You're investing more in technology, expanding your services, and adapting to constant regulatory changes. But despite these efforts, your revenue growth remains stubbornly flat. You’re not alone – this is the reality most billing companies are facing.

Tebra's third annual State of the Medical Billing Industry report shines a light on this problem. In a survey of 190 billing companies, the report found that 54% expect gross margins to be at 10% or below, while 63% say denial rates have increased in the last year.

But the broader industry is evolving, not failing. In this article, we’ll walk through the latest medical billing benchmark data and detail steps your company can take to overcome revenue challenges.

Source: Tebra 2026 State of the Medical Billing Industry Report

Despite increasing demand from independent practices for billing services, billing companies aren’t reaping the financial benefits. 

Let’s take a closer look at why this is happening. 

The global revenue cycle management (RCM) market was valued at $384.6 billion in 2025 and is expected to reach $894.3 billion by 2033, growing at a rate of 12% each year.

A few forces are driving that expansion:

In addition to these changes, collecting reimbursement is becoming more difficult. Sixty-seven percent of billing companies now believe payers are using AI to automate and increase denials. Whether that perception is fully accurate or not, the downstream effect is real. You’re dealing with more appeals and more revenue that’s stuck in limbo.

Regulatory changes add pressure, too. For example, the Consumer Financial Protection Bureau's (CFPB) 2025 rule to remove medical debt from credit reports could reduce leverage to recoup outstanding patient balances.

For billing companies, staying ahead of these changes requires building workflow systems that are nimble and adaptable.

In the span of three years of benchmark surveys, one trend is consistent – billing companies project aggressive growth, but always fall short. Here’s what the data shows:

Even revenue distribution has shifted. As of 2025, 48% of billing companies generate under $250,000 annually, up from 28% in 2023. But the share for those earning upwards of $1 million dropped from 32% to 9%.

We’re seeing a similar story with profit margins, as 54% of billing companies expect gross margins to be at or less than 10%. Despite these dismal projections, many  continue to spend on things like:

Yet these investments aren’t resulting in a significant lift in revenue or margins.

Every billing company deals with some version of the same pressure points. Common challenges include:

You're likely spending more than you were two years ago – so is nearly every billing company in the industry. And workflow operational issues are often to blame. Seventy-seven percent of billing companies operate on client-owned systems or a mix of platforms. This requires your team to constantly:

Relying on so many disparate systems and processes makes it impossible to standardize processes and places a huge administrative burden on teams. 

In fact, 28% percent of billing companies cite training staff on multiple systems as a top challenge. And that cost compounds with every new client that’s onboarded.

Over time, a lack of systemization eats into your margins even when the billing work itself is solid.

New regulations are a constant, and can disrupt and cause bottlenecks in your billing workflows. For example, CPT and CMS make annual updates to telehealth and E/M guidelines that change how you document and bill for services. To keep pace, 37% of billing companies have increased compliance and security-related investments in the past year.

Also, without the leverage of credit reporting under the CFPB's new rule,  your practice clients will need to lean more heavily on:

Having the right technology in place is critical, and 60% of billing companies have invested in this area.

The number of claims denials continues to increase. In fact, 46% of billing companies reported an increase in the past 12 months — up from 28% in 2024.

These are the categories that require the most rework: 

Rework pains can be eliminated by investing in technology that automates documentation and creates a single source of truth.

The 2024 Change Healthcare Cyber Attack compromised the protected health information of over 100 million individuals and disrupted claims processing for thousands of providers and billing companies. Many teams faced weeks of payment delays. This helped prompt 37% of billing companies to increase their spend on compliance and security initiatives last year.

Take measured steps to avoid these types of risks by documenting and strictly enforcing your security policies. It’s also important to educate staff about phishing and other cybersecurity schemes.  Taking these preventive measures can help protect your company’s revenue and reputation.

Despite narrowing margins, billing companies continue to find opportunities to expand their offerings and prove their value.

Here are a few strategies they’re employing.

To remain competitive, 98% of billing companies offered add-on services beyond core claims in 2025 — up from 80% in 2023.

The most popular add-on services include:

These types of add-on services are now considered table stakes. When every billing company offers more, differentiation becomes a selling point. It’s no longer about what you sell but what you can prove — and that’s where specialization comes in.

According to Tebra’s 2026 report, 40% of billing companies are choosing to specialize in specific practice types to win more business. As evidence of this trend, the share of billing companies that are highly focused on specific specialties rose from 43% in 2023, to 57% in 2025.

