What is the role of managed service providers in HIPAA compliance?

According to TechTarget, “the number of protected health information (PHI) data breaches more than doubled over the past 14 years, increasing from 216 in 2010 to 566 in 2024. Hacking and IT incidents increased from 4% to 81% of all breaches in the same period.” Furthermore, the news report stated that “From 2010 to 2024, 732 million records were impacted by healthcare data breaches, and hacking or IT incidents accounted for 88% (643 million) of those.” The Health Insurance Portability and Accountability Act (HIPAA) sets rigorous standards for protecting protected health information (PHI). For many healthcare providers, meeting these requirements can be daunting without the right expertise.

This is where Managed Service Providers (MSPs) play a pivotal role. As outsourced IT specialists, MSPs help healthcare organizations navigate complex technological landscapes, offering services ranging from email encryption to comprehensive data security and cloud management. 

What are managed service providers?

Managed service providers, or MSPs, offer IT services to other businesses on a subscription or contract basis. Their primary focus is to manage and maintain IT infrastructure, systems, and services, allowing organizations to concentrate on their core operations while ensuring their technology remains efficient and compliant. MSPs are not limited to any specific industry and cater to a wide range of businesses.

HIPAA and the need for IT expertise

The HIPAA Security Rule requires healthcare organizations to implement administrative, physical, and technical safeguards to protect electronic protected health information (ePHI). This includes:

• Conducting risk assessments
• Encrypting data at rest and in transit
• Implementing access controls
• Monitoring for security incidents
• Creating contingency plans for data recovery

Meeting these requirements can be resource-intensive and complex. According to the 2024 CDW Cybersecurity Report, as shared in HealthTech magazine, only 32% of healthcare professionals stated that their organizations do not outsource any security initiatives, which implies that about 68% outsource at least some cybersecurity functions to third-party vendors like MSPs. This outsourcing helps close internal knowledge gaps while enabling organizations to leverage cutting-edge security infrastructure and monitoring systems.

Email encryption and HIPAA compliance

Email remains one of the most widely used communication tools in healthcare, with the study titled Email Use Reconsidered in Health Professions Education: Viewpoint citing that 100% of oncology physicians had used email to communicate with colleagues, and 78% had received results via email. Yet, without encryption, it can also be a vulnerability. HIPAA mandates that PHI transmitted over email must be protected through appropriate safeguards. Unencrypted emails can be intercepted during transmission, exposing sensitive information to unauthorized parties. Email encryption involves using encryption protocols and keys to secure the content of emails. MSPs set up these encryption mechanisms and monitor them for potential vulnerabilities or issues.

One of the areas where MSPs assist healthcare organizations with HIPAA compliance is email encryption. MSPs implement and manage email encryption solutions, ensuring that protected health information (PHI) remains confidential during transmission. MSPs further ensure that staff are trained on identifying phishing attempts and that outbound messages containing PHI are encrypted automatically.

Related: Encryption at rest: what you need to know

MSPs and data security in HIPAA compliance

HIPAA requires the protection of ePHI against unauthorized access, alteration, or destruction. MSPs offer a layered security approach that combines multiple defenses across the network, endpoints, applications, and data environments.

Here’s how MSPs help bolster HIPAA compliant security frameworks:

• Access control: MSPs help define and manage user roles to ensure that only authorized individuals access PHI. Role-based access systems, multi-factor authentication (MFA), and session logging are implemented to monitor data usage.
• Encryption: In addition to email, MSPs encrypt stored data ("at rest") using industry-standard algorithms like AES-256 to prevent unauthorized access in the event of a breach or device theft.
• Intrusion detection and prevention: MSPs deploy systems that monitor for unusual behavior and known attack patterns, generating alerts and, in some cases, automatically responding to incidents.
• Endpoint management: With the rise of remote work and mobile devices, MSPs secure all endpoints accessing PHI, including laptops, smartphones, and tablets, using mobile device management (MDM) tools.
• Regular risk assessments: Under HIPAA’s Security Rule, covered entities must regularly assess risks and vulnerabilities. MSPs conduct routine audits and penetration testing to uncover weaknesses and recommend improvements.

The U.S. Department of Health and Human Services (HHS) reports that over 133 million healthcare records were exposed in 2023 alone due to data breaches. Many of these incidents could have been prevented with stronger endpoint and network defenses, two areas where MSPs are instrumental.

MSPs and cloud solutions for HIPAA compliance

Cloud computing has transformed healthcare by making data storage, sharing, and analysis more scalable and cost-effective. However, using the cloud also introduces new risks and regulatory obligations under HIPAA. MSPs that provide or manage cloud infrastructure play a crucial role in ensuring HIPAA compliance in these environments.

Here’s how MSPs support secure, HIPAA compliant cloud adoption:

• Secure cloud hosting: MSPs offer HIPAA compliant cloud platforms or work with providers like AWS, Microsoft Azure, and Google Cloud that offer business associate agreements (BAAs) and HIPAA-ready infrastructure.
• Backup and disaster recovery: MSPs ensure that ePHI is backed up regularly and stored in encrypted formats. In case of a ransomware attack or hardware failure, healthcare providers can quickly restore patient records and resume operations.
• Audit trails and logging: MSPs configure cloud services to track user activity, access attempts, and data transfers. These logs are essential for both internal oversight and demonstrating compliance during audits.
• Business associate agreements (BAAs): As required under HIPAA, MSPs sign BAAs with their clients, acknowledging their responsibility to protect PHI and clarifying their role in compliance.

According to HealthTech Magazine, “Cloud storage in healthcare has become standard operating procedure, with nearly three-quarters of organizations partnering with multiple public cloud vendors.” However, “Only less than half of the participants of [the] Datica Survey which was conducted at the HIMSS18 Conference held between March 5-9 in Las Vegas said they were comfortable assessing compliance, security, and privacy of application vendors that are hosted in the cloud,” writes Cybersecurity Insiders.

Related: A guide to HIPAA and cloud computing

MSPs and incident response

HIPAA’s Breach Notification Rule mandates that covered entities report breaches within 60 days. MSPs often function as the first responders in these scenarios, containing the breach, investigating its root cause, and assisting with documentation and reporting.

Their role typically includes:

• Isolating affected systems
• Notifying affected parties as required by HIPAA
• Working with legal teams and compliance officers
• Coordinating with regulators and insurers
• Implementing lessons learned to prevent future incidents

Having a reliable MSP can mean the difference between a controlled event and a crisis that leads to regulatory penalties, reputational damage, and loss of patient trust.

Read also: Responding to a cyberattack

Selecting an MSP for HIPAA compliance

Not all MSPs are equipped to support HIPAA compliance. Healthcare organizations must choose providers that:

• Have experience working with HIPAA-regulated clients
• Offer HIPAA-specific services 
• Are willing to sign a BAA
• Provide documentation for policies, procedures, and technical safeguards
• Maintain certifications such as HITRUST, SOC 2 Type II, or ISO 27001

See also: HIPAA Compliant Email: The Definitive Guide (2025 Update)

FAQS

Why is cybersecurity critical in healthcare?

Healthcare organizations handle vast amounts of sensitive patient data. Cybersecurity helps protect this data from breaches, ransomware attacks, and unauthorized access, which can disrupt care and violate privacy laws.

See also: Healthcare and cybersecurity

What are the common threats to healthcare data security?

Common threats include phishing attacks, ransomware, insider threats, unsecured devices, and third-party/vendor vulnerabilities.