Implementing a Privacy Program that Scales: Essential HIPAA Practices for Digital Health Companies
The Overlooked Half of HIPAA Compliance
Most digital health founders associate HIPAA compliance with encryption, access controls, and other technical safeguards. Those are essential. But they represent only one side of the compliance equation.
The side that is often overlooked involves privacy practices that shape how a healthcare company handles patient information. While the HIPAA Security Rule focuses on protecting electronic data, the HIPAA Privacy Rule governs how that data is used and shared in any form. Understanding both sides is critical for digital health companies building lasting trust with users, customers, and investors.
Privacy Compliance as a Competitive Advantage in Digital Health
In healthcare technology, privacy is not just a legal requirement. It’s a business strategy.
Patients and providers choose partners they trust. Health systems and payers vet vendors for compliance readiness. Investors assess whether your company manages regulatory risk effectively. Implementing a comprehensive privacy program signals professionalism, operational discipline, and maturity as a company.
Health tech startups that invest in privacy early create an advantage for themselves. They reduce legal exposure while increasing credibility with customers and capital partners. Savvy founders know that a privacy program isn’t just paperwork to be done; it’s proof that your company respects the people whose data makes your business possible.
The Privacy Risk Assessment: People, Policies, and Processes
HIPAA’s Security Rule requires every covered entity or business associate to conduct a Security Risk Analysis, often outsourced to an IT security firm, to assess technical, physical, and administrative safeguards for electronic protected health information, or “ePHI.”
In contrast, the HIPAA Privacy Rule applies to any form of PHI and focuses on policies, procedures, and workforce practices. A Privacy Risk Assessment focuses on how PHI is accessed, used, shared, and disclosed. It reviews operational safeguards to ensure that your digital health company’s practices align with the HIPAA Privacy Rule.
A strong Privacy Risk Assessment should include:
Privacy policies and patient notices: Do your privacy statements, consent forms, and patient communications accurately describe your PHI practices?
Business Associate Agreements (BAAs): Are your contracts up to date and compliant with current HIPAA standards?
Workforce training and awareness: Does your team understand how to handle PHI appropriately in day-to-day workflows, including telehealth and remote patient monitoring?
Incident response readiness: Are your policies and procedures prepared to detect, document, and respond to a potential privacy breach within required timeframes?
Patient rights management: Are your processes for access, amendments, and restrictions aligned with HIPAA requirements?
It’s important to note that not every company handling health-related data is bound by HIPAA. For example, Direct-to-Consumer health applications and wellness platforms may not qualify as covered entities or business associates. However, these companies are likely to be held to privacy obligations under the Federal Trade Commission’s Health Breach Notification Rule. That rule requires notice to users and the FTC when individually identifiable health information is improperly disclosed or accessed. Even for companies outside HIPAA, implementing comparable privacy and security safeguards helps manage regulatory risk and strengthen user trust.
How Should Privacy Practices Mature as a Digital Health Company Scales?
Privacy compliance programs should grow in sophistication as the business itself grows. A health tech startup serving a few mid-sized medical practices has a very different risk profile than a nationwide remote-care platform, and the expectations for sophistication of a company’s privacy program vary accordingly.
At a minimum, early stage companies should designate a privacy officer, implement a privacy policy that accurately reflects the company’s business model, ensure that the appropriate BAA is in place for customer contracts and vendor agreements (yes, there is a difference!) and conduct a simple training for employees on best privacy practices.
Growth-stage companies will be expected to have more formal processes in place, including defined privacy workflows, documented assessments, structured staff trainings, and a response plan for potential incidents.
Established enterprises should conduct internal audits, implement advanced monitoring, and undergo periodic third-party reviews to validate privacy compliance.
Just as a product becomes more refined with each iteration, a privacy program should evolve and become more robust over time. Each stage should build upon the last, reinforcing trust as your user base and data footprint expand.
How often should my company have a Privacy Risk Assessment?
Privacy is not static. Your product offerings change and new privacy rules appear each year. Conducting an annual Privacy Program Review/Risk Assessment will keep your digital health company aligned with current regulatory expectations and industry standards.
A typical annual Privacy Risk Assessment should:
Review and revise privacy policies, patient consents, and BAAs
Assess response times and documentation for patient data requests
Revisit any privacy incidents and update internal policies accordingly
Refresh workforce training and access permissions
Document the entire Privacy Risk Assessment as evidence of ongoing compliance
This recurring process helps identify issues before they become problems, while signaling to customers, partners, and regulators that your company takes compliance seriously.
At Nixon Law Group, we help digital health innovators build privacy programs that grow with their business. Our team conducts comprehensive Privacy Program Assessments, drafts and updates HIPAA-compliant policies, and guides founders through scalable frameworks that make compliance a competitive advantage. Contact us to learn more.