Why It’s Insane Not to Have Comprehensive Cyber Insurance: Protecting Your EBITDA for DSOs and Large Group Practices

In today’s digital world, the threat of cyberattacks is more imminent than ever. For dental service organizations (DSOs) and large group practices, ignoring the necessity of comprehensive cyber insurance is like running a marathon with a broken leg—disastrous and unsustainable. Protecting your EBITDA (earnings before interest, taxes, depreciation, and amortization) is not just about increasing profitability; it’s about safeguarding the very foundation of your business. Here’s why comprehensive cyber insurance is absolutely critical to your future and how one cyberattack could obliterate everything you’ve built.

The Devastation of a Cyberattack: A Real-World Scenario

Let’s examine a DSO generating $25 million in annual revenue, managing around 10,000 patient records across multiple locations. Business is booming, patients are satisfied, and everything seems to be on the right track. But then, disaster strikes—a ransomware attack that completely halts operations for three weeks. The fallout from this incident is nothing short of catastrophic.

• Lost Revenue: With $25 million in annual revenue, this DSO pulls in approximately $480,769 each week. A three-week shutdown due to a cyberattack would result in a staggering revenue loss of $1,442,307. That’s money that will never be recovered—an instant hit to your EBITDA that could take years to recuperate from, if ever.
  
  
• Breach Notification Costs: According to HIPAA, you must notify every single affected patient if their data has been compromised. With 10,000 patient records on file and an average breach notification cost of $250 per patient, you’re looking at $2.5 million just to meet regulatory requirements. That’s not an optional expense—it’s a legal obligation and could be devastating without the right insurance.
  
  
• Reputation Repair: The damage doesn’t stop with financial losses. Your reputation takes a massive hit as well. Patients lose trust, competitors start circling, and your brand takes a nosedive. The costs of PR, patient communication, and possibly legal defenses could easily add another few hundred thousand dollars to your tab, and that’s just the start of rebuilding your public image.
  
  
• Cybersecurity Forensics and Legal Fees: You’ll need cybersecurity experts to investigate the breach (required under HIPAA) and ensure that it won’t happen again. You’ll also need legal counsel to navigate the regulatory landscape, handle any lawsuits that may come your way, and manage compliance. These essential services could cost between $500,000 and $1 million, depending on the complexity of the attack.

When you total everything up, this cyberattack could cost your DSO well over $5 million, or more than 20% of your annual revenue. This isn’t just a bad quarter—it’s a financial disaster that could put your entire business at risk. And if you don’t have comprehensive cyber insurance, you’re on the hook for every single dollar.

The Non-Negotiable Coverage Components in Your Cyber Insurance Policy

Given the potential for catastrophic losses, not having comprehensive cyber insurance is financial self-sabotage. To protect your EBITDA and ensure the survival of your business, your policy must include these critical components:

• Business Interruption Coverage: This is an absolute must. If your operations are forced to shut down due to a cyberattack, you need coverage for the revenue you lose during that period. As we’ve seen, a three-week shutdown could cost nearly $1.5 million. Your policy should cover at least one month’s worth of revenue to protect you from financial ruin.
  
  
• Data Breach Response and Notification Costs: HIPAA requires that you notify every affected patient in the event of a breach, and this isn’t cheap. With 10,000 patient records, you’re looking at $2.5 million just to comply with the law. Your policy needs to cover these costs in full, or you’re putting your business at serious risk.
  
  
• Cyber Extortion and Ransomware Coverage: Ransomware attacks are becoming more frequent and more costly. Your policy should include coverage for paying ransoms (if absolutely necessary) and restoring your data and systems afterward. Without this, you could be left with no choice but to pay out of pocket—or worse, lose critical data forever.
  
  
• Legal and Regulatory Coverage: Breaches come with a host of legal and regulatory challenges, from fines and penalties to potential lawsuits. Your policy must cover the costs of legal representation and any fines that may arise from a data breach. This is essential to protect your financial health.
  
  
• Crisis Management and Reputation Repair: A data breach can destroy your reputation in a matter of days. Your policy should include coverage for crisis management, public relations, and patient communication efforts to help you rebuild trust and restore your brand’s image.
  
  
• Cybersecurity Forensics: After a breach, you need to know exactly what happened and how to prevent it from happening again. This is required under HIPAA. This coverage pays for cybersecurity experts to investigate the breach, assess the damage, and implement stronger security measures moving forward.
  
  
• Third-Party Liability Coverage: Every patient you notify of a breach is now a potential lawsuit waiting to happen. When you compromise patient health information, you’re not just dealing with regulatory fines—you’re opening the door to individual lawsuits from patients whose data was exposed. Each of those 10,000 patients could potentially bring a suit against your organization, leading to a tidal wave of legal battles and settlements. Third-party liability coverage ensures you’re protected from the financial fallout of these lawsuits, covering the costs of legal defense and any settlements or judgments that may arise. Without this coverage, the cumulative impact of multiple lawsuits could be crippling, putting your entire operation at risk.

Don’t Be Fooled: Cybersecurity and HIPAA Training Are Vital, But Not Foolproof

Investing in cybersecurity and HIPAA training is crucial, but it’s not a silver bullet. Even with the best training and the most secure systems, all it takes is one wrong click, one careless moment, and your entire operation could be compromised.

Cybercriminals are constantly evolving, finding new ways to infiltrate systems and exploit vulnerabilities. No matter how prepared you think you are, there’s always a risk that something will go wrong. That’s why it’s absolutely critical to have comprehensive cyber insurance in place. It’s your safety net—the only thing standing between you and financial disaster when preventative measures fail.

In today’s digital landscape, not having comprehensive cyber insurance is not just risky—it’s reckless. For DSOs and large group practices, the financial impact of a cyberattack can be devastating, potentially wiping out years of profits and putting the future of your business in jeopardy. Protecting your EBITDA isn’t just about making more money—it’s about ensuring that your business can survive and thrive, even in the face of a major cyber incident.

Cyberattacks are not a question of if, but when. Without the right insurance coverage, you’re playing with fire, risking everything you’ve built for the sake of short-term savings. Don’t wait until it’s too late. Make sure your cyber insurance policy includes comprehensive coverage for business interruption, breach notification, ransomware, legal fees, and reputation management. It’s the only way to protect your EBITDA and secure the future of your DSO in an increasingly dangerous digital world.

Carrie Millar, MBA, CIC, is the Vice President of Business Development at Dentist Insurance Services, a national brokerage specializing in insurance solutions for DSO and group dental offices. To learn more about comprehensive cyber coverage or to ask any questions, reach out to Carrie at carrie@joindis.com, visit www.joindis.com/group-malpractice, or call/text 850-350-7155.