Third-Party Vendor Risk in Healthcare: How You Can Stay in Control

Healthcare providers are often dependent on vendors that may not maintain the same level of cybersecurity, which can increase exposure to threats. Trusting third-party vendors is unavoidable, yet the potential for losing control over sensitive systems and patient data remains very real. This article outlines the foundational elements of third-party vendor risk management to help you minimize security risks.

Key takeaways:

• Dependence on third-party vendors across clinical, administrative, and technical operations creates a significant risk of PHI exposure and disruption of core healthcare workflows.
• Vendor-related breaches are rising across radiology groups, pharma, IT providers, medical transport, and pharmacies, according to Verizon’s 2025 Data Breach Investigations Report.
• A structured third-party risk management strategy helps reduce risks and identify threats before they escalate into major incidents.
• Cybersecurity platforms can enhance third-party vendor risk management by reducing manual work, centralizing monitoring, and accelerating threat detection.

Why third-party vendor risk management is a must for healthcare providers

Healthcare organizations rely extensively on third-party vendors to deliver clinical, administrative, and technological services. Third-party vendors help the healthcare industry run critical operations — from storing and transmitting PHI to supporting diagnostics, workflows, and remote care. 

However, working with third-party vendors introduces significant cybersecurity risks for healthcare organizations. While vendors can connect to your clinical systems, you typically have limited insight into how they access data, which controls they apply, or whether they follow internal security policies. This lack of visibility and transparency leaves security gaps, making it harder for you to detect mistakes, misconfigurations, or unauthorized access.The healthcare industry remains a prime target for cyberattacks, as noted in Verizon’s 2025 Data Breach Investigations Report. Attackers particularly favor supply chain compromises, knowing that compromising a single supplier, integrator, or cloud service can provide access to multiple healthcare organizations simultaneously.

In 2024, cybersecurity incidents impacted multiple types of healthcare vendors, including radiology groups, pharmaceutical organizations, IT providers, medical transport services, and pharmacies — some of which work with patients nearing the end of life.

“When we look at notable publicly disclosed data breach incidents that affected Healthcare this year, the partner angle is right out in front. Attackers clearly don’t have any ethical qualms about deploying their tools against not only healthcare providers but also the companies they rely upon to get their jobs done.”

Verizon’s 2025 Data Breach Investigations Report

Implementing third-party vendor risk management can help you proactively identify supply chain vulnerabilities and significantly reduce the likelihood of a vendor weakness snowballing into a major incident.

Third-party vendor risk management in healthcare is the process of identifying, assessing, and controlling the operational risks that arise when healthcare organizations rely on external suppliers, service providers, or technology partners. Its goal is to maintain transparent, compliant external relationships while ensuring the security and privacy of patient health information (PHI).

Benefits of third-party vendor risk management in healthcare

Effective third-party vendor management can offer your healthcare organization several advantages:

Minimizing operational disruptions

Third-party vendor management can help your healthcare organization avoid disruptions in providing patient care by ensuring that external providers that deliver EHRs, diagnostic platforms, billing tools, cloud services, and telehealth solutions operate reliably. By securing vendor access to your environment and continuously monitoring their activity within your infrastructure, you protect your organization in the event the vendor is compromised or misuses their permissions.

Reducing exposure to costly incidents

A significant share of healthcare data breaches can be traced back to third parties. Without strong vendor governance, your vendor’s misconfigurations or security gaps can result in costly penalties, litigation, and remediation expenses. Third-party vendor risk management helps identify issues early and significantly reduces financial losses when incidents occur.

Preserving customer trust 

Every security incident influences how patients perceive a healthcare provider. Demonstrating strong oversight of third-party partners and minimizing vendor-related security incidents shows that data protection is taken seriously. It helps maintain the trust patients need to feel safe receiving care and sharing sensitive information.

Maintaining regulatory compliance

Regulatory expectations extend far beyond internal systems. A well-established third-party vendor risk management strategy ensures that every vendor handling PHI follows the required safeguards and breach notification protocols. This reduces the likelihood that a vendor’s weak security controls will jeopardize your alignment with regulatory requirements.

Regulatory requirements governing healthcare organizations’ relationships with vendors

Healthcare is one of the most heavily regulated sectors. Multiple regulatory frameworks explicitly require oversight of any partner that handles patient data, interacts with medical devices, or supports clinical operations. Let’s review some of them.

HIPAA and HITECH

The Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health (HITECH) Act state that healthcare providers’ security responsibilities extend beyond their internal systems. Whenever a vendor handles PHI, whether through cloud hosting, EHR integrations, billing platforms, or analytics tools, the healthcare provider must ensure that the vendor meets the same security standards they do. 

Because vendor errors are considered the covered healthcare entity’s liability, robust third-party vendor risk management is a foundational part of compliance with HIPAA and HITECH. BAAs, regular audits, and verification of safeguards are all integral parts of maintaining compliance with these acts.

FDA

The U.S. Food and Drug Administration (FDA) regulates the safety and cybersecurity of medical devices, including connected and software-enabled devices developed or maintained by third-party manufacturers. Although FDA requirements primarily apply to device manufacturers, they also directly influence the security posture of healthcare organizations that rely on these devices. 

The FDA’s cybersecurity expectations, including ongoing monitoring of device software, vulnerability management, secure update mechanisms, and supplier controls throughout the device lifecycle, determine how well a vendor-built device can withstand cyber threats. 

Because many modern medical devices rely on external software components, cloud services, and vendor-controlled integrations, healthcare providers must implement robust third-party vendor risk management to ensure that the manufacturers they work with meet the FDA’s cybersecurity expectations.

