Software Development for Healthcare: What You Need to Know

What is healthcare software development? Healthcare software development encompasses building applications for the medical industry — patient portals, electronic health records (EHR), telemedicine platforms, appointment scheduling, clinical decision support, and health data analytics. The key differentiator from other software is regulatory compliance: HIPAA in the US, GDPR in Europe, and various country-specific regulations governing how patient data is collected, stored, transmitted, and accessed. Non-compliance carries severe penalties (up to $1.5M per HIPAA violation category per year).

Healthcare software is not regular software with a medical logo slapped on it.

We say this because that's how most teams approach it. They build a standard web app, add a login screen, call it a "patient portal," and assume they're done. Then the compliance audit happens. Or the security incident. Or the hospital integration team asks about HL7 FHIR and the development team Googles it for the first time.

This guide covers what's actually different about building software for healthcare — the compliance requirements, the data standards, the technology constraints, and the mistakes that derail projects.

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Types of healthcare software

Healthcare is broad. The software needs are diverse. Here's what companies are actually building:

Patient portals — Self-service platforms where patients view test results, manage appointments, communicate with providers, and access medical records. These are the most common custom healthcare projects we see.

Telemedicine platforms — Video consultation, appointment scheduling, digital prescriptions, and remote monitoring. Post-COVID, this went from niche to essential. Many clinics still use generic video tools (Zoom) and want purpose-built solutions.

EHR/EMR integration tools — Very few companies build a full EHR from scratch (that's a multi-year, multi-million dollar undertaking). What's far more common: building applications that integrate with existing EHR systems like Epic, Cerner, or Allscripts to extend their functionality.

Clinical decision support — Tools that help clinicians make better decisions — drug interaction checkers, diagnostic aids, treatment protocol guides. These increasingly involve machine learning, but the regulatory bar is high.

Health data analytics — Population health dashboards, outcome tracking, operational analytics for hospitals and clinics. The data exists; the challenge is making it accessible and actionable without violating privacy rules.

Fitness and wellness apps — The lightest end of the spectrum. These often don't handle Protected Health Information (PHI) and may not need full HIPAA compliance. But the line between "wellness" and "medical" is blurrier than most founders think.

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Compliance: what HIPAA actually requires (technically)

HIPAA is the regulation everyone mentions and few people understand at the implementation level. Here's what it means for your development team:

The basics

HIPAA's Security Rule requires three types of safeguards for Protected Health Information (PHI):

1. Technical safeguards

• Encryption at rest and in transit. All PHI must be encrypted using AES-256 (at rest) and TLS 1.2+ (in transit). This is non-negotiable.
• Access controls. Role-based access with unique user IDs. No shared accounts. Automatic session timeouts. Multi-factor authentication for any system accessing PHI.
• Audit logging. Every access to PHI must be logged — who accessed what, when, and from where. These logs must be retained and reviewable. This is the one teams most often skip and most often get caught on.
• Integrity controls. Mechanisms to ensure PHI hasn't been improperly altered or destroyed.

2. Administrative safeguards

• Written security policies and procedures
• Regular risk assessments
• Workforce training on data handling
• Incident response procedures

3. Physical safeguards

• Controls on physical access to systems storing PHI
• Workstation and device policies
• This matters less for cloud-hosted software but still applies to the hosting environment

Business Associate Agreements (BAAs)

If you're building software that handles PHI, every vendor in the chain needs a BAA. Your cloud provider, your email service, your error monitoring tool, your analytics platform — if any of them can access PHI, they need a signed BAA.

This eliminates many common tools. You can't just use standard Google Analytics, Sentry, or Mailchimp. You need HIPAA-eligible alternatives or configurations.

AWS, Azure, and GCP all offer HIPAA-eligible environments — but you must configure them correctly and sign the BAA. "Hosting on AWS" doesn't automatically make you HIPAA-compliant.

Beyond HIPAA

If you're operating internationally, GDPR adds data subject rights (right to erasure, right to access, data portability). India's Digital Personal Data Protection Act (DPDPA) has its own requirements. Each adds complexity, and you need to architect for the strictest applicable standard.

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Data architecture: HL7 FHIR and healthcare interoperability

Healthcare data has its own standards. The two you'll encounter:

HL7 v2 — The legacy standard. Pipe-delimited messages that look like they were designed in the 1980s (because they were). Still widely used in hospitals. If you're integrating with existing hospital systems, you'll probably deal with HL7 v2 messages.

FHIR (Fast Healthcare Interoperability Resources) — The modern standard. RESTful APIs, JSON-based. Much more developer-friendly. Most new healthcare applications should be built FHIR-first. Major EHR vendors (Epic, Cerner) now expose FHIR APIs.

Key data architecture decisions

• Data isolation. Multi-tenant healthcare applications need strict data isolation. Shared databases with row-level security are technically possible but risky. Separate schemas or databases per tenant are safer and easier to audit.
• Consent management. Patients must consent to how their data is used. Your system needs granular consent tracking — what was consented to, when, and the ability to revoke.
• Data retention and deletion. HIPAA requires retention of certain records for 6 years. GDPR requires you to delete data when requested. These can conflict. Your architecture needs to handle both.
• De-identification. If you're using health data for analytics or research, you need proper de-identification following HIPAA Safe Harbor or Expert Determination methods.

