Essentials and challenges of healthcare data sovereignty laws

Healthcare data carries profound implications for patient care, medical research, and healthcare systems worldwide. With the proliferation of electronic health records, cloud-based data storage, and advanced telemedicine platforms, the question of who owns and controls this data has become increasingly critical. This challenge has prompted countries to author healthcare data sovereignty laws—an evolving legal framework that addresses the rights, responsibilities, and jurisdictional control over healthcare information. 

As businesses grapple with balancing data protection, privacy, innovation, and profitability, the challenges of complying with these laws grow ever more urgent. Understanding the essentials and challenges of these data sovereignty laws is crucial, as they are poised to play a significant role in shaping the future of healthcare.

In this article, we will discuss some key healthcare data sovereignty laws, and data residency for the healthcare industry and show you how InCountry can help you maintain compliance.

The current state of health data sovereignty

Health data sovereignty is the application of data sovereignty principles to the healthcare industry. It means that health data collected and stored within a country is subject to the laws and regulations of that country. This ensures that personal health information (PHI residency) is handled following local privacy standards and that data is protected from unauthorized access or misuse.

As health data is increasingly digitized, and used in research globally by different health institutions, here are some current factors that business leaders of health institutions should note, regarding data sovereignty in healthcare:

• Growing legal and regulatory frameworks: 

Countries are enacting laws that give individuals more control over their personal health data. For instance, the General Data Protection Regulation (GDPR) in Europe provides rules around consent, data portability, and privacy. Similarly, in the U.S., HIPAA (Health Insurance Portability and Accountability Act) regulates how covered entities use health data. The list goes on. Business leaders should be aware of these policies to avoid breaking any rules.

• Emerging sovereignty concerns with AI and cloud storage:

The use of AI models in healthcare, along with cloud-based storage solutions, has raised new challenges. AI models often require large datasets which are often stored in cloud-based solutions. Cloud-based storage raises concerns about where health data is being stored (especially if outside national borders) and who has access to it. Health data sovereignty laws are pushing for more local storage solutions or restrictions on cross-border data flow.

• Indigenous data sovereignty:

Indigenous groups worldwide, particularly in countries like Australia, Canada, and New Zealand, are advocating for the right to govern their health data in culturally appropriate ways. The movement aims to ensure that health data is not exploited or misused and that it respects the communities’ values and needs.

• Privacy concerns in telehealth:

The rise of telehealth services during and after the COVID-19 pandemic has spotlighted health data sovereignty concerns. Patients’ data often crosses borders, leading to questions about which jurisdiction’s laws apply and how data is protected in transit or during storage.

• Data portability and individual control:

Many regulations encourage or require healthcare providers to give individuals control over their data, allowing them to transfer it across providers or services. This is a critical component of health data sovereignty as it empowers patients to make decisions about their healthcare records.

Why healthcare data sovereignty is important?

Here are some key reasons why healthcare data compliance is so critical at this time:

• Privacy and security:

This is arguably the biggest case for healthcare data sovereignty. Since healthcare data contains sensitive personal and genetic information, data sovereignty ensures that this information is stored and processed in compliance with local privacy laws, reducing the risk of data breaches and misuse.

• Compliance with local regulations:

Countries have specific regulations governing data protection within their territory. Data sovereignty ensures that healthcare organizations comply with these regulations by keeping data within the jurisdiction that governs its use.

• Patient trust:

When patients know their data is protected under local laws, trust in the healthcare system is fostered. This trust encourages patients to share accurate information, which is essential for effective diagnosis and treatment.

• National security:

Healthcare data is a prime target for cyberattacks. Storing data within national borders helps reduce risks of unauthorized access, and protects sensitive information.

• Data accessibility and quality:

Local storage of healthcare data enhances accessibility, allowing providers to quickly retrieve patient information. It also promotes standardized practices that improve data quality.

• Economic benefits:

Managing data within a country can stimulate economic growth by creating jobs in the data storage and technology sectors, encouraging the development of local infrastructure and services.

Healthcare data sovereignty laws by country

We shall review the data sovereignty laws for healthcare in the following countries in this section:

1. Health Insurance Portability and Accountability Act (HIPAA) – USA.
2. General Data Protection Regulation – EU.
3. Privacy Act 1988 and Australian Privacy Principles (APPs) – Australia.
4. China’s Electronic Medical Record Law.

