Key Takeaways
1. SOC compliance in healthcare ensures that organizations meet security and privacy standards set by the AICPA.
2. While SOC 2 attestation is not legally required for healthcare organizations, it is demanded by clients and partners due to rising cybersecurity risks.
3. I.S. Partners provide expert guidance through the entire auditing process and ensure a smooth and efficient experience tailored to the organization’s needs.
What Is SOC in Healthcare?
SOC 2 compliance in healthcare means a medical organization meets the security and privacy standards set by the American Institute of Certified Public Accountants (AICPA).
This involves implementing appropriate controls to protect data (SOC 2 Type 1) and using these controls effectively (SOC 2 Type 2).
This is because no one wants to work with an at-risk healthcare provider. Potential clients want to know how secure your healthcare organization is. Having SOC 2 attestation is a strong way to demonstrate your commitment to security and privacy, showing that your organization is “ready” and trustworthy. Note: Having HIPAA or HITECH certifications will show that you are trustworthy.
Is SOC 2 Required for Healthcare?
No, healthcare organizations are not legally required to comply with SOC 2. However, many healthcare organizations require vendors to have SOC 2 due to the rising cyber attacks and risks.
This is because cyber threats target Protected Health Information (PHI). After all, it can be sold on black markets or used for identity fraud.
This is why a SOC 2 audit helps your healthcare organization address third-party risk concerns by evaluating internal controls, policies, and procedures based on the AICPA’s Trust Services Criteria.
When determining which Trust Services Criteria apply to your healthcare organization, consider the following questions:
- Security: Are our systems protected against unauthorized access and potential threats?
- Availability: Are our systems available for operation and use as agreed?
- Processing Integrity: Are our information systems processing data in a complete, valid, accurate, timely, and authorized manner?
- Confidentiality: Is confidential information, including PHI, protected as agreed?
- Privacy: Is personal information collected, used, retained, disclosed, and destroyed under our privacy notice?
Benefits of SOC 2 for Healthcare
For highly regulated sectors like healthcare, SOC 2 compliance offers significant benefits. SOC 2 audits help healthcare companies adhere more closely to mandatory standards like HIPAA, and the complementary security controls between SOC 2 and HIPAA help build a stronger security posture and best practices. Some of the other benefits are:
- Proven Security Measures: Show that your business has the right controls to protect PHI, which is essential for Business Associate Agreements.
- Follow Security Frameworks: A SOC 2 audit shows you meet recognized security standards, which can reduce HIPAA penalties.
- Identify Risks: Determine which Trust Services Criteria, Control Components, and Points of Focus apply to help you spot and fix potential privacy and data security risks.
- Boost Compliance: The SOC 2 process improves your overall compliance and security posture, even if you don’t have a specific goal in mind.
- Qualified Opinion: SOC 1 or SOC 2 audits give a “qualified opinion,” offering an objective look at your controls and practices instead of a pass/fail grade.
- Better Market Reputation: Who wouldn’t want a better market reputation? Showing SOC 2 compliance boosts your healthcare organization’s reputation. It proves you’re serious about protecting sensitive data and meeting regulatory standards.
- Business Goals: Going through a SOC 2 audit shows that your company takes security seriously and can help you meet your business goals. You can market your organization as having top-notch security, making you a reliable partner for healthcare organizations.
Why Should Healthcare Organizations Include the Privacy Category?
A SOC 2 audit shows that your healthcare organization is dedicated to providing secure services and protecting patient information. While adhering to the Security principle of the trust service criteria is mandatory, including the privacy category demonstrates that you’re serious about keeping PHI secure and ensuring patients receive quality care.
The Privacy criterion is highly relevant for healthcare companies, as they handle a lot of personal health information that needs to be collected, used, retained, and disposed of by privacy regulations. The criterion helps demonstrate that an organization maintains the privacy of this personal information.
Now, here’s why it’s important:
Protecting Personal Information
Including the privacy category ensures your organization handles personal information properly. Think about a doctor’s office; when you first visit, you’re handed a Notice of Privacy Practices because you’ll share personal details like medical conditions, birth date, insurance, and medication lists.
Transparency With Patients
Patients need to know how their sensitive information will be used. For instance, what if the office shares healthcare data with marketing service providers, a research organization, or other medical providers? The privacy notice must clearly state who will have access to this information.
Ensure Compliance
Adding the privacy category to your SOC 2 audit ensures your organization follows its privacy commitments, as promised in your privacy notices. This builds trust and boosts your reputation.
Prevent Data Abuse
Including the privacy category helps prevent misuse of personal information, reassuring patients that their data won’t be shared or used without their consent.
Is SOC 2 a Substitute for HIPAA Compliance Framework?
No, SOC 2 is not a substitute for the HIPAA compliance framework. While SOC 2 and HIPAA aim to protect sensitive data, they have different purposes and distinct requirements. HITRUST is also one of the sought-after frameworks in the healthcare industry.
While SOC 2, developed by the AICPA, and HIPAA, developed by the Health Insurance Portability and Accountability Act, overlap in some areas, they have different periods of coverage, scopes, objectives, and focuses.
- SOC 2 focuses on a broader range of trust service criteria, including security, availability, processing integrity, confidentiality, and privacy. It’s designed to ensure that service organizations manage and protect client data in the best possible manner.
