Shadow IT in Healthcare: Identifying and Securing Unauthorized SaaS Applications

Have you ever wondered how a simple app download by a user could put an entire hospital network at risk?

In today’s fast-paced digital healthcare environment, over 80% of IT professionals report employees using unauthorized apps and services, which we call Shadow IT. These are applications or tools not vetted or approved by your organization’s IT department, yet they hold sensitive patient data, communicate with internal systems, or access critical workflows.

In 2023 alone, multiple healthcare breaches were traced back to unauthorized third-party applications that mishandled Protected Health Information (PHI), violating HIPAA regulations and resulting in massive fines. 

‍

‍

According to ClearDATA, Shadow IT is now one of the top threats to healthcare data security, and it’s growing fast due to SaaS sprawl.

In this blog, we’ll explore how Shadow IT in healthcare is rooted, the risks it poses, how to identify it, and strategies to secure your digital environment. We’ll use real-world examples and guide you step-by-step, especially if you’re new to this topic.

‍

TL;DR 

• Shadow IT, unauthorized SaaS apps, are widely used in healthcare, often without IT’s knowledge.
• These apps create serious risks: HIPAA violations, data breaches, and patient safety issues.
• Warning signs include duplicate tools, unusual data use, and lack of integration with core systems.
• Identify Shadow IT through network monitoring, audits, and app discovery tools.
• Secure your environment with clear policies, centralized app approval, access controls, and staff education.

‍

1. The Rise of Shadow IT in Healthcare

Shadow IT in healthcare isn’t new, but it’s growing at an alarming rate.

With the shift to cloud-based tools, remote consultations, and digitized records, clinicians and staff often turn to external SaaS solutions to streamline their daily tasks. Maybe it’s a free document-sharing tool to collaborate on research. Or a mobile app to manage shift schedules. 

These tools may seem harmless, but if they’re not approved by your IT department, they become Shadow IT. According to a 2023 report by HealthTech Magazine, nearly 70% of healthcare workers admitted to using personal or non-sanctioned apps for work-related tasks. 

This behavior is mostly driven by two factors: the need for speed and ease of use. Traditional IT procurement can be slow, and clinicians are often under pressure to act fast, especially in emergency settings.

But the unintended consequence? An explosion of unvetted apps inside your healthcare network. With Electronic Health Records (EHR), e-prescriptions, telemedicine, and billing all digitized, every unauthorized tool can potentially become an access point for data breaches.

The rise of Shadow IT in healthcare isn't usually about bad intentions; it's often just people trying to improve things. But having good intentions doesn't always lead to great results, and that's where the trouble starts.

‍

2. Risks Associated with Shadow IT in Healthcare

Now that we know Shadow IT in healthcare is common, let’s talk about why it’s so dangerous.

A. HIPAA Violations and Compliance Risks

Shadow IT often bypasses necessary compliance protocols, putting your healthcare organization at direct risk of HIPAA violations.

‍

• Unauthorized SaaS apps may not have Business Associate Agreements (BAAs), making them non-compliant with HIPAA standards.
• Employees might unintentionally upload PHI to unvetted tools, such as file-sharing apps or messaging platforms.
• Regulatory audits can uncover these apps, leading to fines ranging from $100 to $50,000 per violation, with annual penalties reaching up to $1.5 million. 
• Organizations could face civil lawsuits and federal investigations, damaging long-term credibility.
• Failure to comply frequently leads to interruptions in operations during the investigation of the violation, which impacts the continuity of patient care.

B. Data Breaches and Loss of Patient Trust

Using unapproved tools raises the chances of a data breach, which can have serious effects on both patients and healthcare providers.

• Shadow IT tools may lack encryption, role-based access controls, and audit trails, making them prime targets for hackers.
• As stated above, according to ClearDATA, over 30% of healthcare breaches involve third-party apps, most of them unauthorized.
• Exposed PHI includes medical histories, social security numbers, insurance data, and more, high-value information on the dark web.
• A single breach can trigger class-action lawsuits from affected patients.
• Restoring patient trust after a breach can require years of effort in public relations, improving security, and settling legal issues.

