HIPAA vs SOC 2: Do You Need Both?

The short answer: HIPAA is legally required when handling Protected Health Information (PHI), while SOC 2 is a voluntary attestation that customers often request. They're complementary frameworks with significant overlap, and having both can streamline your sales process in healthcare.

Key Takeaways

Aspect	HIPAA	SOC 2
Type	Federal law	Audit standard
Required by	U.S. government (when handling PHI)	Customers (voluntary)
Focus	Protecting health information	Demonstrating security controls
Validation	Self-assessment, independent audits	CPA firm attestation
Output	Compliance documentation, BAAs	SOC 2 report
Renewal	Ongoing (no expiration)	Annual report

Quick Answer: If you handle PHI, HIPAA compliance is legally required, not optional. SOC 2 is voluntary but increasingly expected by healthcare customers as third-party validation of your security controls. Many healthtech companies need both.

Understanding the Fundamental Difference

HIPAA: A Legal Requirement

HIPAA is a U.S. federal law. When you handle Protected Health Information on behalf of a covered entity (healthcare provider, health plan, or healthcare clearinghouse), you're legally required to comply. Non-compliance can result in:

• Civil penalties: $100 to $50,000 per violation, up to $1.5 million per year per violation category
• Criminal penalties: Up to $250,000 in fines and 10 years imprisonment for willful violations
• State attorney general enforcement
• Private lawsuits in some cases

SOC 2: A Trust Framework

SOC 2 is an audit standard developed by the AICPA. It's a voluntary framework that demonstrates your security controls to customers. There are no legal penalties for not having SOC 2, but:

• Enterprise healthcare customers often require it
• It can significantly shorten sales cycles
• It provides third-party validation of your security claims

When Do You Need Each?

You Need HIPAA Compliance When:

• You're a covered entity (healthcare provider, health plan, clearinghouse)
• You handle PHI on behalf of a covered entity (business associate)
• You're a subcontractor to a business associate and access PHI
• Your product stores, processes, or transmits PHI

Examples requiring HIPAA:

• EHR/EMR systems
• Telehealth platforms
• Healthcare analytics services
• Medical billing software
• Patient communication tools
• Healthcare data warehouses

You Need SOC 2 When:

• Enterprise healthcare customers request it
• You want third-party validation of your security posture
• Security questionnaires are consuming significant time
• You want to accelerate sales cycles in healthcare

Common SOC 2 requirements in healthcare:

• Hospital systems and health systems
• Health insurance companies
• Large physician groups
• Healthcare technology companies evaluating vendors

How They Overlap

Despite different origins, HIPAA and SOC 2 have substantial overlap:

HIPAA Requirement	SOC 2 Equivalent
Risk assessment	Risk assessment process (CC3.1)
Access controls	Logical access controls (CC6.1-6.3)
Audit logging	System monitoring (CC7.1-7.4)
Encryption	Cryptographic controls (CC6.7)
Incident response	Incident management (CC7.3-7.5)
Workforce training	Security awareness (CC1.4)
Vendor management	Vendor and business partner oversight (CC9.2)
Change management	Change management (CC8.1)

The Efficiency Opportunity

Because of this overlap, pursuing both frameworks together is more efficient than addressing them separately:

Shared controls:

• Access management policies and procedures
• Security awareness training programs
• Incident response plans
• Risk assessment methodologies
• Encryption implementations
• Audit logging infrastructure

Shared evidence:

• Access reviews and access control documentation
• Training completion records
• Risk assessment documentation
• Policy documents
• System configuration evidence

Key Differences to Understand

Scope

Aspect	HIPAA	SOC 2
Data type	PHI specifically	Any data you define in scope
Geographic	U.S. federal law	International acceptance
Flexibility	Prescriptive requirements	Customizable criteria

HIPAA focuses specifically on PHI. SOC 2 scope is defined by you, though healthcare customers will expect PHI to be in scope.

Validation

Aspect	HIPAA	SOC 2
Certification body	None (no certification exists)	Licensed CPA firms
Output	Self-assessment, optional third-party audit	Formal attestation report
Third-party requirement	Not required but recommended	Required for report

HIPAA has no certification, while SOC 2 produces a formal report issued by a CPA firm. This is why some customers request SOC 2 in addition to HIPAA; it provides third-party validation.

Ongoing Requirements

Aspect	HIPAA	SOC 2
Risk assessment	Required periodically (annually recommended)	Required, frequency varies
Report refresh	N/A	Typically annual
Continuous compliance	Required	Required during audit period

Both require ongoing compliance, but SOC 2 produces annual reports while HIPAA compliance is continuously required without periodic reports.

What Healthcare Customers Actually Want

When healthcare organizations evaluate vendors, they typically want:

Minimum Requirements

1. Signed Business Associate Agreement (BAA) - Required by HIPAA
2. Evidence of HIPAA compliance - Policies, safeguards, risk assessment
3. Security questionnaire completion - Often HECVAT or SIG

Common Additional Requests

4. SOC 2 Type II report - Third-party validation of controls
5. Penetration test results - Evidence of technical security testing
6. Security certifications - ISO 27001, HITRUST, etc.