- HIPAA is specifically tailored for the healthcare industry and mandates how organizations must handle and protect PHI. It includes strict requirements around privacy, security, and breach notification to safeguard patient data.
To give you a broader idea, here are the differences and similarities between SOC 2 and HIPAA:
| Parameter | SOC 2 Audit | HIPAA |
|---|---|---|
| Definition | SOC 2 is an audit process by the AICPA to evaluate an organization’s ability to protect customer data securely. | HIPAA is a federal regulation setting standards for the protection of patient health records and private data (PHI). |
| Types of Reports | Type 1: Assesses controls at a specific time. Type 2: Evaluate control effectiveness over time. | The HIPAA certification report highlights vulnerabilities that violate HIPAA standards and provides detailed technical information about each issue. |
| Data Protection | Focuses on security, availability, processing integrity, confidentiality, and privacy. | Focuses specifically on the protection and confidentiality of PHI. |
| Data Encryption | Requires encryption of sensitive data using up-to-date methods. | Requires encryption of patient data. |
| Passwords | Requires strong passwords and centralized password management. | Requires strong passwords and centralized password management. |
| Data Risk Management | Requires third-party vendor risk evaluations. | Requires third-party vendor risk evaluations. |
| Ethics and Conduct Reviews | Requires annual reviews and a business code of conduct for compliance. | Requires annual reviews and a business code of conduct for compliance. |
| Data Breach Notification | No specific rules for breach notifications. | Requires notifications within 60 days for breaches over 500 records or by year-end for breaches under 500 records. |
| Data Processing | Requires descriptions of data types supporting a product or service. | No specific requirements for data diagnosis. |
| Audit Duration | Typically, it takes around six months to complete, depending on the organization’s size. | It can take up to six months, depending on the size and scope of the organization. |
| Reason for Audit | Typically performed at the client’s request. | Mandatory by federal regulations. |
Asked if organizations would benefit from implementing both frameworks, I.S. Partners’ Healthcare Compliance Manager says,
“The AICPA’s SOC 2 framework considers several risk factors not required by the HIPAA framework. While Security, Privacy, and Breach Notifications are the backbone of the HIPAA framework, SOC2 also considers Confidentiality, Availability, and Processing Integrity within the robust SOC 2 framework.
Companies should consider adopting a hybrid approach, which considers an effective combination of both frameworks to demonstrate an effective control environment designed and implemented to offer users of these organizations robust protections around the information and data processed within their environment.”
Because of these differences, many clients choose to undergo both SOC 2 and HIPAA audits. When this happens, the service auditor will issue two separate reports, one for SOC 2 and one for HIPAA.
Achieve System and Organization Controls in Healthcare in 10 Simple Steps
SOC 2 compliance starts well before the audit date, and the process includes analyzing risks, identifying gaps, remediating, testing readiness, auditing, and certifying.
Here’s a step-by-step guide for your healthcare organizations to start preparing for a SOC 2 audit.
- Clarify Objectives and Goals: Define your SOC 2 compliance goals and align them with business and security needs.
- Choose the SOC 2 Report Type: Decide between SOC 2 Type 1 and Type 2 based on services and client requirements.
- Set the Scope and Select Criteria: Focus on relevant Trust Service Criteria, considering legal and regulatory obligations.
- Form a Compliance Team: Assemble a dedicated team, including an external auditor if needed.
- Prepare Documentation: Gather necessary documents like asset inventories and security and access controls.
- Conduct Risk Assessment: Identify vulnerabilities, assess the security breaches’ likelihood, and categorize impacts.
- Identify Gaps: Review existing controls, identify gaps, and assign remediation tasks.
- Evaluate Readiness: Perform an internal readiness assessment with potential external auditor assistance.
- Address Gaps: Resolve identified issues and align controls with SOC 2 requirements.
- Implement Continuous Monitoring: Regularly monitor and analyze your controls to maintain SOC 2 compliance. You can use SOC 2 mapping to get there.
To learn more about the steps, read the SOC 2 Checklist.
Accomplish HIPAA and SOC 2 for Healthcare with the Help of I.S. Partners
As a healthcare organization, you need to prioritize minimizing your risk exposure. A SOC 2 report is a crucial tool in reducing risk and identifying vulnerabilities.
At I.S Partners, we specialize in guiding healthcare founders through the aspects of SOC 2 compliance. Our team provides hands-on assistance from the initial stages of your compliance journey to achieving the desired level of certification for the healthcare sector.
Our expert services include personalized guidance throughout the SOC 2 auditing process, with dedicated CPAs working directly on your assessment. Whether you’re starting from scratch or already have existing software, we integrate the process and workflow to optimize your information security.
With I.S. Partners, you’ll have access to comprehensive SOC 2 solutions tailored to your healthcare organization’s needs. We can streamline your journey towards both HIPAA and SOC 2 compliance by mapping out an optimal strategy. Our expertise ensures you efficiently meet the requirements of both frameworks, saving you time and resources.
On the flip side, you don’t need to take the burden of carrying out the rigorous audit alone—we’ll be with you every step of the way, drawing on nearly two decades of experience in the compliance industry.
Book a free consultation with our expert today!
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