GDPR

The General Data Protection Regulation (GDPR) applies to any healthcare entity that processes the personal data of EU patients, regardless of the organization’s location. Under the regulation, healthcare providers typically act as “data controllers,” determining the purposes and means of processing, while third-party vendors are classified as “data processors,” acting on behalf of the controller. 

Controllers are responsible for ensuring that processors comply with data protection requirements. This includes assessing vendor risks, conducting due diligence, establishing contractual safeguards, and maintaining ongoing oversight of how vendors access, store, and transfer personal data. It’s important to note that a processor’s failure to protect personal data can still expose the controller to significant regulatory penalties.

NIS2

The NIS2 Directive expands the security and oversight obligations for essential and important entities across the EU, including healthcare providers, pharmaceutical companies, laboratories, clinics, and digital health platforms. Under NIS2, covered organizations are responsible not only for their own cybersecurity but also for that of the third-party vendors and service providers they rely on.

NIS2 requires risk assessments, contractual security clauses, multi-factor authentication, access controls, incident reporting within strict deadlines, and continuous monitoring of vendor activity. Managing third-party vendor risks is therefore a vital requirement for maintaining compliance with NIS2.

With these expectations in mind, establishing robust third-party risk management is crucial to ensure compliance, support clinical safety, and protect patient data at every stage of your vendor relationships.

Third-party risk management fundamentals for healthcare

As your healthcare organization’s environment grows increasingly interconnected with and reliant on third-party vendors, you need a disciplined approach to managing the associated risks. Below, we outline five core practices to put in place when building an effective third-party vendor risk program.

Due diligence

The first step in managing third-party risk is to perform thorough due diligence, ensuring that a prospective vendor is both secure and compliant. Carefully examine any potential vendor’s security posture by reviewing internal policies, technical security controls, incident history, and any relevant certifications, such as SOC 2 or ISO 27001. 

Establishing strong contractual safeguards, such as BAAs that define how PHI is handled, SLAs that set performance and security expectations, and clearly defined breach notification timelines, is also essential.

Risk identification and classification

Before you can manage third-party vendor risks effectively, you need a clear picture of all the vendors in your ecosystem and what they do. Creating a centralized vendor inventory is a crucial first step. 

After creating an inventory, categorize vendors based on their risk profile, considering whether they access sensitive patient information, connect to critical systems, or provide services essential to the delivery of care. This classification process aims to highlight high-risk vendors that should receive more thorough oversight.

Access control

Managing access is critical for third-party risk management. With multi-factor authentication, you can verify vendors’ identities before granting them access to your systems. This significantly reduces the risk of unauthorized access or privilege misuse.

Applying the principle of least privilege (PoLP) when managing vendors’ access to your infrastructure, including hybrid and cloud environments, can help you limit exposure if a third-party account is compromised.

Continuous monitoring

Monitoring of third-party activity ensures that vendor risks are managed not only during onboarding but throughout the entire relationship. It’s essential to maintain real-time visibility into vendors accessing your systems to detect high-risk actions as they occur. Monitoring must remain consistent across on-premises, cloud, and hybrid environments to ensure that vendor activity remains secure wherever patient data is stored, processed, or transferred.

You should also conduct periodic security audits to evaluate whether your vendors continue to meet required safeguards and regulatory expectations. As vendors update their systems, expand integrations, or undergo organizational changes, their risk profile may change, making ongoing audits essential to maintain controls aligned with current risk levels.

Incident response

A coordinated incident response strategy can help you manage vendor-related security events with speed and precision when they occur. A comprehensive incident response plan should define specific roles and assign responsible personnel, outline escalation paths and communication protocols, establish containment procedures, and specify notification requirements to ensure that regulatory and contractual obligations are met.

Implement solutions that can automatically detect suspicious activity, notify your security team about potential threats, and trigger rapid response actions. Such tools significantly reduce the time it takes to identify and contain vendor threats, helping protect both PHI and critical care operations.

Mitigate third-party vendor risks with Syteca

Cybersecurity software plays a crucial role in simplifying third-party vendor risk management, reducing manual workloads, and enhancing the accuracy of threat detection. Syteca is a powerful privileged access management (PAM) platform with identity threat detection and response (ITDR) capabilities that provides your healthcare organization with the visibility, control, and responsive protection necessary to secure third-party access and prevent vendor-related security incidents.

Here’s what Syteca offers:

PAM for controlling third-party access:

• Grant least-privilege, granular, and time-bound access for vendors
• Verify vendor identities through two-factor authentication (2FA)
• Provide convenient and secure remote web-based access for your vendors 
• Scan your IT environment for orphaned or unused accounts to remove or take control of them
• Automate the provisioning, rotation, and protection of third-party users’ credentials

ITDR for visibility into vendors’ actions:

• Record vendors’ sessions and observe vendor activity in real time to spot unauthorized use of PHI, misuse of clinical systems, and other potentially harmful activity
• Safeguard sensitive user information with pseudonymization and live data masking during session monitoring
• Keep and review video-format session recordings and generate over 30 user activity reports for complete audit trails
• Capture keystrokes for a comprehensive record of vendor activity, including system commands
• Receive real-time alerts on suspicious activity and trigger automated response actions to contain threats

Syteca enables effective third-party risk management across cloud and hybrid environments. It’s fast to deploy and easy to manage, even with limited IT resources. Syteca also offers flexible licensing tailored to your specific security requirements and seamlessly integrates with your existing IT infrastructure.