The Crucial Role of SOC 2 Type II Compliance in Healthcare

Service Organization Control 2 (SOC 2) Type II is an auditing procedure and report developed by the American Institute of Certified Public Accountants (AICPA)¹ that is designed to evaluate an organization's internal controls related to security, availability, processing integrity, confidentiality, and privacy of a system.   

SOC 2 compliance is crucial for SaaS companies working in healthcare, as data is highly sensitive, and security is critical. SOC 2 Type II compliance assures healthcare customers that the companies’ systems are safe and reliable.

This article will cover:

• The difference between SOC 2 Type I and Type II

• Why hospitals should care about SOC 2 reporting

What’s the Difference Between SOC 2 Type I and Type II? 

There are two types of SOC 2 reports – Type I and Type II. SOC 2 Type I reports evaluate controls and processes at a single point in time. The goal of this report is only to determine whether controls are designed properly, but does not ensure that the controls are functioning at all. SOC 2 Type I reports are sometimes used when an organization is under a time crunch and needs to obtain the report quickly.  SOC 2 Type II reports evaluate controls and processes over an extended time period. The goal is to determine whether controls function as intended. SOC 2 Type II reports are more thorough than Type I and carry more weight than SOC 2 Type I reports.  SOC 2 Type I and Type II reports require annual audits of an independent auditor.  

Why Should Hospitals Care About SOC 2 Reporting? 

SOC 2 Type II compliance is an important factor that hospitals should weigh when selecting partners to work with. Here are six reasons why: 

1. Data Security and Privacy Protection: SOC 2 Type II compliance provides assurance that the company has the appropriate controls in place to protect the confidentiality, integrity, and availability of sensitive healthcare data. This is crucial within healthcare environments, as hospitals handle vast amounts of protected health information (PHI) that must be safeguarded under regulations like HIPAA. 

2. Regulatory Compliance: By ensuring partners have SOC 2 Type II compliance, hospitals can demonstrate their own due diligence in vetting third-party service providers. This helps hospitals maintain compliance with regulations like HIPAA, which require appropriate oversight of business associates. 

3. Risk Management: Hospitals rely on partners for critical services, and a SOC 2 Type II report provides visibility into the operational controls and risk mitigation strategies of those partners. This allows hospitals to make more informed decisions about partner selection and ongoing monitoring. 

4. Operational Reliability: SOC 2 Type II evaluates the availability, processing integrity, and overall reliability of the partner's systems and services. This gives hospitals confidence that the company can consistently deliver the expected level of service and availability. 

5. Audit Facilitation: When hospitals are audited for compliance, the existence of SOC 2 Type II reports for partners can streamline the process and reduce the burden of evidence gathering. 

6. Reputation and Trust: Hospitals prioritize working with partners that have demonstrated a strong commitment to security and compliance through SOC 2 Type II certification. This reflects positively on the hospital's own reputation and can help build trust with patients and other stakeholders.  

By requiring SOC 2 Type II compliance from partners, hospitals can better protect sensitive data, maintain regulatory compliance, manage third-party risks, and ensure the reliability of critical services – all of which are essential for delivering high-quality healthcare.  

Recommended Reading 

1. System and Organization Controls: SOC suite of services. (n.d.). Resources | AICPA & CIMA. https://www.aicpa-cima.com/resources/landing/system-and-organization-controls-soc-suite-of-services