Global Medical Billing Outsourcing Market
- The medical billing outsourcing market is vibrant — experts expect significant growth over the coming years at a CAGR of 15%.
- Even though the North American region currently dominates this market, the APAC region is expected to become the new high-growth area thanks to a bulging geriatric population and increased demand for ancillary support services.
- Growth drivers include the increased demand for software solutions critical for efficient maintenance of health records, the need to make processes efficient, a growing emphasis on risk management and compliance, and a desire to achieve business goals.
- On the other hand, growth constraints include the variable cost charged per billing and the lack of trained professionals.
Medical billing outsourcing is a management strategy used by healthcare providers to save on resources that would typically go into undertaking certain activities. Generally, medical billing outsourcing helps organizations save on training expenses, staff salaries, and other costs.
Medical billing outsourcing entails healthcare organizations contracting third-party entities to undertake billing services on their behalf. This can happen through partnerships or independent contracting. As a general practice, only services and goods sold to end-users are considered ‘sales’ and therefore included in the billing.
- The global medical billing outsourcing market is expected to grow by about US$1.113 billion from 2020 to 2021 at a CAGR of 13.2%. This growth is seen as the result of companies resuming operations and adapting to new operating procedures to mitigate the impact of Covid-19, which had earlier limited business operations mainly due to restrictive containment measures. Nonetheless, market analysts believe the market value should reach US$16.939 by 2025 at a CAGR of 15%.
- The market is segmented by service (Back End and Front End), End User (Physician’s office, Hospitals, other end users), and Geography (Europe, North America, Asia-Pacific, the Middle East, South America, and Africa).
- North America currently dominates this market thanks to the presence of a large number of healthcare providers, in addition to increased awareness of the benefits of outsourcing billing to third-party entities, such as maximizing operating margins and efficient management of high-volume transactions.
- Further, increased hospital admissions in the North American region is driving the rising demand for software solutions, in addition to proactive government initiatives that aim to facilitate the efficient maintenance of digital health records. It is estimated the 80% of medical bills in the U.S. have errors; therefore, the need to minimize errors significantly contributes to the growth of medical billing outsourcing. Take, for example, the credit agency firm Equifax that recently found in its audits that “hospitals bills charged above US$10,000 have an average error amount of US$1,300”.
- Another trend unique perhaps to the United States is the rising cost of healthcare. As healthcare costs rise, billing errors will rise commensurately.
- Even though the North American region currently dominates the medical billing outsourcing market, the growth area going into the future is the APAC region. A growing geriatric population in the region has been identified as a major driver for the healthcare sector. This population has also increased the demand for ancillary support services.
- Generally, high-impact drivers for the global medical billing outsourcing market include “a growing emphasis on compliance and risk management, the need to make processes efficient, and healthcare organizations’ desire to achieve business goals.”
- A survey of current market practices shows that medical billing service providers are widening the scope of their services through the integration of “cloud-based medical billing software and electronic health records (EHR) services.” Cloud-based medical billing software offers more security compared to existing alternatives, and consequently, the adoption of cloud-based software is increasing.
- Across the globe, advancements and digitization of the healthcare industry and the emergence of new technologies are turning to be market drivers. In the U.S., for instance, the transformation of the healthcare sector into a data-intensive industry has spurred the uptake of innovative solutions “to enhance the development of advanced healthcare.”
- The increased competition in terms of service providers is also another growth catalyst. The emergence of small and medium-sized companies is changing the medical billing outsourcing landscape as these new entrants seek to establish market presence by offering high-quality services.
- However, the variable cost charged by service providers is expected to have a shrinking effect on the medical billing outsourcing market. Medical billing service providers charge a price for every service offered. This usually ranges between 3% to 10% per bill. This essentially means the more the number of tabs (more patients), the more the healthcare provider pays the service provider. Experts contend that the variable cost will negate the growth of the medical billing outsourcing market.
- Another growth constraint is the lack of trained professionals. This aspect will impede the growth of the medical billing outsourcing market because, without trained personnel, service providers cannot offer medical billing services.
The research strategy entailed sourcing information that met the research requirements. The sources used for this research are updated and not older than two years.