HIPAA Compliant File Sharing For Healthcare Providers: 101

As a covered entity in healthcare that routinely handles, processes, and shares protected health information (PHI), file-sharing practices that align with HIPAA regulations are the only kind you should tolerate. 

In this guide, we’ll unpack what HIPAA-compliant file sharing really means, why it’s non-optional, and how you can keep your healthcare organization on the right side of the law.

1: Why HIPAA compliant file sharing matters more than ever

The real risks of sharing healthcare files 

Since 2009, more than 519 935 970 healthcare records have been exposed following data breaches aimed at the medical industry, making it one of the most targeted sectors for cyberattacks. 

According to Checkpoint’s 2024 Cloud Security Report, in 2023, over 80% of data breaches in cloud environments (which are widely employed in healthcare) were due to misconfigurations, such as open databases and improper access settings.

Indeed, human error, like sending information to the wrong recipient, is responsible for a staggering 82% of all data breaches, according to a 2024 survey by international experts in the field.

So, it makes sense that secure protocols and access controls are essential, along with automated systems that reduce the likelihood of human error wherever possible. 

Statistics and research on HIPAA compliant file sharing

Based on the 2024 Cost of a Data Breach Report by IBM and Ponemon Institute:

• Healthcare industry's leading breach costs: The healthcare sector remains the most costly industry for data breaches, with an average breach cost of $9.77 million in 2024. This reflects the high stakes in maintaining PHI safety and the severe disruption caused by breaches in this sector. Healthcare has held the top spot for data breach costs since 2011.
• Public cloud breach costs: Data breaches involving public cloud environments (so often used in healthcare file sharing) have proven particularly expensive, averaging $5.17 million per breach in 2024. This is a 13.1% increase from the previous year, showing the growing financial impact of cloud-related security incidents.
• Prevalence of compromised credentials: The most common initial attack vector in 2024 was compromised credentials, which were used in 16% of breaches. These breaches had an average cost of $4.81 million each, making them one of the more frequent and costly types of data security incidents.

The IBM report referenced above covers direct and indirect costs associated with a data breach, such as detection, escalation, notification, post-breach response, and lost business.  HIPAA penalties fall under “post breach response” costs, but to better understand the cost of penalties alone, let’s break them down.

HIPAA penalties for non-compliance

HIPAA penalties are designed to enforce compliance with privacy and security regulations in healthcare, with fines structured based on the culpability and corrective actions taken by the offending entity.

Tiers include: 

• Unknowing violations: Penalties range from $137 to $34,464 per violation, with an annual maximum of $34,464.
• Violations with reasonable cause: Fines start at $1,379 per violation, with a maximum penalty of $68,928 per violation and an annual cap of $137,886.
• Willful neglect (corrected): Penalties range from $13,785 to $68,928 per violation, with a maximum annual penalty of $344,638 if the violation is corrected within the required timeframe.
• Willful neglect (not corrected): Fines start at $68,928 per violation, with a maximum annual cap of $2,067,813 for uncorrected violations.

To better understand how these penalties and annual caps work, and why published figures sometimes vary, read this.

It’s also important to note that most cases involve multiple penalties rather than a single fine, compounding the financial and operational impact. 

These fines apply to the covered entity, so it’s essential for healthcare providers to select partners that support their HIPAA compliance, particularly when those partner interactions involve the sharing of PHI.

2: Components of HIPAA compliant file sharing practices

Business Associate Agreements (BAAs) for compliance

BAAs are legally binding contracts that require third-party vendors handling PHI to comply with HIPAA regulations. These agreements are there to ensure that any vendor interacting with PHI is held to the same stringent standards of privacy and security as the healthcare entity itself. 

Without a BAA between you and all of your partners, vendors and business associates, there’s the risk that they may mismanage PHI, meaning potential breaches and hefty penalties for the healthcare provider—you. 

BAAs outline the specific safeguards and responsibilities that vendors must adhere to, creating a clear framework for accountability and minimizing risks associated with data sharing. 

