Australia: Health care and the cloud - a prescription for complexity

The use of cloud technologies in health care has the ability to completely revolutionise the industry. However, as with all new technologies, its application comes with technical risks and issues that could have serious implications if the appropriate protections aren’t in place.

In this article, Partner Alex Hutchens and Lawyer Eliza Humble look at the data protection and privacy law issues associated with the use of the cloud technology in the health care industry, and what needs to be achieved from a legal perspective to ensure users of the technology aren’t exposed to undue risk.

Health care and the cloud - a person for complexity

The benefits of cloud technologies are well documented. Availability, scalability, efficiency and the network effects that flow from widespread user bases having access to data are key. Add to this the proliferation of connected devices, be they near-ubiquitous smart-phones (and their apps), or specific-use devices that make up the ever-expanding Internet of Things, and it is clear that we are in the midst of a transformative period.

Of all of the industries that could benefit from these advances, health care is perhaps the most exciting. As we grapple with the tension between a growing (and ageing) population, together with increasing expectations of (and interest in) good health,1 it is clear that the cloud provides much-needed answers.

Indeed, we are seeing the manifestation of this in both the private and public sector. Key players across the health care industry are starting to migrate to the cloud to improve their operations in various ways. For instance:

  • Doctors and other health care providers in both the private and public system are storing health records and other patient information in digital form and some have started using the cloud for data storage and sharing.
  • “Health tech” has expanded as an industry sector, and now offers a range of products and services to consumers from task-specific devices (like glucose monitoring systems for diabetics), to apps like ?tness trackers and heart rate monitors that work with multi-function smart phones. These products collect and store increasingly large volumes of personal information, and many make use of cloud technology.
  • Health insurers are also making use of the cloud for the hosting of web-based customer portals and the secure storage of large bodies of personal information.
  • The federal government has introduced the My Health Record system, which is a centralised system for patients to store an online summary of their health information and for participating doctors to access that summary.

With this exciting range of developments comes of course a range of legal issues, so it is timely to review the benefits of these technologies and measure them against the risks, understand the legal implications of those risks and then consider how to best address them.

Benets of the cloud for the health care industry

Cloud computing offers both economic and operational advantages to the health care industry, including:

  • Increased efficiency and reduced cost in accessing and sharing data. Health care providers are required to collect, use and store large quantities of data, much of which is being digitised in the form of electronic medical and health records (including the new My Health Record system). Cloud services can assist in data management and the efficient access of data by health care providers, while also enabling remote access to applications and data. The scalability of cloud services means real cost savings can also be realised.
  • Better health outcomes for patients. The improved data management and sharing capabilities offered by cloud technology is likely to benefit patients in a number of ways, including by allowing accurate analysis of their medical histories (which may be updated in real time) for the purpose of diagnosis, minimising duplication and unnecessary testing, and enabling easier long-term monitoring of chronic diseases. Further, it enables physicians to communicate and collaborate more easily and offer care as a team or to patients in remote areas.
  • Big data analytics. The cloud facilitates the use of “big data” solutions to aggregate and analyse large bodies of medical and health-related data on processes, treatments, effectiveness, costs and conditions. For example, big data analytics can be used to identify geographic areas in which particular conditions are most prevalent, as well as other emerging trends or patterns, enabling targeted and holistic strategies to be developed to address those conditions proactively. The various “open data” projects around the country,2 and associated protections like new prohibitions against re-identifying anonymised data sets,3 will assist in the evolution of this area.
  • Increased security of data. In most cases, cloud service data centres are subject to high levels of security involving encryption, identity management, and physical and logical access controls, which are implemented and maintained by expert professional staff. While there is legitimate concern in ensuring that these solutions are secure, the reality is that cloud storage is often more secure and protected against both internal and external threats than local in-house servers.
  • Regulatory compliance. Health care providers handle personal and sensitive health information that is subject to stringent privacy, confidentiality, security and retention requirements under both state and Commonwealth Australian laws (discussed further below). Much is made of the fact that using third party providers can increase the risk of regulatory non-compliance because of the loss of control over data handling in particular. However, there is an increasing body of specialist health care cloud service providers who are subject matter experts, and can actually assist in data management and ensure compliance with relevant legislation.

Risks of using the cloud in the health care industry

Of course, these benefits must be weighed up against the risks of cloud computing. While these risks are not different in nature from those risks that apply to any other industry, given the inherently sensitive nature of the information held in the health care industry — and the heightened community sensitivities around it — the potential impact of those risks is certainly more acute.

