Community Health Systems (CHS) reported to the U.S. Securities and Exchange Commission in July that it was the target of an external criminal attack and data breach between April and June 2014. CHS’s expert forensic firm, Mandiant, indicated that the attacker was an advanced persistent threat (APT) group operating in China. The APT group used highly sophisticated malware to attack the company’s systems.

CHS confirmed that the data did not include patient credit card, medical or clinical information; however, it did include patient names, addresses, birth dates, telephone numbers and Social Security numbers.

Effects of the Data Breach

The compromised data may be used in the following ways:

• True name identity theft schemes when combined with other false documents
  • Opening bank accounts
  • Applying for and opening credit cards
  • Applying for and opening loans
  • Piggybacking and increasing credit scores
• Creation of synthetic identities
  • Combination of real and falsified personal information to create brand new identities
• Insurance fraud schemes through filing fraudulent claims

On April 8, the FBI issued a private industry notification (PIN) directed at the health care industry. Insurance Journal quoted the PIN as saying: “The health care industry is not as resilient to cyber intrusions compared to the financial and retail sectors, therefore the possibility of increased cyber intrusions is likely.”

In February 2014, the SANS Institute issued a white paper concerning emerging cyber threats for the health care industry. According to the white paper, the health care industry is particularly vulnerable to data breaches for several reasons:

• The industry is rapidly moving to an Internet of Things (IoT) environment in which medical devices and other technology are connected to the Internet.

• With the rollout of Healthcare.gov, there is a flood of electronic personal health information being exchanged.

• Across the industry, cyber security strategies and controls are inadequate

Analyst Comments

We expect medical industry data breaches to continue to trend upward. The upheaval within the industry related to the conversion of digital records and the increasing reliance on IoT technology combined with deficient cyber security strategies and controls make the industry a prime target.

The CHS data breach was a large, externally targeted breach by a group in China that used sophisticated tools and techniques, which may indicate a nation-state sponsorship. At 4.5 million records, the breach was exceptionally large. As of Aug. 12, the Identity Theft Resource Center reported 204 medical/health care data breaches and 2.2 million records compromised (an average of approximately 11,000 per breach). The industry is not only vulnerable to large attacks, such as the one on CHS, but also smaller attacks, such as skimming devices at point-of-sale terminals within doctors’ offices. Additionally, given the lucrative value placed on stolen medical credentials, the insider threat is also quite real.