In May 2023, an inquiry into a data breach involving the exposure of over 230,000 individuals' private information ended with a $350,000 settlement for an Arkansas-based service provider in the healthcare sector. Doesn’t it sound like a nightmare? Meanwhile, HIPAA-compliant software, along with proper safeguards for subcontractors' data storage, helps prevent and practically eliminate the possibility of such incidents, ensuring the preservation of financial and reputational capital for medical institutions.
The healthcare industry has long been aware of cybercrime. It is a frequent target for hackers eager to steal personal data from medical records, including names, phone numbers, billing information, and Social Security numbers—much more than a compromised credit card can reveal. In the first half of 2025 alone, 379 major healthcare data breaches were reported in the United States, exposing the protected health information of around 31 million individuals, with most incidents caused by hacking and IT failures. This underscores how important HIPAA certification for software is and just how persistent and serious cybersecurity threats remain for providers and patients alike.
Today's post aims to explain what makes healthcare applications adhere to the requirements of HIPAA and why it matters. It also offers a practical checklist to evaluate IT solutions' compliance and supporting organizational practices.
Health Insurance Portability and Accountability Act is a US federal law initially published in 1996. It promotes nationwide standards for protecting health data and specifies people's rights to their personal information. Along with privacy and security regulations, the Act contains a breach notification rule, providing high transparency around health data incidents uncommon in other sectors of the American economy.
The law applies to all healthcare providers and health plans, including their business associates, who deal with protected health information (PHI) — any data that refers to a particular individual's health, provision of care, or payment for that care.
From a bird's eye view, HIPAA is part of a wave of privacy regulations introduced by governments worldwide to respond to the ever-increasing volumes of personal data gathered electronically. In the European Union, a broader legal framework known as GDPR regulates the use of all personal information, including health data. Other rough equivalents of HIPAA are PIPEDA in Canada and the Privacy Act 1988 in Australia.
Despite the promise of this article, it would be incorrect to say that any software alone can guarantee HIPAA compliance. The Act addresses organizations and professionals who use software and are solely responsible for ensuring that they do it obeying the law. Human error rather than technology's weaknesses is the cause of many data breaches.
Yet, it is perfectly possible and essential to adapt the software tools to help make a hospital, insurance company, clinical lab, or other institution that uses these tools HIPAA-compliant. Several measures provide the observance of the Act's rules in healthcare applications. While the advice below is not all-inclusive, it covers most elements that must be present in a compliant IT solution.
The guidance follows HIPAA's fundamental principles concerning PHI, namely, that this data must be:
Cyber threats continue to be a major concern for the healthcare industry, which stores some of the most sensitive personal information imaginable from names and contact details to medical histories and billing records. A 2025 peer‑reviewed study in JAMA Network Open showed that roughly 88% of all protected health information (PHI) exposed in data breaches between 2010 and 2024 occurred because of hacking or other IT‑related incidents, with ransomware and similar attacks playing a large role. This underscores how persistent and dominant hacking remains as a threat vector for healthcare data, highlighting the importance of robust HIPAA certification for software to protect patients and systems alike.
Some of the primary security practices are controlling user access and authentication. Permitting distinct access levels to sensitive data based on the individual's role, combined with multi-factor authentication, requirements on complex passwords, and limited user sessions, lowers the chance of potential information mishandling.
The storage environment needs to be secure too. There are increasingly popular HIPAA-ready cloud platforms such as AWS and Microsoft Azure. Alternatively, healthcare organizations can implement their solutions with data storage in a physical location on-premise, which gives them complete control over data.
Encryption is a typical way to safeguard PHI, and it is a vital element of such software as healthcare communication applications that facilitate patient-doctor interactions and file exchange. By encoding a message or a piece of information, this process adds an extra layer of protection–even in the case of leaked content, it would be incomprehensible to anyone unauthorized. Robust tools and protocols for encrypting data to the required standards exist.
While many organizations today recognize the importance of encryption, there is still room for improvement in how it’s applied across sensitive data categories. According to the 2025 Global Encryption Trends Study, about 72% of organizations with an enterprise encryption strategy reported that encryption significantly reduced the impact of data breaches, highlighting the real value of encryption as a security control. However, only a small portion of companies (around 11 %) have yet to adopt HIPAA software delivery compliance such as blockchain‑based or AI‑enhanced cryptographic solutions, suggesting that widespread implementation is still a work in progress as businesses strive to protect critical information more comprehensively.
