How to Choose a HIPAA-Compliant MSP for Healthcare

When people think of HIPAA compliance, they often picture encryption, firewalls, and login screens—but the real backbone of compliance is often much less visible. Administrative safeguards are where a lot of the day-to-day discipline happens, and according to HHS, they actually make up more than half of the HIPAA Security Rule requirements. This is where policies get implemented, people get trained, and processes either keep things running smoothly—or quietly expose you to risk.

Let’s start with training. A HIPAA-compliant MSP doesn’t just offer technical services—they invest in educating their people. That means every employee who might interact with ePHI is trained on security policies, threat awareness, and HIPAA-specific obligations. This isn’t just a checkbox exercise. It’s an ongoing requirement under the Security Rule, and it matters—because even the most robust tech stack won’t save you from a technician who clicks on a phishing email. When you’re vetting an MSP, it’s worth asking: how often do they refresh training? Do they cultivate a real culture of security awareness? The answers to those questions can tell you more about breach risk than a spec sheet ever could.

Next, policies. A serious MSP should have documented HIPAA security policies that guide their internal operations—from user access and incident response to risk analysis and audit trails. They should be able to show evidence that they conduct internal risk assessments and adapt their practices based on those findings. The Security Rule specifically calls for these types of procedures, and a compliant provider won’t just talk about them abstractly—they’ll have a compliance lead or security officer who’s responsible for keeping their team accountable. You want a partner who lives and breathes these standards, not one who dusts them off once a year.

Administrative safeguards also cover how the MSP helps manage and monitor your environment. That includes supporting user provisioning (and deprovisioning), helping you enforce least privilege, and regularly auditing who has access to what. HIPAA mandates ongoing reviews of records and system activity to detect suspicious behavior. So ask your MSP candidates: do they perform regular audits? Will they share those results with you proactively? A provider that surfaces those reports unprompted is likely one who’s already thinking a few steps ahead.

And finally—perhaps most importantly—comes the Business Associate Agreement (BAA). If an MSP is going to handle protected health information on your behalf, this document isn’t optional. The BAA outlines their obligations, defines breach notification responsibilities, and puts real legal weight behind their security commitments. OCR has issued multimillion-dollar fines to organizations that failed to sign a BAA with their vendors, even if those vendors never technically mishandled data. So it’s simple: no BAA, no deal. A HIPAA-compliant MSP will have a BAA ready and will expect to sign it before any data ever changes hands.

Even with the above criteria in mind, there are pitfalls that healthcare organizations often stumble into during the MSP selection process. Being aware of these common mistakes can help you steer clear of a poor choice:

1. Assuming Every MSP Understands HIPAA: Not all IT providers truly grasp healthcare compliance, and assuming they do can be dangerous. Just because an MSP says they handle security doesn’t mean they know the specifics of protecting health information. In reality, many MSPs are great at general IT but lack healthcare-specific knowledge. As noted earlier, “All MSPs understand the financial security requirements, but not all of them understand the nuances of protected health information”. Always vet their HIPAA expertise. Ask pointed questions about how they handle PHI – for example, what encryption methods do they use for backups? How do they isolate your data from other clients? Have they dealt with an OCR audit or breach investigation? Also, ensure they have existing healthcare clients who can vouch for them. If the provider looks confused when you mention things like the HITECH Act or business associate agreements, that’s a sign they may not be the right choice.
2. Failing to Secure a BAA (Business Associate Agreement): One very common (and dangerous) oversight is skipping the BAA. Under HIPAA, any vendor that touches PHI must sign a Business Associate Agreement with you. This contract isn’t just a formality – it legally obligates the MSP to protect your data and outlines their liability if they fail. If an MSP says a BAA isn’t needed, or drags their feet on signing one, it’s a huge red flag. Unfortunately, some healthcare organizations have learned this the hard way. For instance, a hospital was fined $1.55 million for not having a BAA in place with a contractor. The lesson: always get a signed BAA before allowing an MSP access to ePHI, and keep that document on file. Skipping it not only violates HIPAA, it leaves you exposed if a breach occurs.
3. Choosing Based on Price Alone: Budget pressures in healthcare are real, but going with the cheapest MSP can backfire badly. An MSP that dramatically underbids others might be cutting corners somewhere – perhaps they use outdated security tools, offer minimal support coverage, or don’t invest in skilled personnel. In IT services (as in most things), you often “get what you pay for.” A bargain MSP could end up costing more in the long run through increased downtime, slower support, and even breaches or fines if their security is lax. That’s not to say you must choose the most expensive option but focus on value and expertise rather than just the sticker price. Weigh what you’re getting for the cost: is the MSP providing comprehensive security, true 24/7 support, strategic guidance, etc.? If an MSP’s quote seems too good to be true, dig into the details – you might find they haven’t included important services like disaster recovery testing or on-site support. Cutting those corners can be costly later. It’s worth paying a bit more for an MSP that will keep your practice safe and efficient, rather than suffering an expensive IT meltdown or compliance violation down the road.
4. Overlooking Security Depth: Some organizations focus on finding an MSP to “keep the network running” but overlook whether the MSP can handle modern security threats. This mistake can leave you vulnerable. For example, you might assume the MSP is patching all your systems and monitoring for intrusions but later discover they were only doing basic maintenance. During the selection process, delve into the MSP’s security capabilities. Do they offer advanced threat detection? Will they manage your firewall and regularly update rules? How do they stay on top of new vulnerabilities (e.g., a critical Windows server patch)? If you don’t ask these questions, you might end up with a provider whose security program is shallow. Don’t accept generic answers like “we handle security for you” – ask for specifics. A truly security-savvy MSP will enthusiastically talk about their multilayered approach, mention frameworks or standards they follow, and have quick answers on how they manage incidents. Also, involve your security or compliance officer in MSP discussions to ask the tough questions. The last thing you want is to realize after signing that your MSP isn’t equipped to defend against a ransomware attack or doesn’t understand HIPAA breach notification requirements.
5. Skipping Reference Checks and Due Diligence: Finally, don’t rush into an MSP contract without proper homework. It’s a mistake to be so eager to offload IT burdens that you fail to vet the provider thoroughly. Always check references – specifically, try to speak to one or two of the MSP’s healthcare clients. Ask those references about the MSP’s responsiveness, competence, and any issues they’ve had. Verify any bold claims the MSP makes. If they say, “None of our healthcare clients have ever suffered a major breach,” that’s a great sign – but see if the reference can corroborate their security track record. You should also review the MSP’s certifications or reports (if they have a SOC 2 report, for example, read the overview or ask for a summary of findings). And be sure to read the fine print in the contract or Master Service Agreement. Pay attention to clauses about data ownership (you should clearly own your data), breach notification responsibilities, and exit terms (what happens if either party terminates the contract). If anything is unclear or concerning, ask questions or have your legal counsel review it. It’s much easier to negotiate terms or walk away before you’ve signed, rather than feeling stuck with a bad partner afterwards. Taking the time to do due diligence can save you from a costly mistake with an MSP that isn’t the right fit.

(By being mindful of these pitfalls – from compliance assumptions to cost temptations – you can greatly improve your chances of selecting an MSP that will be a strong, secure partner for your healthcare organization.)