  • Data breaches are the top threat to cloud computing according to the Cloud Security Alliance.4 By its nature, health information is detailed and sensitive, and these two characteristics make it highly valuable. Obviously, hackers are attracted to large data pools, and those with particularly rich insights into individuals’ circumstances (like health information) maximise the potential for using that information for lucrative activities like identity fraud, theft and even blackmail.
  • Loss of data is also a significant risk. This can be distinguished from data breaches generally, as in this case the risk is not so much that another person has gained access to the information, but that the rightful owner or user of the information has lost access to it. In the case of rare or even unique records, this could be catastrophic as they may not be able to be recovered, or only at huge expense. In the case of temporary loss, the consequences can still be significant as without access to data at a crucial time, the data is of little value.
  • Denial of service attacks present much the same risk as a temporary or permanent loss of data —cloud-based services are only useful when they are available, and denial of service attacks on a health care service provider’s cloud service may have catastrophic flow-on effect. Health care providers are heavily reliant on the efficient and secure access to medical and health records, so a denial of service attack will not only result in reputational damage to the health care service provider, but also potentially risk patients’ privacy and safety.
  • Cyber-attacks are becoming a new threat vector in the health industry. As increasingly sophisticated medical devices now come with in-built connectivity, the threat of hacking becomes a reality. In recognition of this, the US Food and Drug Administration has issued security guidelines to help manage vulnerabilities in connected medical devices,5 but it is critical for manufacturers, regulators and users alike to be alive to the potential threat posed from the hacking of a pacemaker, insulin delivery system or any other common connected device.

So, how do these physical risks translate to legal risks? And how can they be managed?

Regulatory environment

The regulatory environment that applies to cloud-based health care solutions is complex to say the least. In order to effectively implement cloud computing technology in Australia, participants in the health care industry are faced with legislation at both a Commonwealth and state level. Depending on the role each plays in the health care ecosystem, the obligations may be different. This makes the move to a universal cloud-based health care difficult, as quite literally, the rules are different for everyone.

For instance, Commonwealth government agencies, and private sector health service providers must comply with the Australian Privacy Principles (APPs) contained in the Privacy Act 1988 (Cth).

The Privacy Act recognises health information as a form of “sensitive information” — a subset of personal information that attracts a higher level of privacy protection under the APPs. This makes compliance with the APPs more onerous than is the case for other personal information, in some cases because additional obligations apply, and in other cases because the standard of “reasonableness” that applies to many of the APPs is (rightly) likely to be higher in connection with sensitive information than it would be in connection with other non-sensitive information.

The following issues are of particular importance:

  • Sensitive information. Rights of use in sensitive information are narrower than for “personal information”. First, sensitive information may generally only be collected from individuals with their consent, and may not be used or disclosed for a secondary purpose unless directly related to the primary purpose for which it was collected. This is more restrictive than for personal information, and means that data collection practices must be designed accordingly. “One size fits all” will not work.
  • Lifecycle management. Patients’ personal information may only be collected and stored if it is reasonably necessary for the performance of the provider’s obligations, and must be removed or destroyed once it is no longer necessary. Cloud services must therefore be capable of keeping track of when information is collected, for what purpose and when it should be deleted.
  • Jurisdiction of storage. Many cloud service providers are based overseas or will disclose data to servers located overseas. It is important that health care providers conduct thorough due diligence to determine where patients’ personal and sensitive information will be disclosed — because APPs 2 and 5 require this to be included in collection statements and privacy policies — and of course APP 8 requires them to take reasonable steps to ensure any overseas recipient complies with the APPs. Due to the high likelihood of sensitive information being handled, this standard is a high one.
  • Security. When storing data in the cloud, the health care service will still be responsible for the security of the personal information, and must take reasonable steps to ensure the cloud service provider complies with the APPs. As discussed above, what is “reasonable” in the circumstances will depend on the type of information collected. The value and sensitivity of health information will warrant stringent security.

By contrast, state-based public sector agencies must comply with state or territory-specific legislation regarding privacy, confidentiality and data management. It is beyond the scope of this article to consider all jurisdictions individually, but in Queensland for example, the Information Privacy Act 2009 (Qld) (IPA) requires sensitive health care information to be handled in accordance with the National Privacy Principles (NPPs).

