The utility of Hospital Information System (HIS) is vast, although one cannot ignore its challenges which prevent the electronic healthcare system from being used properly. Challenges in privacy and security of HIS needs to be studied and understood properly by any healthcare organization and should be resolved to get optimum benefit. One of the main objectives of this paper is to review, explore and analyze the current state of hospital information system's privacy and security of patient's electronic health records. It also focuses on security at the level policy of healthcare organization so that electronic patient record can be protected and secured. In healthcare organization security risks and financial consequences are increasing day-by-day. The vulnerable and breached electronic patient data revealed the fact that, the privacy and security of electronic patient records in health information exchanges is an imperative of any healthcare organization. For any patient care organization persons who are involved in the IT and administrative management should seriously think the issues of privacy and security of patient health record and also proper health information exchange in a secured manner.