HIPAA for Startups: What Founders Need to Know About Compliance and Business Associate Agreements
For health tech and life science founders, few topics cause as much confusion as HIPAA compliance. You’ve probably been told: “Make sure your startup is HIPAA compliant before working with insurers, hospitals, or enterprise partners.” But what does HIPAA really require from startups?
At MedStart, Dr. Larry Ozeran broke it down: most of what founders believe about HIPAA is either incomplete or misunderstood. Here’s a practical guide for startups navigating HIPAA requirements.
What Is HIPAA and Why Does It Matter for Startups?
HIPAA, the Health Insurance Portability and Accountability Act of 1996, was designed to combat fraud, expand insurance portability, and simplify health data administration. Privacy and data security—the parts startups usually worry about—make up just 13 out of 169 pages of the law.
Still, these rules around individually identifiable health information (PHI/IHI) are critical for any startup handling patient data, building digital health tools, or partnering with hospitals and payers.
Does HIPAA Apply to My Startup?
The first step in understanding HIPAA for startups is knowing whether you are a covered entity:
Covered entities include healthcare providers, insurers, and clearinghouses. If you fall into one of these categories, you must follow HIPAA rules.
If you’re not a covered entity but work with one, you’ll likely need a Business Associate Agreement (BAA). A BAA legally transfers HIPAA obligations to you and outlines how you handle protected health information (PHI).
SEO Tip for founders searching: Ask yourself: “Am I a covered entity or a business associate?” That single question determines your HIPAA requirements.
What Does HIPAA Require From Startups?
For startups, HIPAA requirements can feel complex. Dr. Ozeran simplified them into three key areas:
Know Your Status: Are you a covered entity? Do you have BAAs in place with partners?
Follow Industry Standards: Use frameworks from NIST and the Office for Civil Rights (OCR) to guide your privacy and security practices.
Be Patient-Focused: Always prioritize protecting patient data over convenience or profit.
HIPAA Best Practices for Startups
To demonstrate credibility with investors, payers, and enterprise partners, startups should adopt these practices:
Documentation: Write down internal processes, especially how employees are trained on HIPAA compliance.
Policies: Define your data lifecycle—how you collect, store, transmit, and delete PHI.
Security: Follow NIST standards and subscribe to OCR’s mailing list to stay current with evolving HIPAA rules.
What Do Investors and Partners Want to Hear?
When pitching or negotiating partnerships, saying you are “HIPAA compliant” is common—but technically, there’s no official certification. Instead, focus on:
Knowing your covered entity status.
Having signed Business Associate Agreements (BAAs) when required.
Showing that you serve patients responsibly.
Following best practices for PHI security both in transit and at rest.
These are the assurances that build trust.
FAQs: HIPAA and Startups
Q: Can a startup call itself HIPAA compliant?
A: There’s no official HIPAA certification. The real test is whether your practices align with standards and your BAAs.
Q: What is a Business Associate Agreement (BAA) in HIPAA?
A: A BAA is a contract that defines how your startup must handle PHI when working with a covered entity.
Q: What’s the fastest way to prepare for HIPAA as a startup?
A: Follow NIST/OCR standards, train employees, and compartmentalize patient data to limit risk exposure.
The Bottom Line: HIPAA for Startups
HIPAA doesn’t have to block innovation. For startups, the key is understanding your status, clarifying BAAs, and implementing defensible privacy and security practices. As Dr. Ozeran said:
“Don’t let your attorneys write your HIPAA rules. Write the rules, and ask your attorneys if they can defend them.”
By focusing on patient-first practices and industry standards, startups can meet HIPAA requirements, build investor confidence, and scale responsibly.
About Dr. Larry Ozeran
Larry Ozeran, MD, FAMIA has over 20 years experience with information technology and software development, patient care delivery, healthcare leadership, and health policy advocacy. Dr. Ozeran leverages his uncommonly holistic understanding of the dysfunctional American healthcare system to work toward solving its greatest challenges. He was recognized by the State of California for leadership in the State's response to ARRA that secured $38M for interoperability.
He has published book chapters on privacy and Health IT process failures, as well as many peer reviewed articles. As a strategic consultant, he advises healthcare, government, and startup clients on strategy, policy and innovation.