Health Insurance Portability and Accountability Act (HIPAA) – USA

The HIPAA was enacted by the U.S. Congress in 1996 primarily to protect the privacy and security of individuals’ health information and ensure the portability of health insurance. Business leaders in the health industry should understand the implications HIPAA holds in the areas of data protection, patient rights, and administrative simplification, for their businesses. We shall discuss some of the key provisions of HIPAA and their implications for businesses, in the coming paragraphs:

• Privacy rule: The HIPAA sets the US national standards for protecting individuals’ medical records and other personal health information (PHI). It limits who can access and disclose PHI and ensures that patients have control over their health information. Covered entities, such as healthcare providers and insurers, are required to maintain the confidentiality of patients’ health information, whether it’s in physical form or electronic.
• Security rule: The HIPAA Security Rule establishes a framework for ensuring the security of electronic protected health information (ePHI). This includes technical, physical, and administrative safeguards that organizations must implement to protect data from unauthorized access, breaches, or cyberattacks. Encryption, secure data transmission, and regular risk assessments are some of the core security measures required.
• Breach notification rule: In the event of a data breach, HIPAA mandates that affected individuals, and the Department of Health and Human Services (HHS) should be notified. This rule ensures transparency and accountability, requiring prompt notification to mitigate the damage from data breaches.
• Portability and continuity of health insurance coverage: HIPAA also addresses health insurance portability, ensuring that individuals can maintain health coverage when they change or lose jobs. This part of the law prevents insurers from denying coverage due to pre-existing conditions and sets limits on the time individuals can be denied coverage.
• Enforcement and penalties: Compliance with HIPAA is overseen by the Office for Civil Rights (OCR) within the HHS. Entities that violate HIPAA can face severe civil and criminal penalties, ranging from fines to imprisonment, depending on the nature and severity of the violation. Fines can reach up to $1.5 million per year for multiple violations of the same provision.
• Patient rights: HIPAA empowers patients with rights over their health information. These include the right to access and obtain copies of their medical records, request corrections to errors in their data, and receive an account of disclosures of their information. Patients also have the right to request restrictions on who can access their information and how it is shared.

General Data Protection Regulation (GDPR) – EU

Although the EU has no special healthcare data policies, certain provisions of the GDPR are useful for healthcare service providers to stay out of legal trouble. Under the GDPR, healthcare data are classified as “sensitive personal data” and they receive additional protection, making the GDPR highly relevant to the healthcare sector. Below are some key provisions of the GDPR that healthcare service providers in Europe should be familiar with:

• Data localization and transfers: The GDPR does not strictly require healthcare data to be stored within the EU, but it heavily regulates data transfers outside the EU. Transfers to non-EU countries are only allowed if:
  • The destination country has been deemed to provide an “adequate” level of data protection.
  • Appropriate safeguards (like Standard Contractual Clauses or Binding Corporate Rules) are in place.
  • There is explicit consent from the data subject.

• Data protection principles: GDPR mandates that data processing must be lawful, fair, and transparent, with specific purposes for collection. Healthcare providers must ensure that data is collected for explicit and legitimate reasons and is not used beyond its original purpose without further consent.
• Rights of individuals:  Patients have significant rights under GDPR, such as:

1. • Right to access: Patients can request a copy of their data.
   • Right to rectification: Patients can correct inaccurate data.
   • Right to erasure (“right to be forgotten”): Patients can request the deletion of their data under certain conditions, etc.

• Security and breach notification: GDPR requires healthcare organizations to implement robust security measures to protect sensitive data. In the event of a data breach, organizations must notify the relevant supervisory authority within 72 hours and, in some cases, inform the affected individuals.
• Penalties for non-compliance: Organizations that fail to comply with GDPR can face significant fines—up to €20 million or 4% of their global annual revenue, whichever is higher. This high level of accountability reinforces strict adherence to data protection practices.

Privacy Act 1988 and Australian Privacy Principles (APPs) – Australia

Australia’s Privacy Act 1988 and the Australian Privacy Principles (APPs) are the core legal frameworks that provide a basis for discussing healthcare data sovereignty in Australia. It seeks to regulate how personal data, including sensitive healthcare information, is handled. These laws play a crucial role in safeguarding healthcare data sovereignty in the country. Below are key provisions of the Privacy Act and the APPs:

• Sensitive information: Healthcare data is considered “sensitive information” under the Privacy Act, which means it requires stricter protection. Organizations in the health industry must get explicit consent from individuals before collecting or sharing their health data, except in urgent situations, like medical emergencies.
• Australian Privacy Principles (APPs): The 13 APPs outline how personal information should be managed. The key ones for healthcare include:

1. • APP 1 (Transparency): Organizations need clear policies about how they manage health data, including its collection, usage, storage, and protection.
   • APP 3 (Data collection): Health data should only be collected if necessary for the organization’s activities and with the individual’s consent.
   • APP 6 (Usage and disclosure): Health information can only be used for the purpose it was collected unless additional consent is given or there are legal exceptions.
   • APP 11 (Security): Organizations must ensure healthcare data is protected against unauthorized access, loss, or misuse.

