Data security in digital health isn’t optional—it’s the cost of doing business. If you’re running a digital health company, you’re handling sensitive patient data, and that means you’re a target.
Hackers know the value of protected health information (PHI), and regulators won’t hesitate to fine you for security lapses. The price tag for getting it wrong is massive—fines, lawsuits, and a reputation that’s hard to repair.
But even getting it right isn’t cheap. Many digital health companies can expect to spend $150K or more per year on data security. Let’s break down where that money actually goes and how you can cut costs without cutting corners.
What Does $150K+ in Digital Health Security Costs Cover?
Security isn’t one big check you write—it’s a series of investments in different protection layers. Here’s how those costs typically break down:
End-to-end encryption
Expect to spend around $10K–$30K upfront and another $10K–$20K annually on maintenance and licenses. This ensures data is protected in transit and at rest. Without it, a breach could expose unencrypted patient data, leading to costly fines and lawsuits.
Role-based access controls (RBAC)
Implementing and managing RBAC costs around $15K–$25K per year. RBAC limits who can access what, ensuring that employees only see the data they need. It sounds simple, but it’s a major safeguard against insider threats and accidental data exposure.
Audit logging and monitoring
Setting up a proper logging system can cost between $15K and $25K, with ongoing analysis running another $10K–$20K per year. These logs help you detect security incidents early and prove compliance if regulators come knocking.
SOC 2 compliance
Getting a SOC 2 audit will run you $20K–$50K in the first year, with annual renewals costing $15K–$30K. It’s a must-have for B2B digital health companies, as customers and investors will demand it before they trust you with sensitive data.
Penetration testing
A good security strategy includes regular penetration testing, which costs $15K–$30K per test. Annual testing is the minimum, but if you’re scaling fast, you might need biannual or continuous testing.
In the first year, the total cost can be anywhere from $150K to $200K. After that, maintaining security still costs $30K-$60K per year.
| Expense | Price | Reason |
| End-to-end encryption | $10K–$30K setup, $10K–$20K annual | Protects data in transit and at rest, preventing costly breaches. |
| Role-based access controls (RBAC) | $15K–$25K per year | Limits access based on roles, reducing insider threats. |
| Audit logging and monitoring | $15K–$25K setup, $10K–$20K annual | Detects security incidents early and proves compliance. |
| SOC 2 compliance | $20K–$50K first year, $15K–$30K annually | Required for B2B trust and regulatory compliance. |
| Penetration testing | $15K–$30K per test | Identifies vulnerabilities before hackers do. |
Factors That Impact Digital Health Security Costs
Not all digital health companies spend the same amount on security. Your costs will depend on several key factors.
Scale: The larger your user base and data volume, the higher your security costs. More data means more risk, which requires more monitoring, stronger encryption, and additional compliance requirements.
Complexity of integrations: If your platform integrates with multiple EHRs, payment systems, or third-party apps, your attack surface increases. Each connection is a potential vulnerability, and securing these integrations takes more time and resources.
Testing frequency: Annual penetration testing is standard, but for companies handling high-risk data, testing every six months is a better move. It costs more upfront, but catching vulnerabilities early prevents expensive breaches down the road.
Vendor selection: Premium security solutions come at a cost, but cutting corners here can be dangerous. Open-source tools can save money, but they require more in-house expertise to configure and manage.
How to Optimize Digital Health Security Costs Without Compromising Protection
Security doesn’t have to be a bottomless pit of spending. There are ways to optimize costs without weakening your defenses.
Leverage automation and AI: AI-driven security monitoring can reduce manual work and catch threats in real time. Instead of paying an entire team to sift through logs, machine learning can flag anomalies and automate responses.
Prioritize based on risk: Not all data needs the same level of protection. Focus your highest security measures on PHI and critical systems. Less sensitive data might not require the same costly encryption and monitoring.
Build security into development: Retrofitting security after launching a product is far more expensive than baking it into your development cycle. Secure coding practices and early threat modeling prevent costly fixes later.
Outsource smartly: A managed security provider can handle threat monitoring and compliance for less than the cost of a full in-house security team. This works especially well for startups that need enterprise-grade security but don’t have the budget for dedicated staff.
Why Investing in Digital Health Security Now Saves You Money Later
Skipping security investments isn’t saving you money—it’s delaying an inevitable and much larger expense. A data breach costs far more than security ever will. The average cost of a healthcare data breach is $9.77 million, and that doesn’t include reputational damage or lost business.
Regulatory fines are steep. HIPAA violations can run up to $1.5 million per year, and that’s before factoring in class-action lawsuits from affected patients. If your company works with enterprise customers, failing to meet security expectations means losing deals. Many health systems and insurers won’t even consider vendors that aren’t SOC 2 certified.
Security is an investment that pays off in trust, credibility, and long-term stability. Patients, providers, and investors all expect you to take it seriously. The best digital health companies don’t treat security as a burden—they see it as a competitive advantage.
If you’re growing a digital health company and need help navigating these security costs, let’s talk. Getting this right from the start saves you money, stress, and potential disaster down the road. Write to me at astrunk@accretiveedge.com.