Encryption of PHI in transit and at rest

Encryption is one of the most powerful tools protecting sensitive healthcare information from unauthorized access. It works by converting PHI into a format that’s unreadable without a decryption key, making it nearly impossible for unauthorized users to access or decipher the data if it’s intercepted. 

HIPAA compliant file sharing solutions that incorporate both HIPAA compliant file transfer and HIPAA compliant storage, such as SFTP To Go, will help you to ensure encryption of data in transfer and rest, with minimal effort on your part. 

SFTP To Go encryption includes:

• Encryption at rest (in storage): Data is encrypted at rest using AES-256 encryption on Amazon S3, so it’s always secure on the SFTP  To Go server.
• Encryption in transit (during transfer): Data in transit is encrypted using secure protocols such as SFTP and FTPS, so it’s protected during transfer between the client and server, as well as between the server and BA.

Secure access controls

Effective access control is the other key to preventing unauthorized access to PHI. SFTP To Go supports advanced access control mechanisms on multiple levels, including:

• Accounts authenticate via the web dashboard using an email, password, and optional multi-factor authentication (MFA).
• Credentials authenticate via SFTP, FTPS, and S3 with strong passwords or public key authentication.
• Permissions are assigned to each credential, restricting access to specific directories.
• Inbound network rules restrict access to specific IP ranges, and static IPs are used for secure connections.
• All login attempts, sessions, and file access activities are audited and logged.

These controls are designed to enforce the principle of least privilege, ensuring that individuals, including the client and the client’s BAs, have access only to the information necessary for their role—minimizing the potential for data breaches on multiple fronts.

For a full PHI transfer and storage checklist, read this post. 

Consistent monitoring and regular auditing

Continuous monitoring and detailed auditing are among the non-negotiables of HIPAA compliance. These processes allow organizations to keep a detailed record of all interactions with Protected Health Information (PHI) and promptly identify any unauthorized access or unusual activity. 

Solutions that help you automate, encrypt, and secure data sharing practices, like SFTP To Go, also provide real-time monitoring and comprehensive audit logs that track all interactions with PHI, with features including:

• Audit logs: Tracks all user activities (logins, uploads, downloads, deletions) across SFTP, FTPS, and web portal. Logs can be filtered by timestamp, username, or session ID.
• Email notifications: Customizable notifications for file activities (uploads, downloads, deletions) with filtering options based on specific files, paths, or users.
• Webhooks: Enables real-time notifications via HTTP POST requests for specific events (file uploads, downloads, deletions) with security measures like signature validation for authenticity.

This allows admins to quickly detect and respond to unauthorized access or other suspicious activities. Audit logs are also essential for demonstrating compliance during audits and investigations, as they provide a clear record of who accessed what data and when. 

So, this capability not only helps to identify potential security incidents but also ensures that all file-sharing activities are fully traceable and accountable—a key requirement under HIPAA. 

Scalability and availability: managing large volumes of PHI

As healthcare organizations handle, share, and process increasing volumes of PHI, they need to ensure that the systems they employ are designed for scalability, durability, and availability. 

In fact, HIPAAs security rule, which you can learn more about in our free HIPAA Checklist Ebook, outlines the imperative of applying reasonable and appropriate security measures at scale.

SFTP To Go, built on AWS infrastructure, offers the scalability needed to handle large datasets without compromising on performance or security. Whether your data sets are tiny or massive, SFTP To Go brings the same high standards of security.

• Its AWS architecture is designed to provide 99.999999999% durability and 99.99% availability, so organizations can continuously access their data, even during peak times or in the event of a disaster. 
• What’s more, disaster recovery features mean that interrupted transfers, uploads or downloads, can be resumed without starting over—useful for large files and folders.

This high level of reliability is critical for maintaining the accessibility and integrity of PHI—a must for both patient care and regulatory compliance.

3: Advanced Strategies for HIPAA-Compliant File Sharing

Integrating HIPAA compliance across multiple systems

Integration points between disparate systems represent potential breach points if not managed correctly. 

When PHI flows between different platforms, such as EHRs and public cloud storage, each handoff introduces a risk. The goal of using products like SFTP To Go is not only to provide secure storage between you and your vendors, but also to secure the transfer channels and integration points. 

