Cybersecurity and privacy in healthcare aren’t just best practices; they’re legal obligations. If your organization handles protected health information (PHI), you’re likely subject to HIPAA: the Health Insurance Portability and Accountability Act.

But while HIPAA sets important standards for protecting health data, it can be complex and difficult to navigate—especially for small and mid-sized organizations. This guide explains what HIPAA compliance means, who it applies to, and how to approach it in a way that’s practical, scalable, and aligned with your broader security program.

What is HIPAA?

HIPAA is a U.S. federal law enacted in 1996 to improve the portability of health insurance, simplify healthcare administration, and—most notably—to protect the privacy and security of individuals’ health information.

Today, HIPAA compliance centers around safeguarding protected health information, which includes any identifiable data related to a person’s health status, care, or payment for care. That could mean names, birthdates, Social Security numbers, medical record numbers, lab results, or insurance details.

The law has evolved over time through several key rules:

• Privacy Rule: Establishes what PHI is, how it can be used or disclosed, and gives patients rights over their information.
• Security Rule: Requires covered entities and business associates to implement administrative, physical, and technical safeguards to protect electronic PHI (ePHI).
• Breach Notification Rule: Requires timely notice to affected individuals, regulators, and in some cases the media, following a breach of unsecured PHI.
• HITECH Act (2009): Expanded HIPAA’s enforcement powers and increased penalties. It also incentivized the adoption of electronic health records, making digital security even more critical.

HIPAA compliance doesn’t apply to every organization that handles health data. For example, life insurers, employers, and certain consumer-facing health apps (like fitness trackers or symptom checkers) may fall outside HIPAA unless they’re acting on behalf of a covered entity.

HIPAA is enforced by the U.S. Department of Health and Human Services’ Office for Civil Rights (HHS OCR). Fines can range from $100 to $50,000 per violation, with annual caps up to $1.5 million per category. For SMBs and startups, this makes it especially important to build HIPAA compliance into your operations early—before a misstep becomes costly.

Who needs to comply with HIPAA?

HIPAA compliance is required for a wide range of entities involved in the delivery, payment, or support of healthcare services. There are two primary categories:

1. Covered entities.

These are the core organizations regulated under HIPAA, including:

• Healthcare providers (hospitals, clinics, doctors, dentists, therapists)
• Health plans and insurers (HMOs, employer-sponsored health plans, government programs like Medicare)
• Healthcare clearinghouses (entities that process nonstandard health information into a standard format)

2. Business associates. 

These are vendors or service providers that handle PHI on behalf of a covered entity, including:

• Billing and coding services
• Cloud storage or SaaS platforms
• IT support, MSPs, and cybersecurity consultants
• Legal or actuarial services
• Telehealth platforms and data analytics tools

In other words, even if your company doesn’t directly provide healthcare, HIPAA may still apply. If your systems or services process, store, transmit, or interact with PHI, you’re likely required to follow HIPAA rules and sign a Business Associate Agreement (BAA).

What does HIPAA compliance involve?

HIPAA doesn’t dictate exactly how to secure health data—but it does require you to do it. Specifically, the law calls for reasonable and appropriate safeguards based on the size, complexity, and risk profile of your organization.

These safeguards fall into three core categories: administrative, technical, and physical. Together, they form the operational backbone of any HIPAA compliance program:

1. Administrative safeguards

These govern the policies, processes, and oversight that guide your organization’s handling of PHI:

• Conduct a formal HIPAA risk assessment
• Designate a HIPAA compliance officer or team
• Develop and regularly review internal policies and procedures
• Deliver recurring HIPAA training to all employees
• Maintain signed Business Associate Agreements with vendors

2. Technical safeguards 

These controls secure electronic PHI (ePHI) at the system level:

• Restrict access through roles and user permissions
• Log and monitor system activity
• Encrypt ePHI in transit and at rest
• Use secure authentication methods and configure automatic session timeouts

3. Physical safeguards

These address the physical spaces and devices that could expose PHI:

• Restrict access to servers, laptops, and workstations
• Secure mobile devices used to access PHI
• Set policies for facility access, hardware disposal, and disaster recovery

HIPAA also requires ongoing review. As your organization adopts new technologies, expands services, or encounters new threats, you’re expected to adjust your safeguards accordingly.

Whether you’re standing up a compliance program or reinforcing what’s already in place, these safeguards are the foundation. They reduce the risk of breaches, support regulatory readiness, and signal to partners that your organization takes privacy and security seriously.

How HIPAA compliance overlaps with other frameworks

HIPAA is often just one piece of the broader security and compliance puzzle—especially for organizations operating across industries or jurisdictions. The good news? Many HIPAA requirements align closely with other well-known frameworks:

• HITRUST translates HIPAA’s high-level mandates into detailed, certifiable controls.
• NIST SP 800-53 / 800-171 offer technical standards that mirror HIPAA’s expectations for access control, auditing, and risk management.
• ISO/IEC 27001 includes globally recognized security controls that overlap significantly with HIPAA’s Security Rule.
  

