Compliance Trends in the Health Care Industry

Health care providers face one of the most complex and fast-changing regulatory environments in recent memory. New state-level privacy laws, rising breach costs, heightened scrutiny of data sharing and stronger federal enforcement push hospitals and health systems to adapt quickly. At the same time, emerging technologies such as artificial intelligence (AI) and machine learning (ML) reshape how organizations approach cybersecurity and compliance. Are hospitals ready for the next wave of compliance challenges?

With state privacy laws, AI adoption risks and stricter HIPAA audits, providers need more than awareness — they need a plan.

Proliferation of State-Level Privacy Laws

Hospitals and health systems already contend with HIPAA, but they now face a growing patchwork of state privacy laws that impose overlapping and sometimes conflicting requirements. Legislation is moving forward in states such as Michigan, Ohio, Oklahoma and Pennsylvania, adding to laws already on the books in California, Virginia, Colorado and Connecticut.

This fragmentation creates a steep compliance challenge. Consent requirements, breach-notification standards, and data-deletion rules differ from state to state, making a one-size-fits-all approach impossible. Noncompliance carries real risks, including steep fines, private-right-of-action lawsuits and reputational damage.

How providers can prepare:

• Establish a central privacy office to coordinate multistate compliance mapping
• Implement dynamic policy engines in electronic medical records and patient portal software that apply the correct state rules based on patient location
• Train staff to follow the most stringent state requirements rather than relying on the lowest common denominator

AI and Machine Learning for Proactive Threat Detection

According to an article in The HIPAA Journal, breach costs in health care climbed to an average of $9.77 million in 2024, and providers are shifting from reactive responses to proactive defense. AI and ML tools are being tested to detect anomalies, flag insider threats and reduce dwell time before attackers can cause damage.

While no AI-specific law governs health care yet, HIPAA’s Security Rule combined with Health and Human Services (HHS) and the National Institute of Standards and Technology (NIST) guidance requires organizations to assess risks. Early adopters of AI in security operations centers will be positioned to respond faster to suspicious activity, while late adopters may find themselves outpaced by increasingly sophisticated, AI-driven cyber threats.

How providers can prepare:

• Pilot narrow AI use cases such as user-entity behavior analytics (UEBA) before expanding into broader security orchestration, automation and response (SOAR)
• Vet AI vendors carefully for HIPAA-compliant data handling and model transparency
• Train security teams to manage AI-generated alerts, ensuring human validation prevents alert fatigue

Data Broker Regulation and National Security Scrutiny

Hospitals increasingly collaborate with analytics vendors and digital health startups, but data sharing comes with heightened risks. Regulators are focusing on how patient-generated data is used by third parties, especially data brokers who may resell sensitive health and location information.

Recent enforcement actions by the Federal Trade Commission (FTC), U.S. Department of Justice and the Consumer Financial Protection Bureau (CFPB) highlight the government’s concern over data misuse and national security. Although a CFPB proposal to regulate data brokers as consumer reporting agencies was withdrawn in May 2025, new executive orders continue to target how sensitive health data can be aggregated and shared. These include the FTC’s Health Breach Notification Rule (16 CFR Part 318) and Section 5 of the FTC Act that prohibits unfair or deceptive data practices.

How providers can prepare:

• Audit downstream data recipients and enforce strict data use agreements
• Share only the minimum necessary data fields with external parties
• Conduct periodic risk assessments and vendor reviews to verify broker compliance

Stricter HIPAA Risk Analysis Enforcement and the HISAA Proposal

The Office for Civil Rights (OCR) has stepped up audits under HIPAA’s Security Rule, and the proposed Health Infrastructure Safety Accountability Act (HISAA) would further raise the stakes by codifying penalties for inadequate risk assessments. These efforts reflect regulators’ expectation that risk analysis must be rigorous, documented and repeatable.

Without effective risk-analysis processes, hospitals could face multimillion dollar fines, lawsuits and reputational harm if breaches reveal overlooked vulnerabilities. The combination of OCR’s audits and the HISAA proposal underscores the need for organizations to make compliance a continuous, measurable process rather than an occasional exercise.

How providers can prepare:

• Automate risk-analysis workflows using governance, risk and compliance platforms
• Integrate threat intelligence feeds into risk-scoring models for real-time visibility
• Test preparedness through tabletop exercises and red-team penetration tests

Looking Ahead

As the health care industry enters a new era of regulatory oversight and technological disruption, hospitals and health systems that rely on outdated approaches risk rising costs, regulatory action and erosion of patient trust. Entities that act now by centralizing privacy oversight, investing in AI-driven defense, enforcing stricter vendor controls and adopting repeatable HIPAA compliance practices will be better positioned to thrive in the years ahead.

To find out how your health care organization can stay ahead of these emerging risks, contact us. We are here to help.

Authored by Jeff Jones, Alexis Kennedy and Hunter Sundbeck

©2025

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