Why Digital Health M&A Needs Cybersecurity Beyond HIPAA

Digital health M&A needs cybersecurity beyond HIPAA because compliance alone does not tell buyers enough about real operational risk. Connected care platforms, patient data flows, mobile applications, cloud infrastructure, third-party integrations, and medical devices all create exposure that can affect valuation, integration difficulty, and post-deal resilience.

The strategic issue is diligence, not just documentation. Buyers and operators need to understand where fragile systems, inherited weaknesses, incident history, and vendor dependencies could turn into trust loss or disruption after a deal closes. In digital health, cybersecurity is part of transaction quality, not just post-close cleanup.

The Growing Imperative of Cybersecurity in Digital Health

Digital health has changed how care is delivered, through telemedicine, mobile health apps and connected medical devices. Every new channel is also a new way in for attackers. As more health data goes digital, real security has to go well beyond compliance with the Health Insurance Portability and Accountability Act (HIPAA).

Healthcare breaches are costly. Patient records get exposed, operations stall, and trust takes years to rebuild. The 2024 ransomware attack on Change Healthcare, a UnitedHealth Group unit, showed how far one breach can spread. Mergers and acquisitions add risk, because systems are being connected and responsibilities shift while the deal closes.

Beyond Compliance: Making Cybersecurity a Priority

HIPAA sets a baseline for protecting health information. It does not tell a buyer whether a company’s systems can stand up to a determined attacker. Treating HIPAA compliance as proof of security can leave both sides badly exposed.

What works? A mix of technical controls and planning. That includes strong encryption, continuous monitoring, regular audits and a tested incident response plan.

Legal commentators, including writers in The National Law Review, have made the same point: a company’s value is increasingly tied to how well it protects its data, which makes cyber risk part of deal valuation. Buyers are advised to treat security resilience as a core measure in due diligence.

Due Diligence: The Cornerstone of Successful M&A

In an M&A deal, due diligence should cover security alongside finance and law. A buyer needs to know the target’s real security posture so hidden weaknesses do not hurt the deal’s value or derail it. That review should not stop at closing. It should continue through integration, as threats keep changing.

A good acquisition plan treats security as part of risk management. Basic cyber hygiene matters: keeping software and security controls up to date and training staff, since human error is still one of the most common ways attackers get in.

The Road Ahead: Strategic Investment in Cybersecurity

Digital health companies need a lasting security culture. Security is a business function. It is not a checkbox. Spending on it should follow business goals, with priority on the threats most likely to derail a deal or disrupt care.

Get outside help. Bringing in security specialists during the deal gives buyers an honest view of strengths and weaknesses. It also gives them a roadmap for integration after the acquisition.

The Takeaway

Digital health brings big opportunities, and the data behind it has to be protected. In M&A, looking past HIPAA compliance to real security is now part of doing a deal well. For companies that want to grow in this sector, a strong security program is a requirement, not an extra.

John King, CISSP, PMP, CISM

John King currently works in the greater Los Angeles area as a ISSO (Information Systems Security Officer). John has a passion for learning and developing his cyber security skills through education, hands on work, and studying for IT certifications.