HIPAA: Friend or Foe to Innovation?

by Obermayer Rebmann Maxwell & Hippel LLP

[author: Divya Dhar]

The Patient Protection and Affordable Care Act (“ACA”), viewed by many as the largest overhaul of health care in the United States to date, has brought about a time of great change. The health care industry has never been more complex, and concerns about the cost of, access to, and quality of health care have never been more pressing. In order for the health care system to work under the new requirements brought about by the ACA, we need innovators to design new business models and devices that will revolutionize the health care industry. However, the health care industry is highly regulated. As innovators begin to take advantage of the opportunities provided by the ACA, they must be prepared to work within the parameters of the many laws that strictly regulate the health care industry.

As CEO and Cofounder of Seratis, I feel my company is prepared to meet this challenge through innovative technology. In order to accomplish the goals of the ACA, health care entities will need to think of new ways to improve the provision of care while serving an expanded patient-base. Using the power of HIPAA-compliant technology to provide higher quality care is the key to success. 

HIPAA, an abbreviation for the Health Insurance Portability and Accountability Act, imposes stringent rules on health care providers (called “covered entities” under HIPAA) regarding protected health information (more commonly referred to as “PHI”). It was designed to protect an individual’s right to have his or her health data kept secure and private. HIPAA was updated in 2013, which greatly impacted innovators in the health care industry.

Vendors of health care technology, cloud-computing companies, and electronic health record (“EHR”) system providers are subject to HIPAA with regard to PHI. HIPAA limits the permissible disclosures of PHI, causing innovators to lose the ability to collect, analyze and learn from this data, which can be used to help reduce costs in patient care. Essentially, the burdensome compliance process hampers the power of big data analytics.

In addition to hampering the flow of information, HIPAA may stifle a physician’s ability to use modern tools to coordinate care for patients. The costly penalties for breaches of PHI under HIPAA (up to $50,000 per incident) have put compliance officers at hospitals and health care technology companies on high alert. Doctors and nurses have been warned by their administrators not to use any insecure tools for communication that would risk a patient’s privacy or facilitate a security breach. This has limited the ability of physicians to use modern tools in treatment.

"Although HIPAA seems to limit the technologies that can be used to improve patient care, it also has been an impetus for innovators to design new technologies to meet the mandates of HIPAA and the needs of hospitals and physicians in providing quality care.

The legal mandates of HIPAA have posed a substantial enough risk to some hospitals for them to warrant investing in secure communications solutions, thereby spurring the interest of innovators and entrepreneurs. The question remains whether this market need is sustainable, but for the foreseeable future, it appears that innovators in the health care field have an opportunity to meet an essential market demand for health care technology that both improves patient outcomes and is compliant with the law.

My company, Seratis, has responded to this need in the market by designing a HIPAA-compliant patient-centric team transparency and coordination tool for health care providers. Seratis is a mobile messaging application and communication analytics tool that enables doctors, nurses, and other health care providers to communicate with each other about a patient via text, images, and videos. Seratis’s Cofounder, Lane Rettig, and I believe this tool can help revolutionize the health care industry by improving patient care and lowering costs. Seratis shows how seemingly onerous legal obligations under a compliance regime, like HIPAA, can spark creativity and innovation in the new environment brought about by the ACA.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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