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, By Region, And Segment Forecasts, 2021 - 2028

Report Overview

The global medical billing outsourcing market size was valued at USD 10.2 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 12.66% from 2021 to 2028. Medical billing involves the revenue cycle management (RCM) process, which comprises the most complex and crucial components of the healthcare IT business. The current systems in practice for managing revenue are gradually becoming obsolete due to the lack of expertise in tackling new payment models and revenue management tools. Moreover, the increasing usage of billing and medical coding procedures in revenue cycle management is estimated to bolster the market growth. There are frequent revisions in the classification systems for medical coding, which also drives the market.

The spread of the novel coronavirus has adversely affected the sector. New codes were created for COVID-19. For instance, the World Health Organization created the International Classification of Diseases (ICD-11) codes, which will come into effect in January 2022. The advent of new technological solutions, increasing 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.

The coronavirus pandemic has made unparalleled consequences on daily lives in addition to the global economy. A substantial burden is formed on healthcare systems around the world. The COVID-19 pandemic has negatively affected and is expected to adversely affect the medical billing outsourcing sector by reducing patient or service volumes and payment ability. Healthcare providers need to prevail over these challenges by reconsidering their financial plans to lessen the impact of the COVID-19 pandemic on revenues. On the other hand, telemedicine solutions can boost patient volumes, improve patient satisfaction and experience, and eventually propel revenues.

Medical billing outsourcing increases cash flow, helps save on the cost of equipment and software, and reduces staff size and employee expenses. The growing geographical reach of the key companies through mergers and acquisitions is expected to drive the market for medical billing outsourcing in the coming years. For instance, in December 2016, Allscripts acquired an Australian healthcare IT software provider, Core Medical Solutions, to significantly increase Allscripts offerings in the country.

COVID-19 medical billing outsourcing market impact: 0.63% decline from 2019 to 2020

North America emerged as the largest regional market for medical billing outsourcing in 2020 and is expected to maintain its lead over the forecast years. This is attributed to the high awareness levels about outsourcing healthcare IT services and the strong presence of prominent market players in the region. In 2019, Becker's Hospital Review listed around 210 revenue cycle management solutions in the global market space and recognized Athenahealth (U.S.), Accenture (Ireland), R1 RCM (U.S.), Atos (France), and Experian Health (U.S.) as some of the leading revenue cycle vendors. 

Europe is 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.

Component Insights

The outsourced segment held the largest revenue share of over 50.0% in 2020 and is expected to register the highest CAGR from 2021 to 2028. In-house and outsourced are the major components of the market for medical billing outsourcing. Medical billing outsourcing significantly reduces costs and proves as a good fit for small and medium practices.

For the last 5 years, physician practices (acute care hospitals and clinics/physicians) 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 medical billing outsourcing is expected to increase in the years to come.

Service Insights

The front-end service segment held the largest share of over 35.0% in 2020. Front-end services consist of processes, like scheduling, preregistration, registration, eligibility, insurance verification, and pre-authorization. The front-end service constitutes the major function of medical billing outsourcing.

However, front-end services are gradually facing a decline in revenue growth due to market saturation and increased competition. Middle-end services are expected to witness the fastest growth in the forecast period due to the entry of new market players and the growing awareness among healthcare practitioners.

End-use Insights

The hospital segment held the largest revenue share of over 45.0% in 2020 as hospitals were prime users of such services due to high claim volume. Consolidations of hospitals further increase the complexity of billing and reimbursement procedures. Hence, the demand is high in hospitals.

The physician office segment accounted for the second-largest revenue share in 2020 and is expected to grow at the fastest rate over the forecast period. Rising expenditure on healthcare by small and midsized healthcare providers due to the growing emphasis on risk management and regulatory compliance and complex technology and staffing requirements is expected to drive the segment in the years to come.

Regional Insights

North America held the largest share of over 45.0% in 2020. The presence of a number of healthcare providers in the U.S. has turned their focus on end-to-end outsourcing firms for managing their billing processes. Due to the increased awareness about the benefits offered by outsourcing firms, providers are relying on the companies to maximize operating margins and manage high-volume transactions. Developing regions such as Asia Pacific and Latin America are expected to register a lucrative CAGR in the forecast years as outsourcing practices are being standardized across the globe.

The newly introduced International Classification of Diseases-10th revision (ICD-11) has made the medical billing business even more complex in nature. Owing to this, the demand for revenue cycle management (RCM) has increased drastically. In addition, providers are choosing the companies offering the right combination of RCM with electronic medical records (EMR) for improved patient outcomes.

Companies like AthenaHealth, Inc. and eClinicalWorks are providing RCM services that offer EHR software. Other large EMR providers have begun offering RCM services as well, including GE Healthcare; McKesson; and Allscripts Healthcare Solutions, Inc. Kareo, Inc., a practice management software provider, released a free EMR with RCM services to physicians.

Key Companies & Market Share Insights

Partnerships, mergers and acquisitions, and technological advancements are some of the key business strategies undertaken by key companies to expand their geographical reach and service offerings. For instance, in July 2019, Cerner Corporation partnered with Amazon Web Services (AWS) for access to its cloud space and global infrastructure to drive healthcare IT innovations. The partnership is expected to improve clinical efficiency and lower operational budgets for healthcare organizations.

In February 2019, Veritas Capital acquired athenahealth, Inc. in collaboration with Evergreen Coast Capital, as a minority investor. Virence Health, a subsidiary of Veritas Capital, combined with athenahealth to gain access to its network-enabled services for hospital and ambulatory customers. In another acquisition, in July 2018, Veritas Capital acquired GE Healthcare’s Enterprise Financial Management asset, which includes its RCM business, Ambulatory Care Management asset, and Workforce Management assets. Some prominent players in the global medical billing outsourcing market include:

• R1 RCM, Inc.

• Cerner Corporation

• Allscripts Healthcare Solutions, Inc.

• Experian Information Solutions, Inc.

• eClinicalWorks

• GE Healthcare

• Genpact

• HCL Technologies Limited

• Kareo, Inc.

• McKesson Corporation

• Quest Diagnostics

• Athenahealth Inc.

• The SSI Group, LLC.

Medical Billing Outsourcing Market Report Scope 

Segments Covered in the Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2016 to 2028. For the purpose of this study, Grand View Research has segmented the global medical billing outsourcing market report on the basis of component, service, end use, and region:

• Component Outlook (Revenue, USD Million, 2016 - 2028)

  • In-house

  • Outsourced

• Service Outlook (Revenue, USD Million, 2016 - 2028)

  • Front End

  • Middle End

  • Back End

• End-use Outlook (Revenue, USD Million, 2016 - 2028)

  • Hospital

  • Physician Office

  • Others

• Regional Outlook (Revenue, USD Million, 2016 - 2028)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • U.K.

    • Spain

    • France

    • Italy

  • Asia Pacific

    • China

    • Japan

    • India

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa (MEA)

    • South Africa

    • Saudi Arabia