March 1, 2023

Medical billing industry outlook for 2023

The medical billing industry outlook for 2023 is positive, although increased competition and consolidation pose challenges.

Despite challenges and unexpected economic shifts, 70% of medical billers are positive about the industry. The medical billing market has its own set of challenges, but several trends are making it easier than ever for companies to expand and boost their revenue streams. 

In a recent survey, medical billing companies in North America told Tebra what they expect in 2023. Here is what they said. 

Building for growth

The medical billing industry outlook is bright for both new and established medical billing organizations. A medical biller can use several ways to expand their business today, from offering more services to a growing number of new medical practices and the popularity of high-deductible patient plans.

An industry ripe with opportunities

The medical billing service market provides various opportunities, and the biggest by far is outsourcing: 4 in 10 companies see medical billing outsourcing as the top trend for the next 1 to 3 years.

“The medical billing service market provides various opportunities, and the biggest by far is outsourcing: 4 in 10 companies see medical billing outsourcing as the top trend for the next 1 to 3 years. ”

But that’s not all. Medical billers also see chances for growth in:

  • Service expansion
  • An upcoming, improved economy
  • More stability and clarity regarding compliance and regulations
  • New ways for company differentiation

For example, a billing company looking to attract more customers and improve revenue cycle management may look into cloud-based medical billing, a new complimentary service type, like medical practice marketing, or upgrade to a more compliant system for its billing process. It could also provide a special discount or charge for new clinics with lower billing volumes or invest more in managing its own online reputation.

The fact is, there are many ways a billing company can grow — you just need to find your organization’s sweet spot. 

Overarching healthcare trends

The billing industry is also heavily influenced by the larger healthcare landscape, which has transformed drastically over the last decade. 

Just over 45% of medical billing company respondents identify high-deductible insurance plans as a significant opportunity for growth. With these plans, patients cover more of the costs upfront, paying either the entire fee or a copay before meeting their deductible. Thus, this model may simplify the billing structure and improve cash flow.

In addition, medical billers are noticing an increase in patient-centered medical homes, new accountable healthcare organizations, the popularity of bundled payment programs, and merit-based incentive payment systems. 

The vast majority of respondents felt that all of these trends would result in at least modest growth over the next 3 years. 

Current and upcoming market challenges

Yes, many medical billers are optimistic. But that doesn’t mean there’s no risk in the industry. A shrinking customer base, an uncertain economy, and increasing competition are all challenges that companies face today. 

Medical billing consolidation

The most prominent risk today in the medical billing market is mergers and acquisitions. Over 40% of companies identify the purchase of practices and clinics by larger entities as a significant threat.

“The most prominent risk today in the medical billing market is mergers and acquisitions. Over 40% of companies identify the purchase of practices and clinics by larger entities as a significant threat. ”

The potential client pool shrinks when more medical practices are absorbed into larger health networks. 

Practices that keep their billing in house, combined with automation and healthcare provider retirement, further reduce the potential for customer acquisition and retention. And while many companies hope for clearer regulations, new compliance initiatives can hurt healthcare providers and indirectly affect the medical billing industry. 

The uncertain economy

High inflation and grumblings of recession have created a rapidly fluctuating market. Even as inflation has dropped to 6.5% in early 2023, patients continue to tighten their spending and neglect their healthcare. Providers now see fewer patients, which results in lower billing volume.

The economic uncertainty has led around 60% of medical billing companies to remain concerned with inflation, as well as with healthcare regulations. Additional or poorly executed compliance updates could compound the costs and friction for providers and medical billers alike. 

But these aren’t the only economic stressors. The average medical biller is also thinking about:

  • The ongoing labor shortage
  • The U.S. and global political environments
  • Increased healthcare costs
  • Rising interest rates

Competitive market dynamics

Despite the consolidation of medical practices and clinics, 45% of medical billing companies feel that the industry has become more competitive than ever. Accelerated market growth has translated into challenges with customer acquisition and employee retention.

Yet, as payment technology, medical billing services, and outsourcing tools continue to evolve, companies can combat these issues through differentiation. Medical billers that lean into the future and leverage their expertise can find ways to stand out and build their business.

Get the full story

Even with the medical billing industry risks today, most billers expect growth over the next 3 years. And innovation around pricing, operations, payments, and medical record digitization provides ample room for company differentiation and rapid growth. 

Read insights on these topics and more in Tebra’s 2023 Benchmark Report: The State of the U.S. Billing Industry.