Healthcare Software Data Privacy Requirements

It’s an amazing time for digital healthcare innovation. AI is being used to interpret brain scans, spot bone fractures, and detect early signs of diseases years before they develop. Devices like portable ultrasounds and drones that deliver medical supplies are expanding care to people that don’t have easy access to it.

But it’s also a golden era for threat actors focused on disrupting healthcare systems. In 2024, healthtech data breaches accounted for 23% of all breaches across different industries. Protected health information of 276,775,457 individuals was exposed or stolen, an average of 758,288 records per day. The year saw the biggest ransomware attack to date in the healthcare industry - Change Healthcare, a US provider of revenue and payment cycle management, was involved in an incident affecting 192,700,000 individuals.

The need for secure healthcare software has never been greater. The incentive is just as great, with the United States and the European Union leading the global effort to make digital products secure by design.

If you’re a manager in a healthtech company, you need to understand potential risks and how to mitigate them. This article will give you a broad overview of the need-to-know aspects of healthcare software data privacy.

Current Threats To Healthcare Software Data Privacy

In June 2025 alone, there was a 17% month-over-month increase in healthcare data breaches and a 302% increase in the number of individuals who had their personal and health data exposed or impermissibly disclosed. 70 large data breaches were reported, and more than 7.6 million people were affected.

The numbers are staggering, but what's behind them? Three major attack vectors dominate the healthcare cybersecurity landscape in 2025.

Ransomware attacks remain the top threat, with increasingly sophisticated tactics and social engineering techniques. Sometimes they involve patient extortion, where attackers directly contact patients threatening to leak their data unless they pay individual ransoms.

Phishing and credential theft continue to plague the sector. A few years ago, Microsoft reported that 81% of breaches are caused by stolen credentials, with 55% of organizations in the U.S. suffering from at least one successful phishing attack last year. Healthcare workers, often overwhelmed with their primary responsibilities, remain vulnerable to carefully crafted phishing emails that masquerade as trusted entities.

Third-party and supply chain breaches are the emerging threat that keeps security teams up at night. Business associates and vendors with access to protected health information (PHI) represent a significant vulnerability. A single breach at a debt collection firm or billing service can cascade to affect dozens of healthcare clients and hundreds of thousands of patients.

How Healthcare Privacy Regulations Are Changing

For the first time in two decades, the HIPAA Security Rule is getting a major overhaul to strengthen cybersecurity protections for electronic protected health information (ePHI).

It involves big changes that will reshape how healthcare organizations approach data security.

Multi-Factor Authentication Becomes Mandatory

The 2025 update removes the distinction between “required” and “addressable” implementations, and makes them all required with only specific, limited exceptions. This means MFA is no longer optional - it's becoming mandatory for all systems handling ePHI.

The proposed rule requires authenticating users through at least two of three factor categories:

• Something you know (passwords, PINs)

• Something you have (tokens, smart cards, mobile devices)

• Something you are (biometrics like fingerprints or facial recognition)

Encryption Requirements Get Specific

Encryption is now explicitly required under HIPAA. ePHI must be encrypted by default, whether it’s structured, semi-structured, or unstructured. This includes:

• Data at rest using AES-256 or equivalent

• Data in transit using TLS 1.2 or higher

• Encryption key management with regular rotation

Continuous Risk Assessment Replaces Annual Audits

Gone are the days of yearly security checkups. The new requirements include conducting a risk analysis with a written assessment that contains a review of the technology asset inventory and network map at least once every 12 months and in response to a change in the regulated entity's environment or operations that may affect ePHI.

Asset Inventory and Network Mapping

Organizations must maintain an updated inventory of all technology assets that process, store, or transmit ePHI. This includes creating a network map that tracks ePHI's movement between internal systems and external partners.

Global Regulations of Healthcare Data Privacy

While healthtech organizations operating in the US grapple with HIPAA updates, the global healthcare data privacy landscape still presents more complex challenges. Healthcare technology companies operating internationally must navigate a patchwork of regulations, each with unique requirements and penalties.

GDPR - Europe's Gold Standard

The General Data Protection Regulation (GDPR) classifies health information as "special category" data requiring the highest level of protection. GDPR applies to any organization processing EU residents' health data, regardless of where the company is based.

Key GDPR requirements for healthcare include:

• Explicit consent - healthtech organizations must obtain explicit and informed consent that is freely given, specific, and unambiguous

• Data subject rights - patients have the right to access, rectify, erase, restrict processing, and data portability

• Privacy by design - data protection must be integrated into systems from the outset

• Data protection impact assessments (DPIAs) - required for high-risk processing activities

• 72-hour breach notification - authorities must be notified within 72 hours of discovering a breach

• Penalties - up to €20 million or 4% of global annual turnover, whichever is higher

The European Health Data Space (EHDS)

Entered into force in March 2025, the European Health Data Space Regulation creates a unified framework for health data across the EU. Key provisions include:

• Cross-border exchange of electronic health data for healthcare delivery (primary use)

• Secure reuse of health data for research and innovation (secondary use)

• Standardized exchange of patient summaries and ePrescriptions by March 2029

• Medical images and lab results interoperability by March 2031

The Complex Legal Mosaic in The Asia-Pacific Region

The Asia-Pacific region presents unique challenges with each country implementing distinct privacy frameworks.

China's PIPL (Personal Information Protection Law) includes strict data localization requirements, no legitimate interest basis for processing, cross-border data transfer restrictions, and penalties up to 5% of annual revenue.

