A chain of risk analysis

The HIPAA Final Rule creates a chain of risk analysis and compliance from the hospital, downstream to the business associates who handle / process PHI for the hospital and sub-contractors who handle / process PHI for the business associate.
And so on.
The first thing an organization needs to do is a risk analysis.   How important is a risk analysis?  Ask Cancer Care Group who were just fined $750,000 for non-compliance with the Security Rule.

$750,000 HIPAA settlement emphasizes the importance of risk analysis and device and media control policies

Cancer Care Group, P.C. agreed to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy and Security Rules with the U.S. Department of Health and Human Services (HHS), Office for Civil Rights (OCR). Cancer Care paid $750,000 and will adopt a robust corrective action plan to correct deficiencies in its HIPAA compliance program. Cancer Care Group is a radiation oncology private physician practice, with 13 radiation oncologists serving hospitals and clinics throughout Indiana.
On August 29, 2012, OCR received notification from Cancer Care regarding a breach of unsecured electronic protected health information (ePHI) after a laptop bag was stolen from an employee’s car. The bag contained the employee’s computer and unencrypted backup media, which contained the names, addresses, dates of birth, Social Security numbers, insurance information and clinical information of approximately 55,000 current and former Cancer Care patients.
OCR’s subsequent investigation found that, prior to the breach, Cancer Care was in widespread non-compliance with the HIPAA Security Rule. It had not conducted an enterprise-wide risk analysis when the breach occurred in July 2012. Further, Cancer Care did not have in place a written policy specific to the removal of hardware and electronic media containing ePHI into and out of its facilities, even though this was common practice within the organization. For more information see the HHS Press Release from Sep 2, 2015 $750,000 HIPAA settlement emphasizes the importance of risk analysis and device and media control policies

Risk analysis is the first step in meeting Security Rule requirements

I have written here, here, here and here about the importance of risk analysis as a process of understanding the value of your assets, the impact of your threats and the depth of your vulnerabilities in order to implement the best security countermeasures.
The HIPAA Security Rule begins with the analysis requirement in § 164.308(a)(1)(ii)(A). Conducting a risk analysis is the first step in identifying and implementing safeguards that comply with and carry out the standards and implementation specifications in the Security Rule. Therefore, a risk analysis is fundamental to the entire process of HIPAA Security Rule compliance, and must be understood in detail by the organization in order to specifically address safeguards and technologies that will best protect electronic health information. See Guidance on Risk Analysis Requirements under the HIPAA Security Rule. Neither the HHS Guidance nor NIST specify a methodology – we have been using the Practical Threat Analysis methodology for HIPAA Security risk analysis with Israeli medical device companies since 2009 and it works smoothly and effectively helping Israeli medical device vendors comply and implement robust security at the lowest possible cost.

§ 164.308(a)(1)(ii)(A) Risk Analysis (R¹): As part of the risk management process, the company performs information security risk analysis for its services (see company procedure XYZ) analyzing software application  security, data security and human related vulnerabilities. Risk analysis is performed according to the Practical Threat Analysis methodology.