Cyber attacks put patient lives in jeopardy.
When healthcare systems go offline treatments are delayed, medical histories become inaccessible, and critical care is compromised. In a 2023 survey, IT professionals stated mortality rates increased by 28% for ransomware attacks, highlighting the stark human cost of these digital assaults. Beyond this immediate threat to wellbeing, patients also face long-term consequences: privacy violations, identity theft, and diminished trust in healthcare institutions they depend on for life-saving care.
As healthcare organizations navigate these threats, they must balance their fundamental mission of patient care with the complex financial realities that follow an attack. While protecting patients remains the paramount concern, understanding the complete economic impact is crucial for healthcare leaders seeking to secure funding and make prudent investments in safeguarding both their patients and their organizations' ability to serve them in the future.
The Tip of the Iceberg: Immediate Financial Impacts of Operational Disruption
When a cyber attack forces healthcare systems offline, the revenue impact is immediate and severe. Hospitals may be forced to divert ambulances, cancel elective procedures, and delay appointments—all representing significant lost income. On average, healthcare organizations affected by ransomware have a 20-40% patient volume reduction, with a corresponding drop in revenue.
During this same period, overtime costs skyrocket. The loss of electronic workflow is hard to compensate for and additional staff are required to maintain the quality of care. Further, as paper forms need to be moved between departments, every available employee may be called to serve as runners. The extensive overtime and disruption to family life can result in higher employee attrition.
In the case of ransomware, there’s also the question of the ransom. Organizations face an impossible choice when patient care hangs in the balance: pay criminals or risk extended downtime. Ransom demands have skyrocketed, with healthcare-targeted payments often reaching millions of dollars.
Beyond the payment itself, there's the troubling reality that payment doesn't guarantee full data recovery, and might place a future target on those organizations that choose to pay it. Additionally, 3rd party research shows that paying the ransom only makes about a 2% difference in the total financial impact of an attack. This calls into question the efficacy of paying the ransom—especially when weighed against the fact that 78% of organizations who pay a ransom experience another attack.
Compounding the reduction in the volume of patients treated, many organizations also experience greater revenue cycle leakage for the patients they did treat, as a result of several factors, including:
The inability to validate insurance coverage on intake, resulting in patients being seen by out-of-network providers
Fewer tests are ordered as a result of increased friction caused by the loss of electronic workflow
Sub-par documentation and lost paper records
Delayed coding and billing processes, resulting in reduced compensation—even for tests and treatment that were provided
The Burden of Recovering Trust
Determining the attack's scope and vector requires specialized expertise. Digital forensics investigations are costly, often continuing for weeks since external specialists are required to satisfy insurance and legal requirements.
Beyond that, the costs to cleanse systems, restore data, implement new security controls, and potentially replace compromised hardware can be considerable. This includes restoring systems and enhancing them to prevent future compromises, an essential but costly process involving:
Network segmentation implementation
Endpoint detection and response deployment
Identity access management overhauls
Backup system enhancements
Improved security tooling, and managed services
Healthcare breaches inevitably trigger lawsuits from affected patients, business partners, and shareholders. Legal defense costs alone can reach many millions of dollars for significant breaches, excluding settlements. And legal proceedings often continue for 3-5 years after the initial breach, creating ongoing financial uncertainty.
The HHS Office for Civil Rights can impose penalties up to $2 million per violation category annually for HIPAA non-compliance. These fines are often assessed years after the breach, creating delayed financial impacts.
Additionally, when payment card data is compromised, organizations face additional fines from payment card companies and processors. These can range from $5,000 to $100,000 monthly until compliance is demonstrated. Healthcare organizations may be holding more payment card information than they suspect, even if another organization is primarily responsible for processing those transactions. Organizations should adopt tools that routinely audit their environments for payment card data, or factor these potential penalties into their total breach cost assessment.
The Cost to Reputation and Trust
Rebuilding patient trust requires substantial investment in communication and reputation management. Consider the cost of crisis communications, PR consulting, and media campaigns following a significant breach. These costs persist long after technical systems are restored as organizations work to rebuild their reputation.
Perversely, as an organization tries to remedy this damage it may face a series of unflattering headlines, as settlements and court cases are resolved. Sources indicate a 30% increase in medical errors when the EHR and other applications go offline. While many of these incidents will be settled before they reach a trial, any headlines unfortunately refresh the public’s memory of the events.
Notification costs are another significant category of financial impact. Even using a low cost of $3 per patient (and third-party services can charge far more than this), a breach affecting several million patients can result in significant notification costs, sometimes rivaling the cost of the eventual class action settlement itself.
Depending on the nature of the data that was compromised, class action lawsuits following healthcare breaches have resulted in significant settlements. These settlements typically include requirements for free credit monitoring for affected individuals, often for multiple years, further extending the duration of the financial impact..
Perhaps most devastating in the long term is the loss of patient confidence. Studies show that healthcare organizations experience a 6-7% patient attrition rate following a publicized breach, with financial impact continuing for years. Steve Alder, editor-in-chief of The HIPAA Journal detailed this impact in his editorial “The Cost of Non-Compliance with HIPAA”:
“A study conducted by the Ponemon Institute in 2019 found that healthcare experiences the highest churn rate of all studied industry sectors following a data breach. At 6.7%, it is higher than the financial sector (6.1%), services (5.2%), energy (3.0%), and education (2.7%). In an effort to minimize patient loss, hospitals often increase their spending on advertising. One 2019 study determined that advertising expenditure increased by 79% in the two years following a healthcare data breach. The researchers suggested that these costs, which can be considerable, were seen as necessary to repair reputations and prevent patient loss."
Even in the aftermath of a class action settlement, the long-term effects of a ransomware attack and data breach can reverberate for several more years in the form of increased attrition (fueled in part by reduced funds for bonuses and retention) coupled with a higher cost to attract talent, given the reputational damage caused by the incident. Cyber insurance costs are also likely to increase significantly. The volume of donor giving and grants can also be impacted by the headlines. There may be reliable, profitable contractual relationships with other organizations that are impacted as those organizations address the fallout of their customers’ and patients’ data being breached. And lastly, given the interruption in income and the high costs outlined above, any organization seeking to raise debt may pay a higher cost of capital, which by itself could represent significant financial harm.
The Healthcare Impact Calculator: Get an Estimate of Potential Costs
The true cost of a healthcare cyber attack extends far beyond immediate technical remediation. When calculating potential impact, organizations must account for revenue loss, operational recovery, legal consequences, reputation damage, and the extended timeline over which these costs emerge. In some cases, when the total is added up, these attacks can rival the loss of an entire facility, or other financially existential event.
By understanding the complete financial picture of cyber risk, healthcare organizations can make more informed decisions about security investments and incident preparedness. That’s why we created this calculator that will take these extended costs into consideration in order to help you understand the potential costs of a cyberattack, and make the case for appropriate investments in risk mitigation
With a few bits of readily available information, you can get a customized estimate for each category of impact that can be estimated externally, and ask for assistance crafting a more detailed and customized assessment for your organization.