Illinois Hospital Closure Showcases Ransomware’s Existential Threat

An Illinois hospital’s decision to cease operations later this week at least partly because of a 2021 ransomware attack that crippled operations for months is a stark reminder of the sometimes-existential threat that online extortion campaigns can pose.

That’s especially true for resource-strapped small and rural hospitals.

St. Margaret’s Health (SMH) will permanently close its hospitals, clinics, and other facilities at Spring Valley and Peru, Ill. this Friday, June 16, after serving the community for 120 years. Multiple factors led to the decision, including unprecedented expenses tied to the COVID-19 pandemic, low patient volumes tied to social-distancing mandates, and staff shortages that forced the health system to have to rely on temporary staffing agencies.

But the February 2021 ransomware attack on its systems at Spring Valley had a big part to play; they  catastrophically impacted the hospital’s ability to collect payments from insurers for services rendered, and the attack forced a shutdown of the hospital’s IT network, email systems, its electronic medical records (EMR) portal, and other Web operations.

A Contributing Factor

SMH vice president of quality and community services Linda Burt says the attack lasted four months, during which employees had no access to the IT system, including email and the EMR system. 

“We had to resort to paper for medical records. It took many months, and in some service lines, almost a year to get back online and able to enter any charges or send out claims,” Burt says. “Many of the insurance plans have timely filing clauses which, if not done, they will not pay. So, no claims were being sent out and no payment was coming in.”

SMH is the latest to make the list that security analyst and researcher Adrian Sanabria maintains of organizations that were forced out of business because of a cyberattack over the past two decades. The list currently comprises 24 organizations — many of them small — across multiple sectors. Among the names in the list is payment processing firm CardSystems, which closed in 2005 following a data breach that exposed sensitive data associated with some 40 million credit cards; security firm HBGary which went…