In the evolving landscape of healthcare, the surge of mergers and acquisitions (M&A) presents heightened vulnerabilities in cybersecurity and data privacy for both buyers and sellers, according to attorney Jonian Rafti from Proskauer. He emphasizes that while entities are often focused on financial gains, they must also be acutely aware of the potential regulatory and compliance gaps that come with such transactions.
Rafti notes that when a buyer enters a healthcare deal, they are not merely acquiring the tangible assets of the company; they are also assuming the associated legal risks, particularly concerning compliance with regulations such as HIPAA and state-specific privacy laws. This necessitates a thorough review process, usually executed in two distinct phases. Initially, legal advisors assess the seller’s existing compliance measures and their adherence to statutory obligations. Following this, cybersecurity specialists are often brought in to conduct a comprehensive technical evaluation of the seller’s systems and workflows, ensuring that every potential vulnerability is scrutinized from a security standpoint.
For sellers, preparing for an anticipated transaction is crucial. Rafti advises entities to “put their best foot forward,” anticipating inquiries regarding their compliance frameworks. Key questions include whether they have established HIPAA policies, if a compliance program is in effect, and whether a designated security and privacy officer is in place. Sellers must also recognize the importance of conducting thorough risk assessments, which differ significantly from routine cybersecurity evaluations or penetration testing.
The discussion in Rafti’s recent interview highlights additional risks associated with M&A, including challenges related to IT inventory, legacy systems, and unpatched vulnerabilities within organizational frameworks. The concept of cyber insurance emerges as a critical consideration, alongside the need for diligent vendor oversight to mitigate risks presented by a complex web of interconnected systems.
As the conversation unfolds, Rafti presents key cybersecurity and data privacy considerations for both parties engaged in healthcare M&A transactions, underscoring the importance of strategic mitigation actions. He also emphasizes the need to stay abreast of applicable state and federal regulatory frameworks, as changes in legislation could impact transaction dynamics in the coming year.
Rafti, serving as an associate in the corporate division of Proskauer and actively involved in the firm’s healthcare group, specializes in representing a diverse range of clients—from private equity investors to healthcare systems. His expertise in the healthcare sector informs his ability to guide clients through intricate transactional and regulatory landscapes, ensuring compliance with HIPAA and health data privacy standards.
In the context of MITRE ATT&CK framework, potential tactics that may have been employed during recent cyber incidents include initial access, where attackers find a foothold within a network, persistence tactics to maintain their presence, and privilege escalation techniques that allow adversaries to gain elevated access to resources. These tactics underscore the critical need for strategic cybersecurity measures as entities engage in potentially risky M&A activities in the healthcare space.
