Healthcare Compliance: All You Need to Know

If you’re thinking of developing software for the healthcare industry, you’re probably aware of HIPAA.  

But how about HITECH? Or PIPEDA? Or GDPR? 

Healthcare software or healthcare-related apps must comply with several industry regulations—and the laws differ from country to country. 

These healthcare compliance laws cover billing, patient care, reimbursement, and many other areas. They’re intended to improve the quality of care and keep patient data secure. 

As such, industry regulators require all health-related software to comply with these regulations. And the penalties for non-compliance can be severe. 

This article discusses regulatory compliance in healthcare software. We look at the importance of these standards and how they differ in the United States, Canada, and the Europe Union.  

The Need for Regulatory Compliance Standards   

When it comes to healthcare software, regulatory compliance laws are primarily focused on data security and patient privacy.    

In 2018, healthcare data breaches impacted 14 million people, according to a cybersecurity company Critical Insights report. By 2020, that number grew to 34 million, and then 45 million in 2021. 

Data breaches come in the form of ransomware attacks, credential harvesting, and the theft of devices containing patient data. 

Attackers either sell patient health information (PHI) on the Dark Web or prevent the targeted health organization from delivering patient care until an exorbitant ransom is paid. 

A single healthcare data breach costs a hospital or care provider $7.13 million on average. 

This rapid increase in healthcare industry cyberattacks led countries worldwide to mandate stricter laws and regulations for healthcare software.    

Penalties for Noncompliance 

Because of the importance of keeping PHI secure, the penalties for non-compliance can be costly. To avoid steep fines, companies offering healthcare software development services need to be aware of the difference between regulatory and compliance risks. 

Compliance risk involves legal and financial penalties levied on an organization for failing to adhere to a regulation.  

Regulatory risk happens when a regulation changes, making an organization non-compliant.  

Healthcare software developers and startups must stay updated on industry regulations to avoid penalties for themselves and the healthcare providers they service.     

Global Healthcare Industry Regulations and Standards 

What follows is a breakdown of the major global healthcare industry regulations and standards that a health startup or software development company should study.  

While countries not governed by these standards may have their own regulations, they are most likely patterned on one of these standards. 

Health Insurance Portability and Accountability Act (HIPAA)  

Managed by the U.S. Department of Health and Human Services (HHS), HIPAA is the primary set of regulations covering health data security in the United States.  

HIPAA is particularly concerned with electronic patient health information (ePHI) security and safeguarding patient privacy while using electronic health records (EHR).    

HIPAA’s primary requirements include:  

  • HIPAA Rules: Health software must adhere to all aspects of HIPAA rules, including the Privacy Rule, Security Rule, HITECH, and the Omnibus Rule. 
  • Security Safeguards: Software developers must abide by the administrative, physical, and technical safeguards described in the Security Rule. 
  • Transport Encryption: All electronic patient health information (ePHI) must be encrypted before being transported or shared electronically. 
  • Backup: All ePHI must be securely backed up in case it must be recovered or restored. 
  • Authorization: Only authorized personnel should be granted access to ePHI, so restrictions must be in place. 
  • Storage Encryption: ePHI must also be encrypted while in storage, not just during transport. 
  • Integrity: ePHI must not be subject to unauthorized changes, improper destruction, or other prohibited interference. 
  • Disposal: Once the ePHI is no longer needed, it should be destroyed safely and permanently. 
  • Business Associate Agreement: Software companies that store or transport ePHI must sign business associate agreements with the entities for which they will be working. These agreements must be stored on secure servers. 

The penalty for non-compliance can be anywhere from $100 to $50,000 per violation, depending on the level of negligence. The fine can add up to $1.5 million per year for violations of an identical provision. 

Health Information Technology for Economic and Clinical Health Act (HITECH)   

The HITECH Act goes hand-in-glove with HIPAA and is also overseen by the HHS. The primary purpose of HITECH was to accelerate healthcare providers’ EHR adoption.  

However, it also expanded HIPAA’s privacy and security provisions. HITECH extended the responsibility for disclosing data breaches to include healthcare organizations and their business associates—including the provider of the breached software. 

HITECH clearly defines the penalties for criminal and civil non-compliance. Fines scale up based on the degree of willful neglect and how quickly the organization acted to fix the breach. These fines can exceed $1 million.  

Personal Information Protection and Electronic Documents Act (PIPEDA)   

PIPEDA is a Canadian regulation similar to HIPAA, but covers more aspects of health data usage.  

The definition of “personal information” under PIPEDA is broader than HIPAA’s. It refers to any data that, on its own or when linked to other data, may identify a patient, including: 

  • Demographic information (including name, age, social security and identification numbers, nationality, race, ethnicity, and marital status) 
  • Contact information (phone and fax numbers, email address) 
  • Financial information (income, banking, credit and loan records, and any merchant and consumer disputes) 
  • Medical information (history, DNA identifiers, blood type, and any records and personal data) 
  • Personal history information (educational, employment, disciplinary actions, evaluations, intentions, opinions, or comments)

Any software development company or health startup operating in Canada must follow 10 fair information principles to protect personal information, as outlined in Schedule 1 of PIPEDA. 

The principles are: 

  1. Accountability 
  2. Identifying Purpose
  3. Consent
  4. Limiting Collection
  5. Limiting Use, Disclosure, and Retention
  6. Accuracy
  7. Safeguards
  8. Openness
  9. Individual Access
  10. Challenging Compliance

The company that has breached the PIPEDA requirements can be fined up to $100,000 for each case of violation.  

General Data Protection Regulation—European Union (GDPR)  

The GDPR is the European Union’s data privacy regulation. Proclaimed to be “the toughest privacy and security law in the world,” it mandates compliance by any organization that targets or collects data related to people in the EU—even if the organization is located outside the EU.  

The GDPR broadens the HIPAA and PIPEDA definitions of sensitive data to add: 

  • IP addresses  
  • Biometric and genetic data 
  • Racial and ethnic origin  
  • Religion 

It also allows individuals to delete their data and withdraw their consent for data collection any time they want. 

GDPR’s seven core principles are:  

  1. Lawfulness, Fairness, and Transparency
  2. Purpose Limitation
  3. Data Minimization
  4. Accuracy
  5. Storage Limitation
  6. Integrity and Confidentiality (Security)
  7. Accountability

Any organization that violates the GDPR’s privacy and security standards can face severe fines, with penalties reaching tens of millions of euros. 


If your company makes or distributes software that is in any way related to healthcare delivery, you can’t afford to ignore healthcare compliance regulations in the countries where your software will be used.  

Likewise, you must ensure your software development partner is experienced with compliance in medical and health software. 

David Borcherding

David is a Senior Content Writer at Taazaa. He has 15+ years of B2B software marketing experience, and is an ardent champion of quality content. He enjoys finding fresh, new ways to relay helpful information to our customers.