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Technology considerations

Hosting

Use HIPAA-eligible cloud environments. AWS (with BAA), Azure (with BAA), or GCP (with BAA). Avoid hosting in regions without adequate data protection laws.

Avoid: Certain managed services that aren't covered under BAAs. Check your cloud provider's HIPAA eligibility list before using any service. On AWS, for instance, not every service is BAA-eligible.

Infrastructure choices

• Containerized deployments (ECS, EKS, or equivalent) give you better audit trails and reproducibility than bare EC2 instances.
• Managed databases with encryption enabled. RDS with encryption at rest, automated backups, and point-in-time recovery.
• Separate environments. Dev/staging should never contain real PHI. Use synthetic data for development and testing.
• WAF and DDoS protection at the infrastructure level. Healthcare systems are frequent targets.

Technology stack notes

For healthcare web applications, the stack itself isn't radically different from other industries — but the configuration and operational discipline are.

• Next.js or React for the frontend. Standard choices, well-supported.
• Node.js or Python for the backend. Python has strong healthcare library support (HL7 parsing, FHIR client libraries). Node.js works fine if your team prefers it.
• PostgreSQL for the database. Mature, encrypted, well-understood by compliance auditors. Avoid NoSQL for PHI — relational databases are easier to audit and constrain.

Avoid these common shortcuts

• Don't store PHI in browser localStorage or sessionStorage
• Don't send PHI in URL parameters or query strings
• Don't use email to transmit PHI without encryption
• Don't log PHI in application logs (this catches many teams)
• Don't use third-party tools without verifying HIPAA eligibility
• Don't use free-tier cloud services for PHI workloads — they often lack the compliance certifications

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Build vs buy vs customize

Approach	Best for	Watch out for
Off-the-shelf (Athena, DrChrono, SimplePractice)	Solo practitioners, small clinics with standard workflows	Limited customization, vendor lock-in, per-user pricing adds up
Customize existing platforms	Mid-size practices with specific workflow needs	Integration limits, upgrade challenges, still dependent on vendor
Custom build	Unique workflows, multi-system integration, product companies	Higher upfront cost, longer timeline, compliance is your responsibility

The honest take: if an off-the-shelf solution covers 80% of your needs, use it. Healthcare custom builds are expensive because compliance adds overhead at every stage. Custom makes sense when your workflow is genuinely unique, when you're building a product (not an internal tool), or when you need deep integration across multiple systems.

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Common mistakes

1. Underestimating compliance costs. Budget 1.5–2x what you'd budget for a comparable non-healthcare application. Compliance adds time to every feature — encryption implementation, audit logging, access control testing, penetration testing, documentation. Teams that budget for a "regular web app" always run over.

2. Not involving clinical staff early. Developers build what makes sense to developers. Clinicians work in ways that don't always make logical sense from a software perspective — but they have reasons. A nurse's workflow is not an engineer's workflow. Get clinical staff in front of prototypes before you write production code.

3. Treating it like a regular web app. "We'll add HIPAA compliance later" is the most expensive sentence in healthcare software. Compliance needs to be architected in from day one — data models, infrastructure, logging, access controls. Retrofitting compliance onto an existing application is painful and expensive.

4. Ignoring interoperability. Healthcare software that doesn't integrate with existing systems (EHR, lab systems, pharmacy systems) is healthcare software that doesn't get adopted. Design for FHIR from the start, even if initial integrations are simple.

5. Over-building v1. The temptation to build a comprehensive platform is strong. Resist it. A patient portal that does scheduling and lab results well is more valuable than one that does 15 things poorly. Ship a focused v1, get real clinical feedback, iterate.

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What it costs

Healthcare software costs more than standard web applications. Here are realistic ranges:

Project type	Timeline	Cost range
Patient portal (basic)	4–8 weeks	₹8L–₹15L
Telemedicine platform	8–14 weeks	₹15L–₹30L
EHR integration tool	6–10 weeks	₹10L–₹20L
Clinical analytics dashboard	6–12 weeks	₹12L–₹25L
Full healthcare platform	12–24 weeks	₹30L–₹60L+

The compliance overhead (encryption, audit logging, access controls, penetration testing, documentation) typically adds 40–60% to what the same feature set would cost without healthcare requirements.

For a broader breakdown of web application pricing, read our guide on what it costs to build a web app.

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Getting started

If you're building healthcare software:

1. Clarify your compliance requirements. Which regulations apply? HIPAA, GDPR, DPDPA? Get this clear before writing any code.
2. Map your integrations. Which existing systems does your software need to talk to? EHR, lab systems, pharmacy, billing?
3. Scope your v1 tightly. Pick the one workflow that matters most. Build that well. For guidance on scoping, see our guide on building a customer portal — the principles apply.
4. Budget for compliance. Take what you'd budget for a regular web app and multiply by 1.5–2x.

Or talk to us. We've built healthcare applications with HIPAA compliance, EHR integrations, and telemedicine features. We'll tell you straight whether a custom build makes sense for your use case — or whether an off-the-shelf solution is the smarter move.