SOC 2 Compliance | Everything You Need To Know

Posted in Healthcare

With digitization taking over various industries, including healthcare, data breaches and privacy violations are becoming a significant threat. Along with HIPAA, SOC 2 compliance offers the perfect solution to protect sensitive patient information.

Service Organization Controls 2, commonly known as SOC 2, is a structure set by the AICPA in 2010. It assesses an organization’s systems’ security, availability, processing integrity, confidentiality, and privacy. SOC 2 compliance in healthcare industries assures regulators that appropriate controls are in place to protect patient data. Take this piece of reading as your ultimate guide to finding details about SOC 2 compliance, its features, benefits, and implementation to protect your organization’s data.

What is SOC2 Compliance?

SOC 2 compliance is a set of security and privacy standards that aid cloud-based services in protecting their data. This criterion is useful in all industries; however, healthcare organizations must also implement HIPAA regulations if they opt for SOC 2 standards.

The structure of the SOC 2 compliance checklist includes these TSC (Trust Service Criteria):

1. Security
2. Availability
3. Processing integrity
4. Confidentiality
5. Privacy

Independently operating, third-party organizations can conduct SOC 2 compliance audits to guarantee that these controls are adequate. The audit process ensures whether the organization complies with SOC 2 compliance requirements, or not.

SOC 2 Trust Services Criteria (TSC)

SOC 2 compliance has five key areas that contain multiple control components and points of focus according to the organization. However, the standards mentioned below apply to all:

Security

The main purpose of this SOC-2 compliance criteria is to ensure that the information on the organizations’ systems is protected against all forms of damage, unauthorized access, or disclosure.

There are nine control components, each with multiple points of focus in this TSC:

• CC1: Control Environment
• CC2: Communication and Information
• CC3: Risk Assessment
• CC4: Monitoring Activities
• CC5: Control Activities
• CC6: Logical and Physical Access Controls
• CC7: System Operations
• CC8: Change Management
• CC9: Risk Mitigation

To avoid operational failure, every point of focus must have at least two control activities.

Availability

Healthcare organizations that opt for SOC 2 compliance must have sufficient data backup and recovery processes to meet the Availability Trust Services Criteria. Additionally, they must also align with the rules set by HIPAA to protect patient data.

Confidentiality

The Confidentiality Trust Services Criteria in a healthcare setup aim to protect PHI (protected health information) maintained in their systems. They must control physical and logical access to their systems and implement methods to prevent, detect, and respond to data breaches.

Processing Integrity

Even though the Trust Services Criteria align with the EU-US Data Privacy Framework and GDPR, health data processing must comply with HIPAA rules. Both SOC 2 compliance and HIPAA aim to guarantee that data processing is complete, valid, accurate, and on-time.

Privacy

The privacy principle requires organizations to protect information and prevent data breaches by implementing physical, technical, and administrative measures to protect valuable information.

SOC 2 Compliance and HIPAA

Both SOC 2 compliance and HIPAA strive to maintain the security of sensitive information and share a close relationship. The contents of the Privacy Management Framework with respect to SOC 2 compliance include:

• Procedures and policies that direct the way to create, collect, use, and transmit protected health information.
• Identifying, classifying, and prioritizing risks to PHI.
• Steps to get signed authorization to use information when necessary.
• Plan to detect and deal with the consequences of data breaches.
• Guide to notify relevant individuals and authorities during a data breach.
• Framework to process access requests and appeal for making copies of protected health information.
• Procedures to edit PHI.

Why SOC 2 Compliance Matters for Your Business?

SOC 2 compliance demonstrates a commitment to protecting sensitive information, which helps businesses build stakeholder trust and attract more customers. SOC 2 compliance audit helps organizations identify their areas of vulnerability and active measures to strengthen them. This not only reduces the risk of data breaches but also protects the company from financial losses.

Along with security, here are a few benefits of SOC 2 compliance: 

• Builds Reputation: SOC 2 compliance is a standard that ensures work efficiency and data safety, fostering trust and reliability.
• More Business Opportunities: Proper compliance with SOC 2 standards requires a team of professionals, opening up new business opportunities.
• Enhanced Operational Efficiency: SOC 2 compliance eliminates the chances of errors by thoroughly evaluating security controls, thereby increasing workflow efficiency.
• No Risk of Regulatory Fines: Non-compliance with SOC 2 compliance or other data protection regulations can cost you since it increases the risk of data breaches affecting all stakeholders.

