In todays world large amount of medical information of patients are uploaded through internet, which needs more amount of time and the information may be easily pirated and grabbed by the hackers. One of the solutions to solve this problem is using watermarking and cryptography in a single system, which is proposed in this article. In this technique, first, the document of the patient is encrypted and then the cipher is embedded in the medical image using bit wise operation for authentication. Due to embedding, some of the details of the medical image may be corrupted, which can be recovered by using reversible property. The proposed algorithm provides high payload capacity, less computational complexity, security, validation, reversible quality and privacy of the patient. © Springer-Verlag 2011.