Since the amendments to the Privacy Act in 2014, the NPPs are similar to, but different from the APPs. For instance, the permitted use rules are subtly different, and the rules that relate to overseas disclosures are different. While this may seem like an issue for the agencies only, s 35 of the IPA requires that service providers be contractually bound to comply with the IPA as well (or deemed liability applies), and so for some service providers, this will in practice extend the scope of the state regime to overlay the Commonwealth regime that already binds them in other respects (as service providers may conceivably be bound by both), creating a difficult compliance issue as the provider tries to implement processes and procedures that comply with requirements in multiple jurisdictions.

Similarly, the Hospital and Health Boards Act 2011 (Qld) imposes strict confidentiality obligations on all health agencies (ie Queensland Health and Hospital and Health services) and their personnel. Further, the Public Records Act 2002 (Qld) requires all public authorities to ensure full and accurate records are kept, and that all data containing personal information and evidence of clinical care provided, must be retained for specific periods and then destroyed in a secure manner. These obligations must be contractually imposed on their service providers if the agency is not performing the functions itself.

If this is multiplied across all jurisdictions, it is clear that the very subtle differences can make an immense impact on the efficiency of cloud-based services.

Finally, there is solution-specific regulation. The federal government’s My Health Record system allows individuals to create online summaries of their health information and share it with health care providers. At present, the system is operating on an “opt-in” basis, both in terms of use of the system at all, and as to the specific records that are stored in the system (individuals can choose to have incomplete histories), and so it is far from complete. However, the system is governed by the My Health Records Act 2012 (Cth), My Health Records Rule 2016 (Cth) and the My Health Records Regulation 2012 (Cth), which imposes strict obligations on contracted service providers to protect the privacy of individuals and the security and integrity of the My Health Record system.

In particular, in order to participate, a cloud service provider must apply for registration and comply with all relevant My Health Records Rules, such as developing and maintaining a written policy, assisting with audits and reviews, and ensuring that no records held for the purpose of the My Health Record system are transferred overseas. Compliance with this legislation is quite onerous for cloud service providers and is likely to impact the adoption of cloud technology in this space.

Conclusion managing risk amidst the complexity

As discussed, there are clear benefits to the application of the cloud in the health industry, but these are matched with technical and legal risks which need to be properly addressed.

The most important risk dynamic arises due to the fact that usually, the “named” service provider is different from the cloud provider actually providing the cloud service. For these named providers in the health care industry, like doctors, health centres and health agencies, it is important to bear in mind that they will be primarily responsible for compliance with relevant laws like the Privacy Act. This is because it is the named provider that is providing services to the patient and collecting the patients’ information.

However, the operational risk of breach sits with the third party service provider. This means that the risk must be managed through the contract with that third party.

In order to do this effectively, it is very important to understand the full scope of regulatory obligations, because only then can the appropriate technical and contractual measures be implemented.

Key issues we see arising time and time again are:

  • express requirements to comply with relevant laws;
  • the imposition of data security provisions, requiring ongoing upgrades access to data on request;
  • mandatory data breach notification, particularly given the recent passage of the mandatory data breach notification laws;6
  • clear and rigorous availability and performance standards; and
  • strict controls around what use and disclosures (if any) the service provider can make of the data.

Then, there needs to be an effective risk apportionment regime relating to the above issues, most frequently involving contractual indemnities for breaches of the substantive obligations, and non-exclusive service credits to address performance and availability issues.

At the front end, the named provider needs to ensure that it is fulfilling those obligations which it controls. This includes ensuring that internal policies and data handling practices are well-designed to address the specifixc risks of the solution, and that staff are well-trained in those policies and practices. Finally, privacy policies and collection statements must expressly set out the types of information collected, the purpose of collection and likely disclosures (including any overseas disclosures). With these mechanisms in place, the benefits of the cloud can be realised without exposing individuals’ information to undue risk, or exposing service providers to undue liability.

  1. Cloud Standards Customer Council Impact of Cloud Comput-ing on Healthcare Version 2.0 (2017)
  2. For details of the Commonwealth project, see:; and for the Queensland project, see:
  3. Privacy Amendment (Re-identification Offence) Bill 2016 (Cth).
  4. Cloud Security Alliance Top Threats Working Group The Notorious Nine: Cloud Computing Top Threats in 2013 (February 2013)
  5. US Food and Drug Administration, Cybersecurity, 3 March 2017,
  6. See the Privacy Amendment (Notifiable Data Breaches) Bill 2016 (Cth), which is expected to commence in early 2018.

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