The global medical billing outsourcing market size is projected to reach USD 19.7 billion by 2026 expanding at a compound annual growth rate (CAGR) of 11.8%, according to a Grand View research report. The report reveals that revenue cycle management (RCM) is one of the most complex components of healthcare IT business driven by challenges in rising healthcare costs, market consolidation, an explosion in clinical documentation, and value-based care initiatives.
Key Market Drivers for Global Medical Billing Outsourcing
The advent of new technological solutions, rising and changing government requirements, and bad debt and uncollectible accounts have sparked a new trend leading to an increased preference for medical billing outsourcing by several healthcare providers. Efforts to decrease in-house processing costs and rising need for error minimization is also likely to augment the demand.
Benefits of Medical Billing Outsourcing for Providers
Medical billing outsourcing increases cash flow, helps save on the cost of equipment and software, and reduces staff size and employee expenses. Increasing geographical reach of key companies through mergers and acquisitions is expected to boost the market in coming years. Recent examples of market consolidation include:
– Navicure and Zirmed merging to form Waystar in 2017
– McKesson and Change Healthcare merger in 2017
– Precyse and MedAssets merging form nThrive in 2016
North America is expected to be the largest regional market over the forecast years on account of high awareness levels about outsourcing healthcare IT services and strong presence of prominent market players in the region.
Europe is also a major market for outsourcing healthcare services, which is majorly driven by the demand for minimizing the overall healthcare delivery costs. The region has high growth potential owing to factors, such as consolidation of large healthcare providers, change in pricing and reimbursement policies and increasing pressure on European healthcare providers to build more sustainable healthcare systems.
Growing Demand for Medical Billing Outsourcing Services
The outsourced segment is expected to register the highest CAGR in the coming years. Medical billing outsourcing significantly reduces cost and proves as a good fit for small and medium practices. Since the last 5 years, physician practices (acute care hospitals and clinics/physician) are facing challenging times as reimbursements have declined and costs are rising, and the newly introduced regulations have made business more complex. Hence the demand for outsourced services is expected to increase in years to come.
Other key findings of the report include
Front End RCM Market Growth
Front-end services consist of processes like scheduling, preregistration, registration, eligibility, insurance verification, pre-authorization, etc. The front-end service constitutes the major function of medical billing outsourcing and accounted for the highest market share in 2018. However, front-end services are gradually facing a decline in revenue growth due to market saturation and increased competition.
Middle RCM Market Growth
Middle-end services are expected to observe the fastest growth in the coming years due to the entry of new market players and growing awareness among healthcare practitioners.
The hospital segment held the highest market share in 2018 as hospitals were prime users of such services due to high claim volume. Consolidations of hospitals further increase the complexation in billing and reimbursement procedures. Hence, the demand is high in hospitals.
Currently, private clinics and physician offices are also outsourcing several services. Hence, the physician offices segment is likely to expand at the fastest CAGR during the forecasts period. The rise in the number of services provided by physicians and change in government regulations are responsible for a significant number of physicians adopting RCM services at their medical facilities.