HIPAA Enforcement Is Rising But Who’s Really Paying the Price

In 2024, the Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services took more enforcement actions than in any previous year. It also levied its lowest average financial penalties in more than a decade. This divergence reveals a strategic pivot: OCR is broadening its enforcement net, but its ability to impose meaningful consequences remains constrained.

While this may appear to be a shift toward proactive regulation, the underlying pattern tells a more complicated story. Small and mid-sized providers, not large-scale offenders, are now bearing the brunt of HIPAA enforcement. Despite escalating breaches across national health systems and business associates, the most resource-limited organizations are paying a disproportionate share of the penalties.

More Cases, Lower Penalties, Limited Impact

The number of HIPAA enforcement cases in 2024 rose significantly, aided by targeted initiatives like OCR’s new risk analysis compliance sweep. Yet the average financial settlement dropped by more than 40 percent from the previous year. Most cases involved relatively minor infractions such as outdated notices of privacy practices, delayed breach notifications, or incomplete risk assessments.

These infractions matter. But the concentration of enforcement on documentation failures within small practices, outpatient clinics, and community hospitals suggests that OCR is pursuing cases it can easily investigate and resolve. Large-scale breaches involving complex third-party networks, on the other hand, remain under-addressed.

The result is a compliance landscape where visibility drives vulnerability. Organizations with fewer resources and less legal insulation are easier targets. Meanwhile, the entities responsible for the largest breaches, often business associates with national reach, face lower odds of investigation and little public accountability.

The Economics of Compliance Disparity

The enforcement imbalance carries both ethical and operational consequences. Small and mid-sized providers already struggle with workforce shortages, technology transitions, and shrinking margins. Regulatory penalties compound these pressures, diverting funds from patient care and security improvements to settlement costs and legal fees.

At the same time, inconsistent enforcement sends the wrong signal to the marketplace. When major actors can absorb or avoid penalties while smaller players are sanctioned publicly, the incentive structure weakens. Compliance becomes less about risk mitigation and more about regulatory optics.

This creates a troubling paradox: organizations least able to withstand penalties are most likely to receive them. And those with the greatest potential to cause systemic harm may escape real scrutiny.

Risk Analysis Without Systemic Reach

OCR’s 2025 risk analysis initiative was designed to push organizations toward more rigorous, ongoing assessments of security vulnerabilities. However, its scope appears limited to desk audits and small-scale corrective action plans. Without the ability to conduct deep, on-site investigations or pursue complex multi-entity breaches, the initiative risks becoming a checkbox exercise.

Worse, there is little evidence that OCR’s increased enforcement is driving measurable improvements in breach prevention. The overall number of reported breaches continues to rise, and many repeat offenders have not faced formal penalties.

The absence of financial consequences for large-scale failures also affects vendor accountability. Business associates that expose millions of records may walk away with only reputational harm, if they experience any repercussions at all. This undermines the purpose of HIPAA’s enforcement authority, which is not just to punish but to deter.

Toward Smarter, Fairer, More Strategic Enforcement

If OCR’s goal is to drive better outcomes, enforcement strategy must evolve beyond volume. That means:

• Prioritizing investigations that reflect real-world impact, not just ease of prosecution.
• Linking penalties to breach scale, systemic risk, and recurrence.
• Increasing transparency around enforcement decisions and rationale.
• Advocating for legislative and budgetary support to expand investigative capacity.

Health systems and vendors should prepare for a future where enforcement becomes more data-driven and outcome-based. That shift will require better documentation, more comprehensive risk assessments, and greater engagement with regulators. But it will also demand that OCR focus its limited resources where they can do the most good.

The path forward should not sacrifice smaller providers in pursuit of easy wins. Real enforcement reform means targeting structural risks, incentivizing prevention, and holding all actors, regardless of size, to the same standard of accountability.