Why SOC 2 Matters to Healthcare Buyers

Healthcare organizations request SOC 2 because:

• Third-party validation: Independent CPA firm verifies your controls
• Standardized format: Familiar report structure across vendors
• Ongoing evidence: Type II shows controls operating over time
• Reduced risk: Demonstrates security program maturity
• Procurement efficiency: Simplifies vendor security assessments

HIPAA + SOC 2: The Combined Approach

Many healthtech companies pursue both frameworks together. Here's how to approach it efficiently:

Phase 1: Foundation (Weeks 1-4)

1. Conduct combined risk assessment

   • Address HIPAA risk analysis requirements
   • Feed into SOC 2 risk assessment documentation

2. Develop unified policies

   • Create policies that satisfy both frameworks
   • Include HIPAA-specific provisions where required

3. Implement shared controls

   • Access management
   • Encryption (in transit and at rest)
   • Audit logging
   • Incident response

Phase 2: HIPAA Specifics (Weeks 4-6)

1. Business Associate Agreements

   • Review and execute BAAs with vendors
   • Prepare BAA for customers

2. HIPAA-specific documentation

   • Privacy practices
   • PHI handling procedures
   • Breach notification procedures

3. Workforce training

   • HIPAA awareness training
   • Role-specific PHI handling training

Phase 3: SOC 2 Preparation (Weeks 6-10)

1. Define scope and criteria

   • Include PHI-handling systems
   • Select Trust Services Criteria (typically Security + Availability)

2. Control mapping

   • Map HIPAA controls to SOC 2 criteria
   • Identify any gaps

3. Evidence collection

   • Gather evidence that satisfies both frameworks
   • Set up continuous evidence collection

Phase 4: Observation and Audit (Months 3-6+)

1. SOC 2 observation period (minimum 3 months for Type II)
2. Maintain HIPAA compliance throughout
3. SOC 2 audit
4. Report issuance

Cost Considerations

Pursuing Both Together (Recommended)

Component	Estimated Cost
Combined gap assessment	$10,000-25,000
Policy and procedure development	Included in assessment
Technical implementation	Varies by gaps
SOC 2 audit	$15,000-40,000
Total first year	$25,000-75,000+

Pursuing Separately

Component	Estimated Cost
HIPAA assessment and remediation	$15,000-40,000
SOC 2 preparation and audit	$25,000-60,000
Total first year	$40,000-100,000+

The combined approach typically saves 20-30% by eliminating duplicate effort in risk assessment, policy development, and control implementation.

Do You Really Need SOC 2 If You're HIPAA Compliant?

The answer depends on your customer base:

SOC 2 May Not Be Necessary If:

• Your customers are small healthcare practices
• No customers are requesting SOC 2
• You're early stage and don't have enterprise healthcare customers yet

SOC 2 Is Worth Pursuing If:

• Health systems or large providers are target customers
• Health insurance companies are in your pipeline
• Security questionnaires are consuming significant time
• Competitors have SOC 2 reports
• You want to accelerate enterprise sales cycles

What About HITRUST?

Some healthcare organizations request HITRUST certification, which incorporates HIPAA requirements and maps to multiple frameworks including SOC 2. HITRUST is more comprehensive and expensive than SOC 2 alone.

Consider HITRUST if:

• Large health systems require it
• You want a single certification covering multiple frameworks
• You have budget for the more extensive certification process

Consider SOC 2 + HIPAA if:

• Most customers accept SOC 2
• You want a faster path to market
• Budget is more constrained

Common Questions

Can SOC 2 replace HIPAA compliance?

No. HIPAA is a legal requirement when handling PHI. SOC 2 is complementary but cannot replace the legal obligations under HIPAA.

Does HIPAA compliance mean I don't need SOC 2?

Not necessarily. While HIPAA compliance demonstrates security measures, SOC 2 provides third-party validation that many healthcare customers require during vendor evaluation.

Which should I do first?

If you're handling PHI today, HIPAA compliance is required immediately. However, pursuing both together is more efficient than sequential efforts.

Will my SOC 2 audit cover HIPAA?

Standard SOC 2 doesn't specifically cover HIPAA. However, you can request a SOC 2 + HIPAA examination that explicitly addresses HIPAA requirements, resulting in a single combined report.

How do I demonstrate HIPAA compliance without certification?

Provide:

• Executed Business Associate Agreement
• Summary of security program and safeguards
• Risk assessment documentation (summary)
• Training records
• Third-party audit reports (SOC 2 or HIPAA-specific)
• Penetration test executive summary

How Bastion Helps

Bastion helps healthtech companies achieve both HIPAA and SOC 2 efficiently:

• Combined assessment: Evaluate against both frameworks simultaneously
• Unified documentation: Policies that satisfy both requirements
• Efficient implementation: Address shared controls once
• SOC 2 preparation and audit coordination: Manage the full process
• HIPAA-specific guidance: BAAs, risk assessments, breach procedures

Ready to discuss your compliance needs? Talk to our team

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Sources

• HHS HIPAA Security Rule - Official Security Rule requirements
• AICPA Trust Services Criteria - SOC 2 criteria documentation
• HHS Guidance on HIPAA and Cloud Computing - Cloud-specific guidance