How Much Does HIPAA Compliance Cost?

Disclaimer: This article was originally published in November 2023 and was updated in October 2025 for comprehensiveness. 

HIPAA (Health Insurance Portability and Accountability Act) compliance typically costs between $10,000 and low six figures, depending on your size, risk profile, and current controls.

The right plan focuses spending on the biggest risks first, so you avoid fines, breaches, and wasted tools. 

HIPAA is a critical piece of legislation designed to safeguard the privacy and security of patients' health information, but its compliance requirements is a complex and costly endeavor. 

Intelligent Technical Solutions (ITS) is a managed IT and cybersecurity provider that helps healthcare organizations and business associates assess risk, close control gaps, train staff, and maintain documentation so they stay compliant while they grow. 

In this guide you will learn: 

• What are the core HIPAA cost drivers? 
• What are the realistic ranges for small and large entities? 
• What is a step-by-step budgeting approach, and
• Frequently Asked Questions (FAQs) about HIPAA Compliance Cost

What drives HIPAA compliance cost? 

The cost of achieving and maintaining HIPAA compliance can vary widely based on several factors, each of which influences the overall financial commitment of businesses. These factors include: 

1. Business Size and Complexity 

Larger environments with multiple locations, mixed cloud and on premises systems, and many third parties require more assessment time, more remediation work, and broader training. Small clinics still need the same safeguards, but the scope is smaller. 

2. Current Infrastructure

The state of your existing IT infrastructure is also a major factor. Outdated systems, legacy servers, unsupported operating systems, and flat networks add remediation costs.

Modernized environments with identity controls, endpoint protection, and backups already in place require you to spend less to reach compliance. 

3. Security Measures 

Expect spend in these categories: risk analysis, policies and procedures, identity and access management, endpoint protection, encryption at rest and in transit, logging and alerting, secure backup and recovery, vendor due diligence, and workforce training.

4. Employee Training 

Annual HIPAA training for all workforce members, role-based training for privileged users, and tabletop incident exercises should be planned as recurring line items. Add time for policy reviews, management sign off, and documentation updates. 

READ: Employee Cybersecurity Training & You: 6 Effects on Businesses 

5. Third-party Services 

 You must inventory vendors, execute BAAs (Business Associate Agreements), assess their controls, and monitor ongoing risk. Cloud and EHR partners often reduce your tooling costs but increase due diligence workload. 

7. Legal and Regulatory Changes 

Enforcement priorities, guidance, and state privacy laws evolve. Build an annual review cycle so you can adjust policies, notices, consents, and technical controls without surprise spend. 

How much does HIPAA compliance cost? 

There's no one-size-fits-all answer, but we’re here to give you a general overview. 

What do small organizations typically spend to get compliant? 

For organizations with about 50 employees or fewer, a practical initial program often includes: 

• HIPAA risk analysis and gap assessment
• Policy and procedure development 
• Technical remediation plan and essential controls 
• Workforce training and phishing awareness 

Typical range: roughly $10,000 to $50,000 for first year activities, depending on preparedness and technology debt. Ongoing costs are lower and tied to renewals, audits, and training. 

What do mid-sized to large organizations spend? 

In the case of larger organizations, costs tend to increase due to additional expenses associated with: 

• On-site Audits or in-person assessments of compliance measures. 
• Vulnerability Scans or identifying potential security weaknesses. 
• Penetration Testing or evaluating system vulnerabilities through simulated attacks. 
• Incident Management Plans or developing strategies to handle security incidents. 

Typical starting point: $50,000 to $150,000+ for first year activities, with ongoing spend driven by monitoring, testing, and audit cadence. 

Where do organizations overspend? 

Overlapping security tools, unused features, custom policies that are never implemented, and one-time assessments without remediation plans. Tie every purchase to a documented risk and a control requirement. 

How should I build a HIPAA budget without surprises? 

What is a simple roadmap to plan spending? 

• Run a risk analysis mapped to HIPAA regulations and NIST guidance. 
• Prioritize remediation by likelihood and impact, starting with identity, MFA, backups, and patching. 
• Update policies and train staff so practice matches policy. 
• Test and monitor with vulnerability scans, alerting, and periodic exercises. 
• Review vendors and BAAs, then standardize due diligence. 
• Schedule an annual cycle for reviews, training, and updates. 

Which quick wins reduce risk fastest per dollar? 

MFA on all remote and admin access, least privilege and quarterly access reviews, encrypted backups with recovery testing, EDR with monitoring, and email security with user training. 

What proof should I maintain for auditors and OCR? 

Risk analysis reports, remediation evidence, policy versions with approval dates, training rosters, BAA list, incident response plan, vulnerability and patch records, and test results for backups and recovery. 

Is HIPAA compliance worth the cost? 

HIPAA is required for any organization that creates, receives, maintains, or transmits PHI.

The cost is manageable when you focus on the highest risks first, replace tool sprawl with managed outcomes, and build an annual review cycle.  

Need help with your HIPAA compliance? 

The decision to invest in HIPAA compliance should not be taken lightly. 

While the cost of HIPAA compliance can present a financial challenge for businesses, it needs to be viewed as an investment in both the protection of sensitive patient data and the long-term viability of your healthcare enterprise.  

At ITS, we help hundreds of businesses maintain compliance by strengthening their cybersecurity. At the same time, we also ensure that we adhere to the highest industry standards as a managed security service provider. In that way, we can provide our clients with quality service.   

Contact us today for a free cybersecurity assessment and advice on maintaining HIPAA compliance. You may also read the following related resources in our Learning Center:  

• What Happens If My Company Is Out of Compliance [VIDEO] 
• HIPAA Compliance is not optional - it's the law  
• The HIPAA Compliance Checklist  

FAQs (Frequently Asked Questions)

Q: Do small businesses need HIPAA compliance? 

A: Yes. If you handle PHI as a covered entity or business associate, you must comply regardless of size. 

Q: Is a HIPAA risk analysis required every year? 

A: You must perform risk analysis regularly and update it after major changes such as new systems, mergers, or incidents. 

Q: What is the biggest driver of HIPAA cost?  

A: Technology debt and process gaps. Modernized environments with strong identity, patching, and backups spend less to close gaps. 

Q: Can training reduce my overall spend?  

A: Yes. Effective employee training lowers incident frequency, improves audit results, and reduces remediation workload.

Q: Do I need a BAA with every vendor?  

A: You need BAAs with vendors that create, receive, maintain, or transmit PHI on your behalf, and you must assess their technology safeguards.