The Impact of Supply Chain Cyberattacks

I talk all the time about third-party or supply chain breaches and there is serious impact to them. Here is one example going on now.

Change Health is a healthcare payment facilitator among other services. They are used by doctors, pharmacies and hospitals to get paid.

Change is owned by Optum Health which, in turn, is owned by UnitedHealth. United is one of the big players so the odds of them getting sued is basically 100%.

On February 21st they (Change) was hit by a ransomware attack, which they initially called an ‘incident’, which it technically is. The effect of the attack was that they took their systems down, or, probably more accurately, the hackers took their systems down.

Since then, Change’s customers – the doctors and other healthcare providers – have not been getting paid. Healthcare runs on such slim margins that this is a problem.

One estimate is that it is costing hospital and pharmacy networks upwards of $100 million dollars a day. That is not for the whole industry, that is for individual large providers.

In fairness, it is a cash flow problem and they will likely (high probability) get paid eventually. But, in the meantime, they have to pay rent and payroll and utilities and a lot of other bills. If the providers can continue to stay in business without getting paid for maybe a month, they will probably survive, but some won’t.

The CEO of the Florida Hospital Association said that the revenue problems, just in Florida, will likely top a billion dollars.

The result of course will be a lot of class action lawsuits for damages, which will take years to make it through the courts.

The federal Department of Health and Human Services said that it will make accelerated payments to providers, like they did during Covid.

In the mean time, the small providers, the ones that don’t have a hundred million dollar line of credit just sitting there – those are the ones that are in trouble.

Change said that it is standing up some new servers; it is not clear how effective that will be.

But, what this means to you, the reader, is to consider the impact of a supply chain disruption. This means not only cash disruption, but other disruptions like materials and services. What happens if a key supplier has a problem and stops working for a week or a month or, as we have seen in the past, just goes out of business.

If you are not prepared, now would be a good time to get prepared. This is one of my favorite songs from the movie Hoodwinked on YouTube.

If you need help, please contact us.

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