SOC 1 vs SOC 2 vs SOC 3: A Comparison

Feature	SOC 1	SOC 2	SOC 3
Purpose	Control over financial reporting	Control over non-financial reporting (security, processing, integrity, availability, privacy control)	A lenient version of SOC 2
User	Auditors and stakeholders	Shared after signing a non-disclosure agreement by management, regulators, etc.	General public
Confidentiality	Restricted use reports	Restricted use reports	Non-confidential, designed for public distribution
Reporting	Standard report attesting to compliance	Standard report attesting to compliance	A valuable tool that showcases your compliance with SOC 2 standards

The SOC 2 Compliance Audit Process

Every company abiding by SOC compliance standards must conduct audits to verify whether the system is working effectively or not. The process differs for every organization; however, there is a standard checklist to prove the authenticity of your SOC 2 compliance certification.

What is a SOC 2 Audit?

An audit is a detailed evaluation of any organization’s systems to ensure they meet specific security, availability, processing integrity, confidentiality, and privacy requirements. A SOC 2 audit determines if sensitive data is handled securely and responsibly.

The SOC 2 Audit Process

1. Choose The Type of Report: You can choose between a SOC 2 type 1 compliance report (design) or a SOC 2 type 2 compliance report (design and operations) assessment.
2. Set The Goals: Jot down the parts of your organization that must undergo audits and the specific Trust Services Criteria you want to address.
3. Perform Gap Analysis: Identify areas that lack SOC 2 compliance requirements.
4. Prepare for the Audit: Hire an auditor to gather documentation and get answers to queries, if any.
5. Select an Auditor: Choose a qualified professional CPA with experience in SOC 2 audits.
6. The Audit Process: They will evaluate your systems, controls, and procedures.
7. Get the Report: The auditors will submit the final SOC 2 report and address any exceptions after the assessment.

SOC 2 Type I vs Type II: Key Differences

SOC 2 audits are divided into two categories: Type I and Type II

SOC 2 Type I: This audit type is based on a point-in-time assessment that evaluates the design of an organization’s controls. It provides evidence that the controls are in place and designed to meet the Trust Services Criteria (TSC). However, the workup does not include checking the operating effectiveness of those controls.

SOC 2 Type II: This type is more detailed and assesses both areas of an organization’s controls:

• The design
• Operating effectiveness

The audit timeline for type 2 SOC 2 compliance is extensive and provides stronger evidence of compliance.

Common SOC 2 Audit Exceptions and How to Avoid Them

SOC 2 audits often find exceptions in areas where an organization’s controls do not meet the Trust Services Criteria. Common exceptions include:

• Lack of documentation: Organizations may lack sufficient documentation to support compliance claims.
• Insufficient controls: The set controls may not work on the identified risks.
• Inconsistencies: Inconsistent policies, procedures, and practices of the organization.
• Human error: Mistakes or oversights by employees can lead to exceptions.

To avoid this, organizations should:

• Document of controls: Maintain detailed data of all relevant policies, procedures, and processes.
• Conduct regular reviews: Regular review and control updates to remain effective.
• Training: Train employees periodically on their responsibilities related to security and compliance.

What is a SOC 2 Bridge Letter?

The SOC type 2 compliance bridge letter assures customers of the effectiveness of an organization’s internal controls during the gap period. For example, if a SOC 2 report covers a specific time, and there is a difference of a few months, the bridge letter confirms if any significant changes occurred in the controls during that time.

Trust Services Criteria of SOC 2 Compliance

How to Prepare for SOC 2 Compliance?

A SOC 2 compliance checklist includes questions about organizational security. It provides information on how data is collected, processed, and stored, as well as information access control and how vulnerabilities are mitigated.

These steps are not an official checklist for SOC compliance reports; however, they can help your organization earn SOC 2 compliance certification.

1. Self Audit

Before you hire a professional to perform an audit, undergo a self-assessment to identify potential weaknesses in your controls so you can make the necessary changes beforehand. You must review the five trust services categories and cross-check whether your controls meet the SOC 2 compliance requirements.

2. Focused Trust Services Criteria For The Audit

After completing a self-audit, select the TSC principles you want to emphasize. View the budget and focus on all five criteria if they are within the range. However, keep in mind that each additional trust service principle increases cost.

3. Security Control Review and Adjustments

After selecting the criteria of interest, take a closer look at the security controls to make the necessary changes and update them to align with SOC 2 compliance requirements.

4. Final Self Assessment

Once you are through with the updates, re-assess everything from your end and verify if the lacking areas are up to date. This step will help you decide whether or not the changes you made were adequate for a real audit.

5. Complete The SOC 2 Audit

The final step is to hire an external firm to perform the audit and provide a SOC 2 compliance report. This SOC report will detail the audit findings; if there are no blocks, you can use the SOC 2 compliance certificate on your website to show that your company takes security and customer data protection seriously.

6. Maintain Compliance On An Annual Basis

Any organization abiding by SOC 2 compliance must perform annual maintenance. This means regular updates of your security controls and documentation with self-assessments and official audits once a year.

What is SOC 2 Compliance Automation?