C. Lack of Visibility and Centralized Control

If IT isn't aware of the apps in use, they can't protect them; that's all there is to say about it.

• Healthcare organizations typically juggle hundreds of SaaS apps, many of which are added without IT's knowledge.
• Shadow IT tools create blind spots in network traffic and data flow, making it impossible to trace unauthorized access.
• Without visibility, IT cannot revoke access when employees leave or change roles, leaving sensitive data exposed.
• Unmonitored apps may conflict with EHR systems, causing data syncing errors or even permanent loss.
• This decentralization leads to audit and incident response delays, increasing the severity of any breach.

D. Interoperability Issues and Patient Safety Risks

Shadow IT can disrupt clinical workflows, leading to mistakes that directly impact patient safety.

• Unauthorized tools might not sync correctly with core hospital systems like Epic, Cerner, or Meditech.
• Misaligned data formats or version mismatches could lead to incomplete or outdated patient records.
• For instance, if a nurse uses an unapproved scheduling app, medication rounds or surgeries might be missed or miscommunicated.
• Shadow IT usually doesn't have alerts, backup systems, or safety measures, which raises the chances of making mistakes.
• These mistakes can result in malpractice lawsuits or even loss of life in critical care scenarios.

E. Increased IT Overhead and SaaS Sprawl

The more unauthorized tools in use, the more fragmented and costly your IT environment becomes.

‍

‍

• IT teams end up wasting time auditing and patching vulnerabilities in apps they didn’t approve.
• Redundant subscriptions across departments lead to SaaS sprawl, inflating operational costs unnecessarily.
• Licensing overlaps are common, multiple departments may pay for similar tools with no centralized management.
• Security policies have to be retrofitted or extended to cover unknown tools, consuming more IT resources and budget.
• Shadow IT also complicates incident response, as logs and data might not be readily accessible in a crisis.

The risks show that Shadow IT in healthcare isn't just a headache; it's a serious problem for operations and security. With issues like HIPAA violations and threats to patient safety, the potential consequences are way too serious to overlook.

‍

3. Identifying Shadow IT in Healthcare Organizations

The initial move to get rid of Shadow IT in healthcare is to bring attention to it. The problem is that these tools usually go unnoticed by standard IT tracking systems. Medical teams may use their own devices or install apps they think are useful, which can accidentally jeopardize sensitive patient information.

As identifying shadow IT can be tricky, we’ll break this into two parts:

1. Key indicators to look for in unauthorized SaaS tools
2. A step-by-step guide to identifying Shadow IT

‍

‍

A. Part 1: Key Indicators to Spot Shadow IT in Your Healthcare Organization

Now that you're familiar with the process, let's talk about the warning signs. These signs can show if a SaaS tool is not getting the attention it needs, which could put you at risk.

a. Duplicate Functionality Across Teams

• If multiple departments are using different apps for the same task (e.g., scheduling, file sharing), some may not be approved.
• For example, one team using Google Drive while another uses Dropbox without IT’s involvement is a red flag.
• Look for redundancy; it often hints at apps introduced outside the procurement process.

b. Unusual Spikes in Data Usage

• A sudden increase in data transfers or network bandwidth could point to unmonitored app usage.
• Watch for file uploads to external domains, particularly after work hours or from unmanaged devices.
• Shadow IT apps often lack data throttling or governance policies, leading to traffic spikes.

c. Shadow Sign-Ups Using Work Emails

• Employees may use their company email to sign up for SaaS tools out of convenience.
• Check for domains like @yourhospital.org registered with SaaS platforms you don’t officially support.
• Email monitoring tools or integrations with identity providers can help flag unauthorized registrations.

d. Lack of Integration with Core Systems

• Shadow IT tools often fail to integrate with EHR systems like Epic or Cerner, making them ineffective or even dangerous.
• If a team relies on CSV exports/imports instead of API-level syncing, the tool may be outside IT’s governance.
• Disconnected tools create gaps in patient records, billing, and compliance workflows.

e. Frequent Helpdesk or Security Alerts

• Your helpdesk could be getting repeated requests about accessing the app or issues with security from unofficial tools.
• Security alerts for unauthorized logins or unknown device access could also stem from Shadow IT apps.
• Pay attention to patterns in user behavior or system error logs, they often surface early indicators.