• Data transfers and localization: While there’s no strict requirement to keep healthcare data within Australia, APP 8 mandates that organizations take measures to ensure overseas data recipients adhere to Australian privacy standards, such as through contracts or other safeguards.
• Breach notification: Under the Notifiable Data Breaches (NDB) scheme, healthcare providers must inform affected individuals and the Australian Information Commissioner if a data breach is likely to cause serious harm, reinforcing transparency in handling healthcare data.
• Penalties for non-compliance: Failure to adhere to the Privacy Act and APPs can result in heavy financial penalties and reputational damage, with the Australian Information Commissioner authorized to take enforcement actions, including imposing fines or requiring remedial steps.

China’s Electronic Medical Record Law (EMR Law)

China’s Electronic Medical Record (EMR) Law is a key regulation governing the use, storage, and protection of electronic medical records within the country’s healthcare system. It sets strict guidelines to ensure the security, accuracy, and confidentiality of patients’ health information stored in digital formats. The law is designed to align with broader data protection frameworks like the Personal Information Protection Law (PIPL) and the Cybersecurity Law, safeguarding the privacy and security of healthcare data while improving healthcare service delivery. Here are some of the provisions of EMR Law:

1. Standardization: The law mandates consistent standards for managing EMRs across all healthcare institutions, promoting accurate and accessible medical records.
2. Data security: Healthcare providers must enforce stringent security measures—such as encryption and access controls—to protect EMRs from unauthorized access or breaches.
3. Patient consent and rights: Patients must give consent for their records to be shared or used beyond treatment, and they retain the right to access, correct, and monitor how their data is handled.
4. Data retention and deletion: EMRs must be stored for a set period and securely deleted or archived afterward to safeguard against misuse.
5. Cross-border transfers: Cross-border health data transfer is tightly controlled, requiring security checks and patient consent to ensure China’s data sovereignty.
6. Breach notification: healthcare institutions are obligated to notify both patients and authorities immediately in the event of an EMR security breach.
7. Penalties for non-compliance: Violating the EMR Law can result in substantial fines, operational restrictions, and legal consequences for healthcare organizations.

Healthcare data sovereignty challenges

Healthcare data sovereignty laws pose several challenges, especially with the growing use of digital health technologies and the global exchange of data. Some of these challenges include:

• Cross-border data transfers

Working around data sovereignty laws like the GDPR, HIPAA, or China’s EMR, can be challenging. It requires a deep understanding of each country’s unique regulations. Additionally, countries with data localization mandates add another layer of complexity, as multinational healthcare organizations must ensure that data is stored and processed within national borders. This not only increases operational costs but also limits flexibility in how data can be managed and accessed across different regions.

• Data security and privacy risks

Healthcare data is a high-value target for cyberattacks, making security a top concern. Ensuring strong protections across regions with different cybersecurity standards is difficult. Additionally, managing data access across multiple locations increases the risk of unauthorized access or breaches, undermining data sovereignty.

• Compliance with multiple jurisdictions.

Different countries impose unique legal requirements for data protection, which complicates efforts for global healthcare providers to maintain consistent practices. Complying with each nation’s data sovereignty laws can be both complex and resource-intensive. Additionally, legal conflicts may arise when one country’s regulations mandate sharing data with authorities or using it in ways that contradict the data protection laws of another country.

• Balancing data sovereignty with innovation

Strict data sovereignty laws can limit access to the large datasets needed for medical research and innovation, particularly in areas like artificial intelligence and genomics that depend on diverse data sources. Also, overly restrictive data policies may deter healthcare technology companies from creating or implementing innovative solutions in regions with stringent requirements, ultimately slowing technological advancement.

• Regulatory changes and uncertainty

Data sovereignty laws are continually evolving to respond to emerging technologies and threats, making it challenging for healthcare organizations to keep up and maintain compliance. Additionally, geopolitical factors, such as political tensions or shifts in international relations, can result in abrupt changes to data protection regulations, impacting how healthcare data is stored and accessed around the world.

• Cost implication

Complying with healthcare data sovereignty regulations often requires significant investment in data infrastructure, legal expertise, and security measures, which can be financially burdensome for healthcare providers.

How InCountry can help global companies stay compliant with healthcare data sovereignty laws

Staying compliant with healthcare data sovereignty laws can be a daunting task for global companies. At InCountry, we know how crucial data is to keeping healthcare organizations competitive; whether it’s for research, innovation, or product development. However, navigating the constantly evolving data sovereignty laws across multiple countries can quickly become overwhelming.

That’s where we come in. At InCountry, we take the hassle out of managing compliance with our data residency-as-a-service solution. We ensure your healthcare data is stored exactly where it needs to be, according to the regulations of each country, while still allowing you to access it from anywhere in the world. This means less worry about data transfers and compliance issues, and more focus on what really matters—growing your healthcare business.

Our data vaults are equipped with top-of-the-line security measures, including encryption, firewalls, intrusion detection systems, and secure communication protocols. You can rest assured that your data is safe and fully compliant with even the strictest regulations.

Ready to simplify your compliance journey? Reach out to us today, and let’s explore how InCountry can bring immense value to your healthcare business.