When most people hear “HIPAA,” they picture large hospitals, insurance companies, and sprawling healthcare networks. But the truth is, HIPAA regulations apply to many small and mid-sized businesses too, often in ways owners don’t realize.

If your business handles protected health information (PHI) in any capacity, whether you’re managing patient files for a medical office, providing billing services, or offering IT support to a healthcare provider, you may be legally required to comply with HIPAA’s strict rules.

And the stakes are high. Non-compliance can lead to hefty fines, legal trouble, and loss of client trust. But more importantly, compliance builds confidence with the people who trust you with their most sensitive data.

In this post, we’ll break down what HIPAA means for SMBs, who it applies to, what counts as PHI, and the steps you can take right now to protect both your customers and your business.

HIPAA, the Health Insurance Portability and Accountability Act, sets rules for how certain businesses handle protected health information (PHI). While it’s easy to assume it only applies to doctors, hospitals, and insurance companies, the law actually covers a wider range of organizations.

Under HIPAA, there are two main groups that must comply:

These are the organizations directly involved in patient care, health coverage, or health data processing. They include:

• Healthcare providers – such as clinics, dental offices, therapists, and pharmacies
• Health plans – including insurance companies and employer-sponsored health plans
• Healthcare clearinghouses – organizations that process health information for billing, claims, or other administrative functions

Any person or company that handles PHI on behalf of a covered entity falls into this category. This is where many small and mid-sized businesses are surprised to learn they’re included.

Examples of business associates:

• An IT company that manages a clinic’s network or cloud storage
• A billing service that processes patient invoices
• A document shredding company that destroys medical files
• A marketing agency that runs campaigns using patient appointment data
• A software vendor providing EHR (electronic health records) or scheduling tools

At its core, PHI is any health-related information that can be linked to an individual. That link can be direct—like a name—or indirect—like a combination of details that could reasonably identify a person.

PHI isn’t limited to electronic data, it also includes paper records, verbal communications, and images.

Information is no longer considered PHI if all identifying details are removed and there’s no reasonable way to link it back to an individual. For example, aggregate statistics about patient outcomes can often be shared without violating HIPAA.

HIPAA compliance boils down to protecting PHI by following a set of privacy, security, and breach notification standards. For small and mid-sized businesses, this often means building policies, procedures, and safeguards into everyday operations.

HIPAA’s rules are grouped into two main areas:

This governs who can access PHI and how it’s used or shared.

Key requirements:

• Limit access – Only employees with a legitimate job need should have access to PHI.
• Patient consent – Obtain necessary permissions before sharing PHI for purposes beyond treatment, payment, or operations.
• Documentation – Maintain clear records of data sharing, requests, and disclosures.

This focuses on how PHI, especially in electronic form, is protected.

Safeguards include:

Administrative Safeguards

• Conduct regular risk assessments
• Create and enforce security policies
• Provide ongoing HIPAA training for staff

Physical Safeguards

• Control facility access (locked file rooms, keycard entry)
• Secure workstations and devices
• Properly dispose of paper and electronic records

Technical Safeguards

• Encrypt PHI at rest and in transit
• Use strong, unique passwords and multi-factor authentication
• Maintain audit logs and automatic logoff features
• Implement firewalls and intrusion detection

For many small and mid-sized businesses, HIPAA compliance challenges come from oversight rather than intent. Unfortunately, even small errors can lead to serious violations and costly penalties.

Here are some of the most common pitfalls:

For many SMBs, maintaining HIPAA compliance on their own can feel overwhelming, especially without dedicated IT staff. This is where partnering with an experienced IT provider can make all the difference.

Here’s how the right IT partner can support your compliance efforts:

HIPAA compliance isn’t just a legal requirement, it’s a commitment to safeguarding the trust your clients place in you. Whether you’re a covered entity or a business associate, the way you handle PHI reflects directly on your professionalism, credibility, and integrity.

By putting the right safeguards in place, technical, physical, and administrative, you can reduce risk, avoid costly penalties, and give your customers confidence that their information is safe.