B. Part 2: Step-by-Step Guide to Identify Shadow IT in Healthcare

Shadow IT doesn't just pop up out of nowhere. It sneaks into the system slowly, starting with one unauthorized download or a workaround from a clinical department. Use this practical guide to uncover it:

a. Monitor Network Traffic Continuously

• Use tools like firewalls and DNS filters to log outbound traffic.
• Watch for unknown IP addresses, unapproved domains, or frequent API calls to unfamiliar platforms.
• Deploy CASBs (Cloud Access Security Brokers) to identify risky cloud applications in real time.

b. Perform Regular SaaS Usage Audits

• Meet with department heads to discuss what tools their teams are using, this can uncover unknown apps.
• Use surveys or internal polls to identify apps used in day-to-day workflows but not officially approved.
• Set a cadence (e.g., quarterly) to review and update your list of sanctioned applications.

c. Deploy Application Discovery Tools

• Implement automated discovery solutions that scan employee endpoints (laptops, tablets, browsers).
• These tools help compile a living inventory of every application being accessed inside the network.
• Ensure they integrate with your existing cybersecurity stack for streamlined visibility.

d. Review Expense Reports and Procurement Logs

• Many SaaS apps are purchased using corporate credit cards or expense reimbursements.
• Look through financial reports for expenses related to vendors such as Zoom, Dropbox, Trello, or specialized medical applications.
• Even low-cost apps like a $10/month scheduling tool can pose risks if handling PHI.

e. Involve IT in Onboarding New Tools

• Create a standardized process where new apps must be vetted by IT and security before use.
• Educate departments on the risks of bypassing this process, especially when patient data is involved.
• Promote this as a collaboration, not a restriction. The goal is to enable safe innovation.

‍

4. Strategies for Securing Unauthorized SaaS in Healthcare 

After spotting Shadow IT in your healthcare organization, the next important step is to manage the risks and protect these unauthorized SaaS applications. Let's explore the best strategies designed specifically for the healthcare field.

‍

‍

A. Establish a SaaS Governance Policy (With HIPAA at the Core)

A formal governance policy creates clarity around how SaaS tools are evaluated, approved, and monitored, especially those touching protected health information (PHI). In healthcare, this also means compliance with HIPAA regulations.

Your policy should spell out clear approval workflows, ownership responsibilities, security benchmarks, and vendor evaluation steps. HIPAA should anchor your framework, ensuring any SaaS tool that touches PHI is compliant from day one.

• Define app approval workflows with input from compliance, IT, and clinical leadership.
• Require HIPAA-compliant Business Associate Agreements (BAAs) for all relevant vendors.
• Document how apps handle PHI, data encryption, and breach protocols.
• Include continuous review cycles to keep your SaaS stack compliant over time.

B. Centralize App Procurement and Request Workflows

One of the leading causes of Shadow IT in healthcare is frustration, teams bypass IT due to long or unclear approval processes. Centralizing SaaS procurement ensures visibility and avoids fragmentation.

Create a self-service request portal where departments can suggest new tools. This portal should feed into a streamlined, cross-functional review process, balancing security, compliance, and business needs.

• Launch a centralized request hub for all new app needs.
• Automate routing to security, compliance, and finance teams for quick review.
• Maintain a clear inventory of approved, restricted, and pending tools.
• Share updates with requesters to avoid “workaround” behavior.

C. Limit Access Through Role and Context-Based Controls

Not everyone needs access to everything. In healthcare, over-permissioning can open the door to massive data leaks, especially when unauthorized apps sync with sensitive systems.