HIPAA requires keeping a 6-year record of activities related to personal health information. In practice, compliant software should maintain an automatic log of all system access attempts with additional details on those originating from unusual locations or devices.
Beyond encryption and access controls, maintaining detailed audit trails is a crucial element of HIPAA-compliant software. Audit trails track every action users take within the system, including logins, file access, edits, and data transfers. This not only helps detect unusual behavior quickly but also ensures accountability by showing exactly who accessed or modified sensitive information. In practice, these logs support internal reviews, compliance audits, and investigations after a potential breach. When combined with automated alerts for suspicious activity, audit trails make it much easier for healthcare organizations to enforce policy, maintain trust, and demonstrate compliance with HIPAA requirements.
There is always some risk of a data breach. When that happens, software must be able to detect the incident swiftly, report it to the relevant parties immediately, and initiate some early measures to avoid more extensive damage. The internal procedures must specifically abide by the breach notification rule. A regular data backup is a feature of compliant software that helps recover critical information after an incident.
As mentioned, secure software is just one component of overall compliance efforts. Here are a few crucial ways to ensure HIPAA readiness on an organizational level.
Running periodic audits helps uncover potential risks of data privacy breaches. An audit can also answer some questions related to the safeguards incorporated in software tools, such as whether they log all entry attempts and where they keep personal data. The result of an audit is a detailed report on present weaknesses and vulnerabilities, as well as suggested actions to mitigate these.
Secure software adds the most value when employees know how to deal with the personal data they access through it and how to notice attacks on the system. Recurring HIPAA compliance training may cover multiple topics, including the types of sensitive data, why and how to protect it, and what data breaches look like in real life.
A recovery plan contains a set of activities to execute in a particular situation of a data incident, a breach attempt, or other system failures. Each healthcare provider needs unique internal security policies and clear recovery plans based on their operational specifics and integrated systems. Moreover, organizations should update these documents regularly, as the emergence of new technologies may lead to obsolete instructions.
Some basic preventive activities that strengthen cybersecurity in addition to the software features mentioned above include:
A healthcare firm may use software vendors' solutions or help from IT consultants. It may also enter into alliances with complementary service providers. These partners and contractors may have access to PHI, which makes it critical for HIPAA-compliant institutions to handle inter-organizational relationships properly. The requirement is for involved parties to sign a contract specifying how they will work with sensitive data.
HIPAA is difficult to navigate. To help you assess where your company and IT systems are on the path to overall compliance, below is a list of general questions to ask yourself. It is aligned with the previously discussed recommendations and includes the necessary measures and features for implementing compliant software.
The price of violating the principles of HIPAA is something you cannot afford to ignore. As our introductory example shows, the monetary fine can range in hundreds of thousands of dollars (reaching up to $1.5 million per incident), not to mention the consequences of broken customer trust and weakened company brand.
The HIPAA Journal noted that outdated IT infrastructure, including unsupported software and legacy systems, is the initial point of access in nearly every fourth severe security incident in healthcare. Considering this fact, organizations must ensure timely upgrades or invest in modern, compliant healthcare software development from scratch.
At CleverDev Software, we develop custom business-driven health tech solutions satisfying strict regulations, including HIPAA, GDPR, and other security standards. Partnering with a company already experienced in building HIPAA-compliant software such as digital medical records and telemedicine applications will save you time and money in achieving the right level of patient data protection.
According to the Privacy Rights Clearinghouse, the healthcare and medical provider industry is a clear leader in recorded data breaches in the US from 2012 to 2022. With over 35% share, it had more reported violations than the financial, manufacturing, tech, communications, and government sectors combined.
The transparency on incident reporting required by HIPAA might partly explain why we observe so many healthcare information breaches. The growing demand for this valuable stolen data in the shadow economy is another driving factor.
Either way, no healthcare organization wants to appear in the media headlines with a case of exposed patient records. That's why HIPAA-compliant software development is the first step to ensuring you get value from your data without worrying about its security.
Technology and Innovation Researcher
Since 2005, Andrey has been a tech trailblazer, passionate about making complexity accessible. He melds his extensive personal research with direct contributions from experienced engineers to craft enlightening and empowering content.
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