If your organization already follows one of these frameworks—or is considering adopting one—HIPAA compliance may be closer than you think. A single set of controls can often satisfy multiple requirements, making your compliance program more efficient and scalable.

Why HIPAA compliance matters for your organization

HIPAA compliance does more than keep you on the right side of the law. It strengthens your security posture, protects sensitive data, and shows healthcare partners you’re serious about privacy from day one. A well-run HIPAA program can help your organization:

• Protect patient and customer data from breaches and misuse
• Reduce the risk of regulatory fines and enforcement
• Build credibility with healthcare providers, payers, and partners
• Accelerate sales cycles by meeting buyer security expectations
• Reinforce broader cybersecurity efforts through structured, documented practices
  
  

For organizations that handle protected health information, HIPAA compliance shows that privacy and security aren’t afterthoughts; they’re built into how you operate.

Common HIPAA compliance challenges 

For SMBs and startups in healthcare and health-adjacent industries, meeting HIPAA’s requirements can feel especially daunting. Common hurdles include:

• Ambiguity in the law: HIPAA doesn’t prescribe exact technologies or checklists. It requires a risk-based approach, which can be difficult to interpret without expert guidance.
• Limited resources: Smaller teams may not have dedicated compliance, security, or legal staff—making it hard to keep up with evolving requirements.
• Third-party risk: Business associates must also comply with HIPAA, and managing vendor compliance can be time-intensive.
• Ongoing obligations: HIPAA compliance isn’t a one-time effort. Risk assessments, employee training, and internal audits need to be repeated regularly—not just once and done.

The good news? These challenges aren’t insurmountable. In the next section, we’ll walk through a phased approach that helps small and mid-sized teams build a sustainable HIPAA program—without getting overwhelmed.

Tips for getting started with HIPAA compliance 

Whether you’re starting from scratch or refining an existing program, HIPAA compliance begins with a clear understanding of your risks and a practical plan to manage them. The law doesn’t require perfection—but it does require documented, good-faith efforts to protect PHI and respond to new threats as they arise.

Here’s a phased approach to getting your HIPAA compliance program off the ground:

Phase 1: Assess your current state

Conduct a HIPAA risk assessment. This is the foundation of any compliance effort, and it’s explicitly required by law. Identify where PHI is created, stored, transmitted, or accessed in your organization, and evaluate the threats and vulnerabilities that could impact it.

Review your vendor ecosystem. Make a list of all business associates (any vendors who handle PHI on your behalf). Ensure Business Associate Agreements are signed, enforced, and aligned with current risks.

Phase 2: Build your compliance framework

Document your policies and procedures. Create clear internal documentation for how PHI is accessed, shared, stored, and protected—then review it regularly as your systems evolve.

Assign a HIPAA compliance lead. Designate a responsible person or team to oversee your program, stay on top of regulatory updates, and coordinate training and audits.

Phase 3: Train and implement safeguards

Train your workforce. HIPAA requires annual training for all employees who interact with PHI. Make sure your team understands what’s at stake and how to recognize and respond to potential violations.

Implement safeguards based on risk. This includes access controls, logging, encryption, device security, and more—tailored to your size, systems, and complexity.

Phase 4: Monitor and improve

Audit regularly. Conduct internal reviews or mock audits to test your program, identify weaknesses, and stay ready for real-world scrutiny.

Update as needed. As your business grows, your HIPAA program should evolve with it. This includes re-running risk assessments, updating policies, and retraining staff as needed.

This phased checklist helps make HIPAA compliance manageable—especially for small and mid-sized businesses. Focus on steady, measurable progress, and document each step along the way. That alone can go a long way in demonstrating good-faith compliance if you’re ever audited.

Final thoughts: Why HIPAA compliance is good business 

HIPAA compliance goes beyond checking a regulatory box. It’s about building the operational maturity to handle sensitive health data responsibly—and being able to prove it when it counts. For SMBs and healthcare vendors, a well-run HIPAA program can reduce risk, open doors with enterprise buyers, and create confidence in how your company operates.

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HIPAA compliance often overlaps with other security frameworks—especially for organizations navigating multiple risk areas. Explore the HITRUST framework for a certifiable approach aligned with HIPAA, or learn how the NIST Cybersecurity Framework and CIS Controls support strong technical safeguards like access control, logging, and encryption. For a wider view of what cybersecurity means for small and mid-sized businesses, check out our foundational guide to cybersecurity compliance for SMBs.

If you’re short on time or in-house expertise, consider working with a partner that specializes in HIPAA readiness. We support SMBs in building HIPAA programs that are practical, defensible, and ready for growth. If you’re struggling to navigate HIPAA compliance, let’s talk.