Data mining by hospitals may be profitable, but not risk-free

The USA Today published a story yesterday about a few hospitals using aggregated consumer data for marketing of such hospitals' most lucrative services. The article describes several instances where such direct marketing efforts yielded significant profits for the hospitals.

We see healthcare providers using aggregated and de-identified data on a regular basis, both for marketing and research purposes. We also see third party vendors (including EHR vendors) adding data mining provisions in their license agreements, which allow such vendors to use the healthcare provider's de-identified patient data for such vendor's internal and commercial purposes.

While these practices are widespread and are becoming standard, they are certainly not risk-free.  Healthcare providers should keep in mind that the updated HIPAA Privacy Rule (as modified by the HITECH Act) includes significant new restrictions on covered entities' marketing efforts. Providers should make sure that their marketing efforts, as well as the marketing activities of their subcontractors and business associates, fully comply with these recent regulations. This may require revisions in existing contracts, including Business Associate Agreements, between providers and IT vendors.

Healthcare providers should also insist on full indemnification by the IT vendors against all claims and damages arising out of such vendor's use of the provider's de-identified patient data. Studies have shown that de-identified data can be aggregated or de-identified inappropriately; and it can also be re-identified. Providers should protect themselves contractually prior to allowing the vendor to access and use the hospital's data (including patient data).

The above is certainly not an exhaustive list of all potential issues associated with data mining by healthcare providers and their business partners. But the USA Today article should serve as a good reminder that healthcare providers engaging in such data mining and marketing activities must protect their organizations from liability for damages relating to such data use.

"Hospitals mine patient records in search of customers," USA Today (February 5, 2012).

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