‍

‍

By implementing role-based access control (RBAC) and context-aware restrictions, you can prevent both internal mistakes and external threats. Think of it as giving the right tool to the right person, at the right time, for the right purpose.

• Use RBAC to limit access based on department, title, or function.
• Add time-based or location-based restrictions to sensitive systems.
• Disable unnecessary SaaS syncs with electronic health records (EHRs).
• Schedule quarterly access audits to remove stale permissions.

D. Deploy Shadow IT Discovery Tools for Continuous Monitoring

You can’t secure what you can’t see. Most healthcare organizations drastically underestimate how many SaaS apps are in use, because they’re never logged in official records.

Use SaaS discovery tools, CASBs (Cloud Access Security Brokers), or SaaS management platforms to uncover Shadow IT. These tools scan your network, browsers, and logs to identify which tools are in use and by whom.

• Monitor traffic patterns to spot unusual or unauthorized app usage
• Set alerts for new apps connecting to PHI or EHR systems
• Use domain filtering to block access to risky third-party tools
• Categorize discovered apps by risk level to prioritize remediation

E. Replace High-Risk Tools with Secure Healthcare-Grade Alternatives

Clinicians often turn to unauthorized apps because they’re faster or easier to use. Instead of banning these tools outright, offer secure alternatives that meet their workflow needs, without compromising security.

Roll out secure platforms like TigerConnect, Zoom for Healthcare, or Microsoft Teams for Healthcare, and integrate them into daily clinical operations. Make secure tools the default, not the exception.

• Identify commonly misused consumer tools (WhatsApp, Google Drive, etc.)
• Replace them with secure, compliant platforms tailored for healthcare.
• Offer training and resources to ease the transition.
• Integrate approved tools into EHRs and care coordination platforms.

F. Promote a Culture of Awareness and Reporting

Shadow IT often emerges from good intentions, staff trying to improve productivity or collaboration. That’s why education and culture-building are your most underrated security tools.

Teach your staff not just what they can’t do, but why it matters. Share real examples of data breaches caused by unauthorized apps. Empower staff to report unknown tools without fear of punishment.

• Host quarterly “SaaS Security in Healthcare” workshops
• Publish newsletters featuring Shadow IT risks and trends
• Make it easy to report unknown or suspicious apps anonymously
• Celebrate teams who proactively switch from risky apps to approved ones

‍

5. To Sum Up 

Shadow IT in healthcare is more than just a hidden tech issue; it’s a growing compliance and security risk. Unapproved SaaS apps can easily lead to data breaches, HIPAA violations, and loss of patient trust. As you’ve seen, these risks are often fueled by convenience, lack of awareness, and poor visibility across systems.

We explored how to identify Shadow IT through step-by-step detection and key signals across networks, access logs, and employee behavior. You also learned healthcare-specific strategies, from HIPAA-compliant governance to centralized SaaS procurement. 

Not sure how to track every hidden app across your systems? CloudEagle.ai helps you take control by detecting unauthorized apps, automating compliance, and optimizing your SaaS stack in one place. You’ll gain visibility, reduce risk, and ensure your teams stay secure without losing flexibility.
Book a free demo with CloudEagle.ai today, lock down Shadow IT before it puts your healthcare data at risk.

‍

6. Frequently Asked Questions 

1. What is meant by "shadow IT"?

Shadow IT refers to unauthorized software, apps, or devices used by employees without IT approval, posing security, compliance, and data management risks within an organization.

2. What is an example of shadow IT?

Using Google Drive or Dropbox for patient file sharing in a healthcare organization, without IT’s approval, is a common example of shadow IT that risks data breaches and compliance violations.

3. What is the role of IT in healthcare?

IT in healthcare ensures secure data management, supports electronic health records (EHR), enables telemedicine, enforces compliance (like HIPAA), and protects systems from cyber threats and unauthorized applications.

4. What is shadow IT detection?

Shadow IT detection involves identifying and monitoring unapproved apps, software, or devices within a network to prevent data leaks, security vulnerabilities, and ensure compliance with industry regulations.

‍