Japan's APPI (Act on Protection of Personal Information) covers flexible usage of medical/health information under the Next-Generation Healthcare Infrastructure Act, introduces the "Pseudonymised Medical Information" concept, and expands MyNumber (National ID) with heightened collection and storage regulations.

Singapore's Digital Health Framework covers the National Electronic Health Record (NEHR) system, mandatory contribution of health data from the private sector, and National Precision Medicine program for genomic data.

Australia's Privacy Act covers mandatory breach notifications, extra-territorial application, and penalties up to AUD $2.2 million for corporations.

Cross-Border Data Transfers Are The Ultimate Challenge

Healthcare organizations operating globally face significant challenges in managing cross-border data transfers.

Data Localization Requirements is one of the big ones. Many countries, particularly in Asia, require health data to remain within national borders, creating challenges for:

• Cloud storage solutions

• International clinical trials

• Telemedicine services

• Global health research

Adequacy Decisions and Transfer Mechanisms represent another challenge. Organizations must implement appropriate safeguards such as:

• Standard Contractual Clauses (SCCs) for EU data transfers

• APEC Cross-Border Privacy Rules (CBPR) for Asia-Pacific

• Binding Corporate Rules for intra-company transfers

• Explicit consent where no other mechanism exists

What Is The Zero Trust Architecture for Healthcare Software?

Compliance is essential but difficult, so some healthcare organizations are adopting Zero Trust architecture as a comprehensive security strategy. Instead of assuming that anything inside the network perimeter is safe, Zero Trust flips the model: every user, device, application, and data flow is constantly authenticated, authorized, and encrypted.

The Seven Pillars of Healthcare Zero Trust

Based on the zero trust framework, healthcare organizations should implement:

1. Identity verification - every user must be continuously authenticated and authorized

2. Device security - all devices accessing ePHI must be verified and compliant

3. Network segmentation - microsegmentation isolates critical systems and contains potential breaches

4. Application security - every application requires verification before accessing data

5. Data protection - encryption and access controls follow data wherever it goes

6. Visibility and analytics - continuous monitoring detects anomalies in real-time

7. Automation and orchestration - automated responses to threats reduce response time

For organizations that haven’t done it yet, implementing microsegmentation can be a quick way to strengthen security. Nowadays it doesn’t require new hardware or complex network reconfigurations, doesn’t disrupt operations, and can be accomplished fairly quickly.

Practical Implementation Steps

Start with pilot programs in high-risk areas:

• Secure remote access for telehealth platforms

• Isolate medical devices on separate network segments

• Implement role-based access controls for EHR systems

Some healthtech systems have shown that focused efforts can yield rapid progress. One example reported a 50,000-user hospital implementing a zero-trust rollout in just three weeks with a small team.

Configuring Cloud Security For Healthcare Data Privacy

As healthcare organizations migrate to the cloud, new security challenges emerge. The shift requires a comprehensive approach to cloud security that goes beyond basic configurations.

That includes data classification and encryption, like implementing AES-256 encryption for data at rest, using TLS 1.2 or higher for data in transit, or deploying hardware security modules (HSMs) for key management. 

Another key challenge is access management. It’s recommended to implement Role-Based Access Control (RBAC), deploy Single Sign-On (SSO) with MFA, and perform regular access reviews and de-provisioning.

Continuous monitoring is necessary, with real-time threat detection and response, Security Information and Event Management (SIEM) integration, and even regular penetration testing and vulnerability assessments.

When using cloud services, remember that security is a shared responsibility. Cloud providers secure the infrastructure, but healthcare organizations still have to:

• Configure security settings properly

• Manage user access and authentication

• Encrypt sensitive data

• Monitor for threats and respond to incidents

• Ensure Business Associate Agreements (BAAs) are in place

Establishing a Culture of Security in HealthTech

Technology alone won't solve the healthcare data privacy challenge. It is important that all members of the workforce receive ongoing security awareness training for two reasons: attackers can infiltrate a network via a device that does not have access to electronic PHI and move laterally through the network, and training must be ongoing due to the evolving nature of cyberthreats.

HealthTech security training should cover topics like phishing recognition, for example with regular simulated phishing tests that provide immediate feedback. Another important area is password hygiene - using password managers and unique credentials. There’s also device security, meaning proper handling of mobile devices and removable media, and incident response, defining clear procedures for reporting suspicious activity. Finally, an essential topic is social engineering awareness, to improve the understanding of tactics like pretexting and baiting.

Why Healthcare Data Privacy is Important

Healthcare data privacy is about maintaining the trust that makes modern healthcare possible on a global scale. With ransomware attacks disrupting patient care, new regulatory requirements emerging worldwide, and the complexity of cross-border data flows, healthcare organizations face unprecedented challenges.

By implementing comprehensive security measures, from MFA and encryption to Zero Trust architecture, and adopting a global compliance strategy that meets the highest standards, healthcare organizations can protect patient data while enabling the innovation that improves care delivery worldwide.

The time to act is now. Organizations that begin implementing these changes today will be best positioned to meet compliance requirements while, more importantly, protecting the patients who trust them with their most sensitive information – regardless of where in the world they are located.

Useful links regarding healthcare data privacy regulations:

• Global data protection laws: https://unctad.org/page/data-protection-and-privacy-legislation-worldwide

• HIPAA compliance (US): https://www.hhs.gov/hipaa

• GDPR guidance (EU): https://www.edps.europa.eu/data-protection/our-work/subjects/health_en

• European Health Data Space:https://health.ec.europa.eu/ehealth-digital-health-and-care