Cybersecurity in Healthcare Private Equity: Insights from Clearwater’s John Santana 5-13-25
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What are the key cybersecurity challenges in healthcare private equity?
This is Scott Becker with the Becker Private Equity and Business Podcast. Thrilled this past week to pass 7 million downloads and to get to the spot we're ranked for the last couple of weeks, the very top of the Apple Business News chart rankings. We're excited today to be joined by John Santana. John is a principal consultant at Clearwater Security, and he focuses on private equity firms assessing their cybersecurity risks across their portfolio of healthcare investments. He's also served as lead author on the Cyber Risk Benchmark Trend Report on Healthcare PE that Clearwater recently published. John, can I ask you to take a moment to tell us a bit about yourself and about Clearwater?
Yeah. Thanks for having me on, Scott. And congratulations on those impressive metrics. You got me all nervous now. I'm on the Joe Rogan of business podcasts.
No, no, no, no. You're fantastic and no reason to be nervous. And God bless you. Tell us a little about yourself and Clearwater Security.
Yeah, so I've been at Clearwater going on four years now. I'm a principal consultant there, and I lead our private equity services delivery in our digital health, health IT team. And Clearwater is the largest pure play healthcare cybersecurity compliance firm tailored just to serving the healthcare industry. I mean, we have targeted teams and verticals serving integrated delivery networks, digital health, health IT companies, and physician practice management groups. And yeah, we also work directly with law firms and private equity firms specializing in health care. You know, our genesis, we really started off more in the risk advisory compliance space as HIPAA wizards, if you will. And we've really evolved in the last five years, especially into a full blown man security services provider business. I've been along for that ride and that transformation, and it's been really fantastic watching the firm evolve and growing with it personally. So, yeah, it's been a great run.
John, we've had a chance to watch Clearwater grow over the years. It's impressive what you folks have done. When you look at private equity firms that invest in healthcare, they acquire healthcare organizations. What kind of unique cybersecurity challenges do they face? And how do these risks differ than some of those in other industries?
Absolutely. Well, I mean, the short answer is the highly nuanced regulatory complexities, right? I mean, some of these portfolios will have a pharma startup, a contract research organization, a revenue cycle management company, and then a big old DSO with 500, 900 locations. And every Totally unique business cases, totally unique challenges, and totally unique regulatory requirements. So it creates quite the firestorm very quickly on what does the right sized fix look like for each company. And I'd say healthcare is pretty unique and in that regard versus other industries, right? I mean, with a portfolio of retail companies, they have unique cases, but they're all making the same widgets and they all have to file the same financial reporting, for example.
But healthcare is truly unique, right? I mean, with those Pharma companies and med device companies, they have to deal with the maelstrom of FDA requirements. And then if you're a provider, you have to make sure you're HIPAA compliant. So those highly nuanced regulatory complexities are what create those unique health care challenges.
Thank you. And take a moment and talk about how should private equity firms approach cybersecurity due diligence before closing a health care investment and other common pitfalls to avoid too?
Yeah, absolutely. Historically, what we've seen is that cybersecurity has been just a footnote or a couple of side questions within more generalized and broad IT operations diligence. We're really working hard to change that. I mean, in this environment where last year there were 277 million records breached and the year before that over 160 million records breached, it's not good enough to just have a couple of cybersecurity questions at the end of your IT ops diligence, right? We really need dedicated cybersecurity diligence and looking at cybersecurity controls, not just reading from a checklist
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