U.S. Medical Billing Outsourcing Market Size, Share & Trends Analysis Report By Component (In-house, Outsourced), By Service (Front-end, Middle-end, Back-end), By End-use- Industry Analysis, Share, Growth, Regional Outlook and Forecasts, 2023-2032

The U.S. medical billing outsourcing market size was exhibited at USD 5.46 billion in 2022 and is projected to hit around USD 15.99 billion by 2032, growing at a CAGR of 11.35% during the forecast period 2023 to 2032.

Key Pointers:

• The outsourced segment held the largest revenue share of over 57.9% in 2022 and is expected to register the highest CAGR from 2023 to 2032.
• The front-end services segment dominated the market with a revenue share of over 40.9% in 2022. 
• The hospitals segment accounted for the largest revenue share of over 48.6% in 2022.

Report Scope of the U.S. medical billing outsourcing Market

Increasing complexity in health reimbursement and high chances of claim denials are expected to drive the market. The growing burden of the patient pool, patient data, and billing volumes during and after the pandemic forced the hospital industry to outsource medical billing services. This is expected to propel the growth of the market during the forecast period.

Additionally, challenges faced by the in-house billing service during the pandemic era increased the need for an alternative i.e. outsourcing the billing services. The challenge mounts when the billing process mandates adherence to the International Classification of Diseases-11th (ICD-11) code along with dealing with rising healthcare costs and declining reimbursements. In order to curb or alleviate these challenges, several healthcare providers, such as acute care hospitals and clinics/physician offices, prefer outsourcing their billing processes. According to the Medical Group Management Association, around 73% of physicians found a reduction in the ARA days due to the addition of outsourcing and posed the higher collections.

Acceptance of Revenue Cycle Management (RCM) in various healthcare facilities varies with application. Scheduling, coding, billing, patient registration, and claims processing are adopted more than other RCM applications in the U.S. Advantages associated with outsourcing of medical billing services include improvement in the billing process by decreasing errors, swift turnaround time, and smooth administrations for hospitals and other medical institutes.

Moreover, the pandemic drastically impacted the U.S. market for medical billing outsourcing. The reduction in hospital revenue and patient volumes slowed down the market growth. New billing and telehealth codes were introduced during the pandemic. The growing patient burden and increased workload on healthcare staff posed a challenge to adapt new codes as well as implement them into the setting. The medical billing providers have spent significant amounts on the billing resources and technology, which can be utilized by the healthcare providers after outsourcing the billing process.

Component Insights

The outsourced segment held the largest revenue share of over 57.9% in 2022 and is expected to register the highest CAGR from 2023 to 2032. According to the study conducted by the National Healthcare Service Exchange, a physician's practice spends approximately 14% of its total income to ensure the exact reimbursement of health insurance from insurers, which is much greater than the fees that an outsourcing agency charges for billing. On the other hand, outsourcing activity significantly reduces costs and proves a good fit for small and medium practices. To reduce healthcare costs, increase profit margin, and improve patient-physician relationships, various hospitals and independent physicians are accepting outsourcing billing services as a good option.

For instance, a recent MGMA study revealed that improved performance was witnessed with outsourced billing than with in-house billing. Approximately 73% of respondents revealed a reduction in AR days and a 60% decline in denied claims. Furthermore, a doctor could not provide the best possible care to patients if he/she is engaged in managing administrative processes, such as recovering claims and managing bills. Hence, to enhance the focus on medical care, large hospitals started outsourcing these services.

Service Insights

The front-end services segment dominated the market with a revenue share of over 40.9% in 2022. It consists of processes such as scheduling, preregistration, registration, eligibility, insurance verification, and pre-authorization. Managing front-end services well is a key to reducing repetitive work and improving the patient experience with faster service. Therefore, the demand for outsourcing these services is strong. Middle-end services are anticipated to witness maximum growth in the coming years due to the entry of new market players, growing awareness among healthcare practitioners, and increasing adoption of services.

The rising number of claim denials due to inefficient claim management and the increasing burden on the front-end service providers is likely to propel the demand for back-end services. Back-end services minimize the burden of front-end services. For instance, according to the report of the advisory board of RevCycle Intelligence, around 90% of denials of claims can be prevented and can be corrected for payment but are never resubmitted to payers due to lack of focus.

End-use Insights

The hospitals segment accounted for the largest revenue share of over 48.6% in 2022. Hospitals are the prime users of outsourcing services due to high claim volume. Consolidations of hospitals further increase complexity in billing and reimbursement procedures. This is fueling the segment growth. The majority of hospitals and healthcare facilities are shifting towards RCM services to minimize errors and find a cost-effective solution.

For instance, in December 2022, Allied Digestive Health, a Northeast-based gastroenterology treatment provider, selected Athenahealth Inc. for its patient engagement service and medical billing. The physician offices segment is projected to witness substantial growth during the forecast period. The soaring need for more cost-effective and efficient processes and increasing emphasis on compliance and risk management by regulatory authorities are supplementing the growth of the segment.

Key Companies & Market Share Insights

The companies operating in the market are focused on streamlining their offerings and identifying areas that would lead to cost improvement. This will result in more healthcare practitioners opting to outsource their revenue management process for better returns. For instance, in September 2022, GeBBS Healthcare Solutions, a major RCM provider for a healthcare firm in the U.S., received recognition by Modern Healthcare in its top 10 list of RCM companies.

Furthermore, partnerships and acquisitions are the major business strategies undertaken by these companies to expand their geographical reach and service offerings. For instance, in January 2022, R1RCM Inc. entered into a definitive agreement for the acquisition of Cloudmed. The deal was worth USD 4.9 billion and is expected to enter into an 18-month lock-up agreement. Some prominent players in the U.S. medical billing outsourcing market include:

Some of the prominent players in the U.S. medical billing outsourcing Market include:

• R1RCM Inc.
• Allscripts Healthcare, LLC
• Cerner Corporation
• eClinicalWorks
• Kareo, Inc.
• McKesson Corporation
• Quest Diagnostics Incorporated
• Promantra Inc.
• AdvancedMD, Inc.

Segments Covered in the Report

This report forecasts the volume and revenue growth at the country level and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2032. For this study, Nova one advisor has segmented the U.S. medical billing outsourcing market.

By Component 

• In-house
• Outsourced

By Service 

• Front-end service
• Middle-end services
• Back-end services

By End-use 

• Hospitals
• Physician Offices
• Others