Automation is one of the valuable SOC 2 compliance tools for those organizations who want to streamline the compliance process. With SOC 2 compliance software, businesses can automate or enhance various compliance aspects, reducing manual effort.

Compliance automation tools assist with tasks such as:

• Continuous monitoring of data
• Document collection
• Control testing
• Non-compliance mitigation guidance
• Automated risk assessments

This automation speeds up the process, improves accuracy, and reduces the chances of errors.

Organizations can implement compliance automation to streamline their SOC 2 compliance efforts. It can help with:

• Preparing for audits
• Identifying necessary actions in lacking areas
• Conducting assessments
• Organizing documents
• Continuous monitoring systems to ensure optimal operation of security controls

Cost Benefits of SOC 2 Automation

By automating parts of the compliance process, organizations can significantly minimize costs and improve operational efficiency. This lessens the need to spend extensive hours on tasks like collecting evidence and documenting procedures manually.

With SOC 2 automation, your team can focus on driving the business forward. This step not only saves time but also reduces the need for expensive external consultants, cutting down on operational costs. However, automation is more than just about saving money; it aims to strengthen the organization’s security so that there are no data breaches.

SOC 2 Compliance Checklist for 2024

1. Determining the Scope: Check the parts of your organization that are up for audit and the specific Trust Services Criteria you want to address.
2. Conduct a gap analysis: Identify areas where SOC 2 compliance requirements are not being met.
3. Develop a Rectification Plan: Address any gaps in SOC 2 compliance standards.
4. Select a Suitable Auditor: Choose a qualified CPA with adequate knowledge about SOC 2 compliance and audits.
5. Gather documentation: Prepare the necessary documents to support your claims.

Post-Audit Checklist to Maintain Compliance

1. Monitor and review controls: Regular assessment to ensure the effectiveness of your security controls.
2. Implement changes: Make the changes needed to maintain SOC 2 compliance.
3. Stay updated on regulations: Keep tabs on industry standards and regulations changes.
4. Conduct periodic SOC 2 compliance audits annually.

SOC 2 Compliance Audit Report Example

• Section I – Report from the Auditor: This section provides an overview of the audit, explaining its purpose with a brief system description.
• Section II—Management Assertion: The company’s management confirms its understanding of the system and assures that the security controls’ design and implementation are effective.
• Section III—System Description: This section provides detailed insights into the system, including personnel, roles, responsibilities, components, and controls.
• Section IV—Tests of Controls: It presents an outline of the audit process and test results in a table format. This part focuses on the Control Environment (CC1) criteria.
• Section V—Other Information: Although this section may not always be included, it provides management’s response to any exceptions noted in the tests. In this particular case, ABC Company acknowledges the issue with the new hire policy and commits to improving it in the future.

SOC 2 Compliant Custom Healthcare Software Development With Folio3 Digital Health

By partnering with Folio3 Digital Health, you can get custom healthcare software developed that not only meets your functional needs but also ensures strict obedience to SOC 2 compliance standards. This collaborative approach helps implement tailored security measures, risk management strategies, and continuous monitoring to protect sensitive patient data. The Folio3 Digital Health team of developers, marketers, and designers will help you out from ideation to deployment and post-deployment support. You can also reach out to us to get AI solutions for your healthcare apps. Each Folio3 Digital Health product is HIPAA-compliant and uses the latest HL7 and FHIR interoperability standards.

Conclusion

In a nutshell, SOC 2 compliance is necessary for healthcare organizations that want to improve their data security structure and foster trust with patients and partners. By adhering to the Trust Services Criteria, medical professionals can effectively safeguard PHI (protected health information), lessen the risks of data leaks, and assure a commitment to privacy and security of sensitive information.

Although SOC 2 compliance is not a legal requirement, it aligns closely with HIPAA requirements and can prove a valuable edge in the competitive market. The benefits of SOC 2 compliance are beyond data protection. It strengthens the organization’s reputation, improves operational efficiency, and commits to better patient care. You can take SOC 2 compliance as an investment in your overall business value.

Frequently Asked Questions

Who Needs SOC 2 Compliance?

Every organization (including healthcare) that handles sensitive customer data or provides services to other organizations requires SOC 2 compliance. Other than healthcare, industries that can benefit from SOC 2 compliance include technology companies, financial institutions, and professional services firms.

How Long Does a SOC 2 Compliance Audit Take?

To check SOC 2 compliance, audits can take 4-6 weeks for Type I reports to a year or more for Type II reports. The exact timeline depends on the extent of the audit and the complexity of your organization.

How Much Does SOC 2 Compliance Cost?

The cost of SOC 2 compliance depends on factors such as the scope of the audit, organization size and complexity, and the fee charged by the auditing firm.

How To Get SOC 2 Compliance?

SOC 2 compliance involves designing, implementing, and documenting security controls to protect customer data.

About the Author