Furthermore, by standardizing encryption and access controls, admins can ensure consistent security measures are in place, lowering the risk of data breaches during system integration. 

SFTP To Go uses API and webhook capabilities to allow seamless integration between your SFTP To Go storage and other systems and cloud platforms, enabling continuous monitoring and compliance checks across the network. 

When you integrate with vendors, these same mechanisms can be implemented. In terms of integrating with diverse BA systems, the process of securing these interactions with SFTP To Go is simple and can largely be automated to minimize human error. 

APIs and webhooks can also be used to integrate the SFTP To Go storage with their workflow and data processing systems as needed.

The basic setup with vendors / BAs is as follows: 

1. Create credentials: The CE creates specific SFTP credentials for the BA, assigning precise permissions (e.g., full access, read-only, write-only) to designated directories. This ensures that the BA only accesses the necessary data.
2. Access and authentication: The BA accesses the SFTP To Go server using secure protocols (SFTP, FTPS) with user/password authentication or public key authentication. Supported algorithms include ssh-ed25519, rsa-sha2, and ecdsa-sha2, ensuring robust security.
3. Data encryption: All data transferred between the CE and BA is encrypted using secure protocols. At rest, data is stored with AES-256 encryption on Amazon S3, providing strong protection against unauthorized access.
4. Audit and monitoring: The CE can monitor all interactions through audit logs, which record file uploads, downloads, deletions, and login attempts. Logs can be filtered by user, action, or time, allowing for detailed oversight.
5. Notifications: The CE can set up customized notifications via email or webhooks, triggering alerts for specific actions like file uploads or deletions, enabling real-time monitoring.

This setup ensures that all data exchanges between the CE and BA are secure, compliant, and auditable.

Securing file sharing in remote and hybrid work environments

In remote and hybrid work environments, secure file sharing becomes more complex due to the increased number of endpoints and the varied security postures of remote networks. Integration points in these environments are that much more vulnerable. 

SFTP To Go tackles these challenges by offering multiple user packages with encrypted connections, granular access controls like MFA, and IP whitelisting, ensuring that only authorized personnel access PHI. 

All remote users work through the same centralized secure servers and encrypted transfer channels. What’s more, SFTP To Go’s user-friendly webportal makes the platform accessible to users of all technical proficiencies, from anywhere in the world, provided they’re authorized for access.

SFTP To Go’s security features allow administrators to monitor and manage remote access in real-time, so that PHI remains protected even outside the traditional office environment. 

Additional measures to protect PHI

Protection of PHI, along with HIPAA compliance, requires a multi-layered approach, especially in complex IT environments.

 Be sure to review our PHI transfer and storage checklist  and Download the Complete HIPAA Checklist for 2024/2025 for a comprehensive understanding of what this entails.

4: A final point on training your team

Ongoing education and training for your team are central to preventing data breaches, especially those caused by configuration mistakes and human error.

Mistakes like sending PHI to the wrong recipient can have severe (and costly) consequences—so having standard procedures in place and using only systems with strict access controls are a must.

Ensure that rollout of products like SFTP To Go are properly managed by your technical team, and conduct regular audits to ensure HIPAA compliance through integration with new BAAs, adoption of new cloud-based tools, and day to day medical data processing. 

Incorporating tools like SFTP To Go and all other data processing platforms into training sessions can reinforce best practices in secure file sharing and ensure all employees are up-to-date on HIPAA regulations. 

Training programs should focus on practical strategies for handling PHI securely, as highlighted in HIPAA's training guidelines.

In conclusion

Maintaining HIPAA compliance in file-sharing practices is an ongoing responsibility that demands the right tools and consistent effort. 

By using strong encryption, enforcing strict access controls, regularly conducting audits, and ensuring continuous staff training, healthcare organizations can dramatically reduce the likelihood of data breaches. 

SFTP To Go provides a highly functional but surprisingly lean and user-friendly platform designed to support these practices, and our goal is to make HIPAA compliant file sharing a “given” for you and your BAs.

Don’t forget to Download the Complete HIPAA Checklist for 2024/2025 for a full guide to HIPAA compliant file sharing in healthcare.