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How To Develop A HIPAA Compliant Healthcare Software? [A Full Guide for 2021]

Healthcare is one of the most transformative and challenging industries when it comes to complexity and importance. Not only that, but the industry has also become increasingly vulnerable to potential digital risks around privacy, security, and accessibility. Since many organizations invest in innovative technologies to address patient care, they should be aware of the continuously changing rules and regulations that software must abide by. Therefore, HIPAA is one of the essential requirements to meet when developing a healthcare software or app.

This blog will explore what it takes to achieve HIPAA compliance for software and its violations cost? Let's learn more about the basics and know the considerations while initiating HIPAA-compliant software development in life sciences.

What is HIPAA?

HIPAA or Health Insurance Portability and Accountability Act is a US federal statute presented in 1996 to regulate the healthcare data industry. This act focuses on how the healthcare industry processes personal information to ensure its safety and privacy.

Introduced by the 104th US Congress, signed in 1996 by President Bill Clinton, the HIPAA focuses on a simplified administration, the safety of the electronic record, and health information. HIPAA empowers a user to maximize the healthcare IT solutions sincerely, satisfactorily, and seamlessly without compromising privacy. In a nutshell, HIPAA protects the privacy of a user's crucial health information.

For any healthcare software to receive HIPAA compliance, a framework is required to guide the concerned. This will ensure the entire process of compliance has been conducted as per the HIPAA rules.

The initial part of HIPAA compliance understanding and execution is to be aware of the healthcare software industry's kind of data.

  • PHI (Protected Health Information) includes doctor bills, emails, MRI scans, medical information, geolocation details, and test results.

  • CHI (consumer health information) — This set comprises data that can be collected from any fitness tracker, such as the number of steps, number of calories burnt, or heart rate readings.

Why Is HIPAA Significant?

HIPAA is important because it prevents any healthcare fraud and ensures all health information is secured appropriately. It has introduced several significant benefits for both the organizations and patients to help transition from paper-based records to digital copies of health information. However, in today's highly connected and personalized healthcare industry, access and use of these information cause areas of concern for marketers within the healthcare ecosystem.

Related Impact of Personalization on Life Sciences

Last year, there were 642 data breaches within the healthcare industry, resulting in a 25% increase over a year. With the growing number of cyberattacks, it is now more than necessary for healthcare providers to have secure patient information. This is where the significance of HIPAA lies. HIPAA helps regulate the flow of healthcare data and ensures that it is protected from any data fraud, theft, and breach. There are plenty of benefits for healthcare firms, such as –

  • Increased Trust - Healthcare practitioners who want to be trusted, should ensure that their software has the seal approval - HIPAA compliant. It shows professionalism and makes patients feel safe during an interaction that may involve sharing personal information.

  • Better Efficiency - HIPAA compliance helps in improving productivity and efficiency by optimizing the administrative tasks through a cohesive standard. By adhering to the bars, organizations can share electronic health data securely and quickly.

  • Better Competitive Edge - Any medical firm that wants to have a competitive edge while helping its patients will benefit from having HIPAA compliance. This makes the company stand out from the rest of the healthcare providers.

  • Avoid Penalties - If any organization chooses to ignore HIPAA regulations, they sustain significant losses if data breach or non-compliance happens. The amount will vary but typically ranges from $100 to $50,000.

Risks and Penalties

The penalties for HIPAA violations can be costly. In addition, the penalty will increase with the number of patients and the amount of neglect.

There are four categories for the penalty structure as mentioned below -

Tier 1: A violation that the covered entity was unaware of and could not have realistically avoided, had a reasonable amount of care had been taken to abide by HIPAA Rules

Tier 2: A violation that the covered entity should have been aware of but could not have avoided even with a reasonable amount of care. (But falling short of willful neglect of HIPAA Rules)

Tier 3: A violation suffered as a direct result of "willful neglect" of HIPAA Rules in cases where an attempt has been made to correct the violation

Tier 4: A violation of HIPAA Rules constituting willful neglect, where no attempt has been made to correct the violation

With that being said, let's dig deeper into the critical considerations for developing a healthcare software compliant with HIPAA regulations.

Developing a HIPAA Compliant Healthcare Software

At Icreon, we always strive to focus on building safety- and privacy-first custom software solutions. When we are developing HIPAA-compliant custom software, we follow many requirements as a custom software development company.

Let's take a look at them.

Evaluate IT infrastructure and policies

The first step is to conduct a detailed assessment of the healthcare facility to recognize the security and administrative policies gaps.

Cybersecurity measures

Data breaches are a significant threat to any healthcare facility, which is why technical safeguards should be robust. This would minimize the risk of any unauthorized access.

Transport Encryption

When developing HIPAA compliant software, it is mandated to ensure the health data is encrypted in transmissions. This is achieved by using HTTP protocols and SSL.

Backup and storage encryption

There's always a major focus on offering robust recovery and backup services, ensuring the data isn't lost in case of any emergency.


While building the HIPAA compliant software, it is essential to have an infrastructure set up to ensure the transfer of information is well-protected.


Archived and backup data that is expired should be disposed of. All the unused data is being removed in a safe, non-retrievable manner.

Which Healthcare Software and App Should Comply with HIPAA rules?

When we measure a software against the requirement of complying with the HIPAA privacy rule, there are three essential criteria to be defined:

  • Entity - When the application is used by hospitals, doctors, or insurance providers like a covered entity, they will comply with the HIPAA compliant software requirements. For instance, you're planning to create an application that enables patient-doctor interaction. Now your app will need to comply with the HIPAA rules as both hospitals and doctors are covered entities. Besides, an application that helps users follow medication instructions won't need to follow the HIPAA privacy rules as there's no covered entity included. While talking about entities, it is essential to look into privacy rules as well. Because it focuses on protected health information while also describing who should be responsible for safeguarding that PI details are not disclosed.

  • Data - Any mobile app-related HIPAA compliance is mainly focused on safeguarded health information, such as medical information that can be utilized to recognize an individual with that data disclosed at the time while availing services like treatment or diagnosis. PHI (Protected Health Information) has two sections - personally identifiable information and medical data. A crucial point to note is that the data is called PHI only when any personally identifiable information is connected to the medical data. For instance, an app that helps doctors diagnose skin elements by observing anonymous photos does not come under any PHI. But when it comes to the patients' name or address, it is a PHI. In a nutshell, any information stored or shared in any app is identifiable individually, so it must comply with the HIPAA compliances.

  • Software security - This is one of the last factors that help identify whether or not healthcare application development comes under the HIPAA rules and is related to the particular technology while also having several standards available for the protection of ePHI.

HIPAA Compliance Checklist for Software Development

When it comes to healthcare software development, there are several requirements and critical limits set by medical organizations. Let's take a quick look into those important insights while considering HIPAA compliant software

  • Do you have a privacy policy available between all the essential roles and stakeholders?

  • Have you ensured if your healthcare solution requires HIPAA compliance for software or not?

  • Do you have stable cloud-based storage and devices for your healthcare software, depending on standards?

  • Have you engrained all the crucial security features and encryption logic in your healthcare software, compliant to HIPAA standards

  • Have you collected all key metrics to measure HIPAA compliance for the software process?

  • Have you partnered with a trusted IT service provider with better software development and healthcare industry expertise?

  • Is your budget for accomplishing the standards set? Is it aligned with the company's cost lines?


This is the right time to adopt the growing compliance and regulatory requirements. As a result, your organization can receive a great competitive edge and credibility in the healthcare industry.

If you're considering developing HIPAA-compliant custom software, connect with us for 1:1 here.