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Wondering if a confidentiality agreement makes sense for your healthcare workplace? Learn how these agreements protect your patients, your staff, and your business.
Healthcare workplaces—whether clinics, doctor’s offices, laboratories, or surgical centers—handle sensitive patient health information every day. Patients trust these facilities to provide ethical care while protecting their personal information.
In addition to protecting patient data, your practice may also wish to guard internal business information, such as trade secrets, internal policies, or plans for mergers. Confidentiality agreements are one tool that can help reinforce privacy expectations across your staff. Let’s explore how they work and how they might benefit your healthcare business.
Why Is Confidentiality Important?
Every business relies on private information to function; healthcare businesses are no exception. You may not want competitors gaining access to your business model, hiring practices, or financial outlook. This applies equally to large healthcare systems and smaller physician practice groups, which often have valuable resources such as training materials, patient guides, treatment protocols, or expansion plans.
These elements are part of what makes your practice unique and successful, and confidentiality ensures they stay protected. At the same time, clear privacy standards remind employees of their obligations to safeguard both business information and patient health data.
What is a Confidentiality Agreement?
If your employees are covered by the Health Insurance Portability and Accountability Act (HIPAA), you may wonder: “Why do I need a separate confidentiality agreement?” It’s true that HIPAA requires your employees to safeguard patient information if you’re a covered entity, regardless of whether a confidentiality agreement exists.
However, HIPAA only applies to health information—not to internal business matters, trade secrets, sales data, or financial information. A confidentiality agreement provides extra protection for those areas. It creates a binding contract between you and your employee, clearly outlining what business-related information must remain private. It also sets expectations upfront and reinforces your practice’s overall compliance culture.
Keep in mind that you cannot require an employee to sign a confidentiality agreement without offering something in return. For new hires, agreeing to the terms as a condition of employment—along with compensation—typically satisfies this requirement. For current employees, continued employment may be sufficient consideration, but you may also offer additional incentives when appropriate.
How is a Confidentiality Agreement Different from a Non-Disclosure Agreement?
The terms “confidentiality agreement” and “non-disclosure agreement” (NDA) are often used interchangeably. However, although both agreements seek to protect business interests, there are significant differences. A confidentiality agreement generally governs the handling of sensitive information during employment, covering day-to-day operations and internal policies. An NDA, in contrast, often focuses on preventing the disclosure of specific information after employment ends.
See our related video, “NDAs in Healthcare.”
What Can I Include in a Confidentiality Agreement?
Most states allow confidentiality agreements to cover a wide range of business information. However, there are limits. For example, a confidentiality agreement cannot prohibit employees from reporting illegal business activities to authorities. Publicly available information also cannot be restricted. Additionally, confidentiality agreements cannot interfere with employees’ rights to unionize or engage in protected union activities.
You should also be aware that NDAs may be more heavily regulated than confidentiality agreements in some states. For instance, in Illinois, an NDA may only be valid if the employee earns at least $75,000, has worked at the business for at least two years, and is advised to consult an attorney.
When Confidentiality Is Especially Important
Do you work with children, elderly patients, or other vulnerable populations? If so, a confidentiality agreement may be especially important. It can reinforce your staff’s duty to treat patient information with the utmost care while also protecting your business’s proprietary information. Vulnerable populations may be entitled to additional privacy protections under state or federal law, making it all the more important to formalize your internal privacy expectations.
Get Legal Support
Are you curious if a confidentiality agreement could benefit your practice or need guidance on what your state requires? Consider speaking with a licensed attorney.
At Jackson LLP, we help licensed healthcare professionals in the states where we practice meet their legal needs so they can focus on patient care and growing their business. Consider scheduling a complimentary consultation to see if we’re a good fit.
This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.
