When health is on the line, even seemingly minor incidents can result in major losses. While risk is unavoidable, healthcare organizations must take precautions to limit their potential exposures. Certificates of insurance (COI) tracking is critical to developing an effective risk management strategy.
According to IT security research organization Ponemon Institute’s report “The Economic Impact of Third-Party Risk Management in Healthcare,” surveyed healthcare organizations averaged 1,320 contracted vendors each. These third parties are often critical to their overall operations, including patient care. However, they also expose companies in the healthcare sector to additional liabilities.
With each third-party relationship bringing a layer of uncertainty, it is crucial for healthcare organizations to effectively track the details of their insurance coverage to mitigate and manage potential exposures and liabilities. Managing
We’ll break down what healthcare organizations should know about third-party risk and how to protect themselves through COI tracking.
The Importance of COI Tracking in Healthcare
In an industry where patient safety and quality of care are paramount, verifying the insurance coverage of vendors and contractors is crucial.
Certificate of insurance tracking enables healthcare organizations to verify the coverage status of vendors and contractors, mitigating the risk of liability in the event of accidents, errors, or other unforeseen incidents.
These certificates serve as proof of insurance coverage and are essential for verifying that healthcare facilities and their vendors possess adequate protection. Without proper insurance tracking, the healthcare sector faces heightened vulnerabilities to financial losses and legal liabilities.
Healthcare facilities are often subject to stringent regulations imposed by federal, state, and local authorities, with non-compliance carrying significant consequences. COI tracking assists healthcare organizations in meeting regulatory requirements by ensuring that all vendors and contractors adhere to coverage mandates.
COI tracking also empowers healthcare organizations to more quickly identify gaps or deficiencies in insurance coverage. By monitoring expiration dates and coverage limits, healthcare facilities can take timely action to rectify any deficiencies and maintain comprehensive protection.
Sources of Third-Party Risk in the Healthcare Sector
Data Breaches
Every industry faces cybersecurity threats, but healthcare organizations are particularly appealing to hackers. Not only do they frequently house valuable protected health information (PHI), but many also have intellectual property from in-house research. Because of this unique combination, the medical field faces cybersecurity risks from multiple angles.
For-profit hackers often have their eyes on PHI they can sell on the dark web. Ponemon Institute’s analysis “Are Risk Assessments Failing to Secure the Third-Party Healthcare Ecosystem?” reports 54 percent of healthcare vendors experienced a data breach exposing PHI, which may include medical history, financial information, and biographical information. The novel coronavirus (COVID-19) pandemic also saw a surge in nation state-sponsored hacks against healthcare operations by threat actors seeking to steal research and/or cause disruption.
Hackers look to exploit any possible weakness, and if a third party has access to your systems, they could inadvertently give cybercriminals an entry point.
HIPAA Violations
Health Insurance Portability and Accountability Act (HIPAA) rules govern how healthcare organizations must protect PHI from theft and fraud. Two critical components include the HIPAA Privacy Rule and HIPAA Security Rule. The Privacy Rule pertains to the protection of PHI, and the Security Rule sets standards for the creation, transmission, and storage of electronic health records.
While HIPAA permits healthcare organizations to share information with third-party vendors—including independent transcriptionists, claims processors, benefits managers, and other relevant organizations—those outside parties must also comply with HIPAA regulations, or your organization could face penalties. HIPAA violations can carry hefty fines, ranging from $100 to $50,000 per violation, so choosing the wrong third-party vendor can be a costly mistake.
Failure in Care
All organizations that work with external subcontractors, suppliers, and vendors expose themselves to third-party risk. However, these are amplified in the healthcare industry due to the element of patient care. In most industries, if a supplier doesn’t deliver on time or a vendor makes a mistake, it might hurt your bottom line. In healthcare, it could cost patient lives. That’s why every healthcare organization should thoroughly screen any potential vendors and maintain all relevant documentation.
Why Healthcare Organizations Should Invest in COI Tracking Software
bcs: Your Partner in COI Tracking
bcs is an industry-leading certificate of insurance tracking solution with full-service software and self-service options available to help you manage your healthcare business with confidence.
The full-service solution couples software and expert support for the highest standard in third-party liability risk management, with minimal work on your end. The self-service option gives you access to the bcs app to reduce the burden on your employees by bolstering their efforts with easy-to-use features, including automation.
Your healthcare business is busy enough as it is. Let bcs make the COI tracking process easy. Watch our self-service COI tracking demo or contact us today to learn more.
