3 2019.

Thus far in 2019, healthcare providers continued to be the most targeted organizations for industry cybersecurity breaches with nearly 4 out of 5 breaches, whereas successful attacks on health insurers and plans maintained with more sophisticated information security solutions with little change year to year. Over half (53%) of all provider breaches were caused by external hacking according to respondents.

Over 93% of healthcare organizations have experienced a data breach since Q3 2016 and 57% have had more than five data breaches during the same timeframe. Not only has the number of attacks increased; more than 300 million records have been stolen since 2015, affecting about one in every 10 healthcare consumers.

The dramatic rise in successful attacks by both criminal and nation-state-backed hackers illustrates how attractive and vulnerable these healthcare enterprises are to exploitation. Despite these wake-up calls, the provider sector remains exceedingly susceptible to ongoing breaches.

Budget constraints have encumbered the practice of replacing legacy software and devices, leaving enterprises more susceptible to attacks. "It is becoming increasingly difficult for hospitals to find the dollars to invest in an area that does not produce revenue," said Doug Brown, founder of Black Book. According to 90% of hospital representatives surveyed, IT security budgets have remained level since 2016. As a percentage of IT health systems and hospital organizational budgets, cybersecurity has increased to about 6% of the total annual IT spend for CY 2020, however, physician organizations and groups report a decrease in actual cybersecurity expense allocated, with less than 1% of their IT budgets earmarked for cybersecurity in 2020.

A third of hospital executives that purchased cybersecurity solutions between 2016 and 2018 report they did so blindly without much vision or discernment. 92% of the data security product or service decisions since 2016 were made at the C level and failed to include any users or affected department managers in the cybersecurity purchasing decision. Only 4% of organizations had a steering committee to evaluate the impact of the cybersecurity investment.

"The situation did not improve in 2019 and dilemma with cybersecurity budgeting and forecasting is the lack of reliable historical data," said Brown. "Cybersecurity is a newer line item for hospitals and physician enterprises and budgets have not evolved to cover the true scope of human capital and technology requirements yet, including AI."

Last year's Black Book cybersecurity survey revealed 84% of hospitals were operating without a dedicated security executive. As a solution to unsuccessfully recruiting a qualified healthcare chief information security officer, 21% of organizations opted for security outsourcing to partners and consultants or selected security-as-a-service options as a stop-gap measure.

In 2019, 21% of hospitals surveyed report having a dedicated security executive, although only 6% identified that individual as a Chief Information Security Officer or CISO. Only 1.5% of physician groups with over ten clinicians in the practice report having a dedicated CISO.

The estimated cost of a data breach by the respondent hospital organizations with actual breaches in 2019 averaged $423 per record.

In a separate Q3 2019 survey of 58 health system marketing leaders with organizational breaches in the past 18 months report expending between 51k and 100k dollars of unbudgeted marketing expense to fight any negative impressions on the hospital brand cast from data breaches and theft. Still, no marketing executive surveyed reported allocating 2020 budget funds to combat the consequences of patient privacy or record breaches.

That shortage of healthcare cybersecurity professionals is forcing a rush to acquire services and outsourcing at a pace six times more than cybersecurity products and software solutions, increased 40% from last year. Cybersecurity companies are responding to the labor crunch by offering healthcare providers and hospitals with a growing portfolio of managed services.

"The key place to start when choosing a cybersecurity vendor is to understand your threat landscape, understanding the type of services vendors offer and comparing that to your organization's risk framework to select your best-suited vendor," said Brown. "Healthcare organizations are also more prone to attacks than other industries because they persist at managing through breaches reactively and not proactively."

The ability of non-CISO executives in healthcare organizations is not improving either. 70% of IT management respondents report their operations are not aware of the full variety of cybersecurity solution sets that exist, particularly mobile security environments, intrusion detection, attack prevention, forensics and testing. Last year 57% reported not having a good understanding of the cybersecurity product and service landscape.

58% of hospitals did not select their current security vendor in advance of a cybersecurity incident. 94% have not augmented their cybersecurity protections since their last breach. 35% of healthcare organizations did not scan for vulnerabilities before an attack.

"Providers are at a severe disadvantage when they are forced to hastily retain a cybersecurity firm in the midst of an ongoing incident as the ability to conduct the necessary due diligence is especially limited," said Brown.

20% of healthcare organizations reported they felt intimidated by a vendor to retain services when the vendor identified a vulnerability or security flaw. "While the intrinsic nature of cybersecurity radiates pressures and urgency, hospitals shouldn't let this dictate the vendor selection process," said Brown.

On a positive note, 41% of healthcare enterprises have not formally identified specific security objectives and requirements in a strategic and tactical plan, improving from 60% in 2018. "Without a clear set of security goals, providers are operating in the dark and it's impossible to measure results," said Brown.

87% of healthcare organizations have not had a cybersecurity drill with an incident response process, despite the skyrocketing cases of data breaches in the healthcare industry, and as of Q3 2019, 84% of hospitals and 65% of payer organizations did not have full-time cybersecurity employees.

27% of hospitals (up from 12% in 2018) believe that a Q3 2020 assessment of their cybersecurity will show improvement. 29% of hospital leaders believe their cybersecurity position will worsen and 79% of physician groups foresee increased cyber-attacks, as compared to 4% in other industries.

In 2019, 40% of providers surveyed still do not carry out measurable assessments of their cybersecurity status. Of those that did, 19% used an objective third-party service to benchmark their cybersecurity status, 7% used an objective software solution to benchmark their cybersecurity status and 73% self-assessed with their own criteria.

26% of hospital respondents and 93% of physician organizations currently report they do not have an adequate solution to instantly detect and respond to an organizational attack.

60% of surveyed CIOs did not evaluate the total cost of ownership (TCO) before making a commitment to sign their current cybersecurity solution or service contract. 91% reported they bought their cybersecurity solution to be compliant, not necessarily to reduce risk when the IT decision was made.

Healthcare organizations are hyper-focused on patient care and reimbursement. "Cybersecurity risks are not at the forefront of executives' minds," said Brown. "Medical and financial leaders also wield more influence over organizational budgets making it difficult for IT management to implement needed cybersecurity practices despite the existing environment."

About Black Book Research

Black Book Market Research LLC, its founder, management and staff do not own or hold any financial interest in any of the vendors covered and encompassed in the surveys it conducts. Black Book reports the results of the collected satisfaction and client experience rankings in publication and to media prior to vendor notification of rating results and does not solicit vendor participation fees, review fees, inclusion or briefing charges and/or vendor collaboration as Black Book polls vendors' clients.

In 2009, Black Book began polling the healthcare user and client experience of now over 622,000 healthcare software and services users. Black Book expanded its survey prowess and reputation of independent, unbiased crowd-sourced surveying to IT and health records professionals, physician practice administrators, nurses, financial leaders, executives and hospital information technology managers. Cybersecurity services and products satisfaction and client experience polling was initiated in 2013 by Black Book Market Research LLC. Media requests for full 78-page report contact: Alex Reber [email protected]

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SOURCE Black Book Research