More on Revenue Cycle Management

More hospitals outsourcing their billing, leading to boom in billing outsourcing market

Reasons for the jump include implementation of the ICD-10 coding system, increasing healthcare costs and EHRs.

Jeff Lagasse, Associate Editor

While handling billing in-house is still the most common means of a hospital handling its revenue cycle management processes, more and more hospitals are beginning to outsource their billing, leading to a projected boom in the billing outsourcing market.

In fact, the global medical billing outsourcing market size is projected to reach $19.7 billion globally by 2026, expanding at a compound annual growth rate of 11.8 percent, based on a new report by Grand View Research.

A large amount of medical code representation for diagnosis and treatment, coupled with the presence of multiple payers, renders medical billing an intricate part of any medical practice, posing significant challenges.


Currently, the healthcare system is witnessing a rise in outsourcing of medical billing services by hospitals and physicians due to obligatory implementation of the complex ICD-10 coding system, increasing healthcare costs, and a federal mandate to implement electronic health records to maintain reimbursement levels, the report found.

On top of that, clinics and physician offices are gradually outsourcing their revenue cycle management to cut unnecessary costs and prevent the burden of managing an administrative team to ensure effective handling of in-house billing functions.

In addition, multispecialty medical groups are implementing consolidation requiring EHR integration and building large healthcare networks. This integration creates a need for revenue cycle management, which, in turn, demands additional expertise and trained personnel to manage it.

Because of this, the consolidation of large healthcare practices is also expected to be a one of the factors fueling the market growth.

Front-end services led the market in 2018, but the middle-end services segment is expected to register the highest compound annual growth rate of 12.4 percent over the forecast period.

Hospitals accounted for the largest market share of the medical billing outsourcing market in 2018 and is estimated to maintain the dominance even during the forecast years.

Some of the key firms in this industry include Accretive Health; Allscripts; Cerner Corporation; EClinicalWorks; Experian Information Solutions; GE Healthcare; Genpact; HCL; Kareo; McKesson Corporation; Quest Diagnostics; and The SSI Group.


A 2018 Crowe study published in September suggested that hospitals should carefully consider whether to outsource their revenue cycle, since it's not a financial no-brainer for everyone.

The analysis found that while hospitals that outsource their revenue cycle collect more patient balance payments, getting the money takes much longer. Plus, higher denial rates and final denial write-offs also proved to be trends stemming from outsourced revenue cycles. Roughly 9 percent of patient accounts saw an initial denial for insourced revenue cycles and outsourced revenue cycles showed a slightly higher initial denial rate of 10 percent.

Twitter: @JELagasse

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