Healthcare organizations protect some of the most sensitive data. Protected health information (PHI) includes traditional personally identifiable information (PII), such as names and addresses, then folds in private information, including medical records and patient diagnoses. Often, data protection requirements and patient trust mean that the healthcare industry struggles to keep up with modern technology advancements.
To maintain high quality patient care, healthcare organizations rely heavily on their third-party partnerships. Meanwhile, risks continue to accumulate as attacks grow in sophistication. To protect data and patient health, third-party risk management (TPRM) for the healthcare industry must shift from checking boxes on compliance lists to ensuring ongoing cyber resilience.
Security Challenges for Healthcare Organizations
The challenge for many organizations is that third-party partnerships can open them up to a new array of security vulnerabilities. These risks can range from a breach of PHI to full operational disruptions. Third-party risks are ultimately operational and resilience issues.
Data Breaches Are Expensive
When looking at the healthcare industry, broad cybersecurity research provides limited insight. For example, the Data Breach Investigations Report identified 1,492 incidents with 1,438 of them confirming data disclosures. Correlating this with the Cost of a Data Breach Report, healthcare breaches remained the most expensive for the second year in a row, totalling $6.64 million in 2026, which is at least a year-over-year reduction from 2025 where they cost an average of $7.42 million.
The numbers at the macro level tell an industry story. However, a blog post from the American Hospital Association (AHA) takes a look at the industry through a microscope with insight into the impact that a single organization might face. According to that blog posts, the AHA observed that the Change Healthcare breach and other reported cyberattacks contain similar patterns, including:
- Malicious actors stealing PHI from third-party vendors, software services, business associates, and nonhospital providers and health plans.
- Hacked health records were stolen from outside the electronic health record system.
- Hacked data was not encrypted, with theft related to stolen credential use granting access to unencrypted data or data being stored in an unencrypted format outside the EHR.
Cyberattacks Disrupt Patient Care
Business disruption for corporate entities increases the breach’s overall financial impact. For healthcare organizations, it impacts their ability to provide patient care. According to an article in the HIPAA Journal:
- 93% of surveyed organizations experienced at least one cyberattack in the past twelve months.
- 72% of these organizations reported that the attacks disrupted patient care.
- 29% of the respondents reported an increase in mortality rate.
Further, other negative impacts included delayed intake, increased hospital stays, and increased complications from medical procedures.
The Failure of the “One-Size-Fits-All” Risk Approach
While traditional healthcare TPRM treats all vendors as equal risk, this one-size-fits-all approach fails in a modern, complex healthcare environment. Third-party technologies and vendors integrate and interact with various digital assets, especially when the assets have different risk profiles. For example, a cloud-based EHR provider may pose a different digital access risk than an ambulance service provider. Meanwhile, an ambulance service provider may pose a different physical access risk than a local cleaning service. To consider this one step further, a local cleaning service and a cloud-based EHR provider likely have opposite digital risk profiles.
When TPRM is treated as a compliance exercise, many focus on:
- Establishing and maintaining compliance
- Relying on checklists for risk management and security audits activities.
- Meeting the bare minimum cybersecurity hygiene requirements.
When healthcare organizations treat TPRM as resilience, they focus on:
- The risks and their probable impacts.
- Potential impact to patient care if a connection is severed.
- Implications in the event an operation is disrupted.
As leadership teams move toward usage-based scoping for their TPRM, healthcare organizations find that they can better manage their partnerships and risks. This usage approach evaluates a vendor based on three critical vectors:
- Volume of data being exchanged.
- Network connectivity.
- Clinical criticality of the vendor relationships.
By scoping these factors, healthcare organizations can better assess risk by determining what might happen if the vendor suffers a cyber attack, including whether it would only impact data or could disrupt operations, like the flow of surgery, patient scheduling, or diagnostic imaging.
TPRM Maturity Involves Addressing Security Gaps
Healthcare organizations begin maturing their TPRM strategies when they integrate assessments directly into their procurement processes. Genuinely mature programs involve several capabilities that most healthcare organizations should consider building or improving. These approaches can drive natural TPRM maturity and implement more proactive security while closing gaps.
1. Establish risk-tiered vendor relationship standards.
Vendor relationships should be assessed based on their criticality by reviewing the likelihood of an incident and its potential impact on the organization. For example, a vendor with read-only access to non-identified data will have a different risk profile than one with write access to your EHR.
To help your team best calibrate assessment depth, your vendor portfolio consider the following when creating different risk tiers:
- Data sensitivity
- Operational dependency
- Business continuity impact
2. Continuous monitoring between assessments closes security gaps.
Many healthcare organizations supplement specific point-in-time assessments with ongoing external threat signals that include:
- System vulnerabilities
- Threat intelligence feeds
- Dark web monitoring for vendor credential exposure
- Vendor communications announcing a breach or material change
Since a vendor’s risk profile can shift overnight, ongoing monitoring and fostering a communication standard for events or issues helps close security gaps between health organizations and their third-party relationships.
3. Integrate third-party vendors into incident response plans.
An effective incident response (IR) plan explicitly names your critical vendors. If a vendor critical to operational integrity experiences a breach or business disruption, your IR plan should consider it, including:
- Establishing critical communication methods
- Determining who needs to contact, in what order
- Established containment measures in place for the vendor
This IR plan must be well-documented and tested before an incident can occur, not improvised in the event of one.
4. Implement shared-risk contractual structures.
Contractual structures define the legal responsibilities for all parties. Shared-risk contracts, transparent reporting expectations, and co-managed oversight models can help align incentives between vendors, payors, and providers. By documenting these activities, organizations create legal rights and behavioral incentives that include:
- Security SLAs
- Breach notification timelines
- Audit rights
By incorporating governance as part of the formal relationship, healthcare organizations and vendors maintain a more proactive security posture.
Drive TPRM Resilience Over Compliance with VendorIQ
Fortified Health Security built VendorIQ specifically for this challenge with TPRM in healthcare. Our tool goes beyond being a GRC tool adapted for healthcare. It’s a healthcare-native solution designed around the complexity of clinical environments, limited internal resources, and the vendor ecosystems that many health systems and infrastructures operationally rely on.
In healthcare, that difference directly impacts patient safety, operational continuity, and trust. If your current TPRM program relies on spreadsheets, annual questionnaires, or assessments that happen after procurement decisions are already made, it’s time for a different solution.
Reach out to speak with one of our TPRM experts to help you drive resiliency beyond your compliance audit checklist needs.
