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CynergisTek-Backbone Consultants deal centers on IT auditing services

CynergisTek looks to expand its services by acquiring Backbone Consultants, a small advisory firm that specializes in IT auditing and regulatory compliance.

Healthcare cybersecurity consultancy CynergisTek Inc. bought an IT risk advisory services firm that will bolster its current offerings and help round out its portfolio of services.

CynergisTek CEO Caleb Barlow described the $7 million acquisition of Minneapolis-based Backbone Consultants as strategic for both companies. The acquisition will enable CynergisTek to expand its data privacy capabilities and introduce IT auditing services to customers.

Caleb BarlowCaleb Barlow

"It's really strengthening our stronghold in the healthcare market and, in a lot of ways, giving us that foundation in healthcare to now go build on capabilities in adjacent spaces," Barlow said in an interview with SearchHealthIT at the 2019 CHIME Fall CIO Forum in Phoenix. "Just like building a house, you want to be building on a strong foundation. Where we had a few gaps in our portfolio, this [acquisition] really fills them out and gives us a strong foundation to work from."

CynergisTek will add Backbone Consultants' three consulting leaders and 14 IT audit, security and privacy experts to its employee roster, according to a news release. Backbone also brings with it multi-year contracts with non-healthcare and healthcare companies, including EHR vendors and medical device manufacturers. Backbone Consultants is being acquired with $5.5 million in cash and $1.5 million in CynergisTek common stock.

IT auditing

Barlow said one of the biggest draws for CynergisTek was Backbone Consultants' IT auditing services

Backbone Consultants can provide a complete IT audit of a company independently or can work with a company's in-house staff to complete an audit. CynergisTek could not provide these services to customers before the acquisition.

Backbone Consultants also provides electronic prescriptions for controlled substances (EPCS) auditing, which Barlow described as a hot area of IT auditing.

Healthcare organizations that prescribe controlled substances electronically are required to meet certain security standards set by the U.S. Drug Enforcement Administration. An organization's entire prescribing chain, from doctor to pharmacy, has to meet security standards, a process that requires validation by a third-party auditor every two years or any time something in the chain changes.

"This is a big need from our clients," Barlow said. "It's something [Backbone] has the DNA to do, and we've now got the ability to scale that up."

Data privacy

In addition to new services, the acquisition will strengthen services CynergisTek already provides, such as data privacy specifically related to government regulation.

Backbone Consultants conducts readiness assessments for GDPR, a data protection and privacy regulation for the European Union, and the California Consumer Privacy Act (CCPA), which was modeled after GDPR. Barlow said services like these give CynergisTek a "toehold into privacy and other markets."

Expanded data privacy capabilities will also affect a significant amount of current CynergisTek customers, according to Barlow. If they work with the data of California residents, they fall under the CCPA regulation.

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