“The concept of being very prescriptive and being very specialized is winning this space right now without a shadow of a doubt," says Sarah Ford, Director of Account Management at Tebra. "One of the friction points I often see is attaining prior authorizations; a lot of specialties require that, and they require exact measures to get that authorization. If billing companies are casting a wide net and saying, ‘We work with everybody,’ they aren’t going to become experts. But by going deep into a specific specialty, they can immediately add value to every single practice in their space.”

For example, by focusing solely on mental health practices, your experience helps you automatically know the modifiers that get flagged and the procedures that need prior authorization. And this type of expertise is a differentiator that pays off and wins business.

More than half of billing companies (63%) now charge 7.99% or less on percentage-based pricing. At the same time, another 28% have moved entirely to a non-percentage model, up from 17% in 2023.

Even set-up fees are becoming more standard. Two years ago, 36% of billing companies didn’t charge set-up fees. Today, only 19% don’t. Increased competition is driving these changes with billing companies reporting increased pressure to win new business from competitors like:

When competitors can undercut on price, strong performance data helps provide justification for your fees.

Currently, only 55% of billing companies pursue patient payments at the same rate as they do insurance reimbursements. Another 21% don't actively collect from patients at all – highlighting a growing opportunity to capture more revenue.

Encourage prompt patient payments by requesting that  clients adopt digital payment options like:

Enabling digital payments reduces the administrative burden of chasing balances and improves your A/R rates. Plus, the easier it is for patients to pay, the faster everyone gets paid.

Fifty-five percent of billing companies say referrals are one of their top strategies for winning business — down from 71% in 2023.

Take steps to build a strong referral network by: 

Use billing software that tracks clients’ performance, paying close attention to metrics like denial rates, first-pass acceptance rates, and days in A/R and net collections.

Did these metrics improve over time? How long did it take for that to happen? Having this information makes it easier to ask for and get referrals.

Operating across multiple billing systems for different clients wastes too much of your team’s time and energy and distracts from actual billing work.

Billing companies that are most effective at preventing denials rely on:

Catch coverage issues before they become denials. Tebra allows you to verify insurance eligibility in advance and automatically check claims forms for errors before submission. 

Billing companies agree that technology matters and 60% have increased how much they’re investing in this category in the last two years. 

Here’s a closer look at the technology solutions they’re prioritizing. 

Seventy-three percent of billing companies aren't using RPA. But among the 27% that are, the use cases for RPA are practical and targeted, with companies reporting:

These companies prefer workflow-specific tools over broader automation platforms to get the job done. They know that focus is where the value is, and that choosing the right platform reduces manual burden.

Platforms like Tebra's billing solution help you do just that. For example, you can automate insurance eligibility checks to reduce claim denials or use business logic to automate data flow for post-ERA processing.

Artificial intelligence (AI) represents a huge opportunity for billing companies. While 43% say they’re optimistic about AI use, 59% haven’t adopted AI for billing tasks. For those companies that invest in AI, the time savings and payoff are often significant. 

Billing companies’ top use cases for AI include:

Among companies that adopted AI, 71% report improved billing accuracy and efficiency. Despite promising results, 31% of billing companies remain skeptical of AI as some tools fail to deliver on their promises.

Considering investing in an AI billing solution? Start by identifying your highest friction workflows. For example, you can chart notes using real-time transcription capabilities within tools like Tebra’s AI Note Assist. This tool also suggests the right ICD-10 codes, reducing billing and coding errors down the line.

Three-quarters of billing companies recommend using an integrated EHR with their billing and practice management software. And it makes sense to do so.

When your billing platform and client's EHR talk to each other, it eliminates manual data entry and enables faster access to claims documentation. Billing companies are clear on the benefits of a unified EHR platform. It provides:

But just because billing companies recommend integration doesn’t mean their clients are taking action. Forty-five percent of billing companies report that fewer than a quarter of their clients actually use the EHR solution they recommend, and  13% report zero client adoption.

While forcing a migration is likely to strain your client relationship, there are tools that enable HL7 integrations. Platforms like Tebra offer a fully connected environment and, if your client is on an external EHR, Tebra can help standardize your internal billing workflows.

As the medical billing industry continues to grow, the companies pulling ahead are making more intentional choices. They’re investing in technology that enables seamless and integrated workflows and shifting towards specialization to position themselves as long-term, trusted partners to specific types of healthcare organizations.

While they know automation is important, they’re not trying to automate everything at once. Instead, they’re investing in targeted automation tools that drive efficiency and standardize workflows. Additionally, they’re taking steps to deliver on shifting expectations and deliver faster and more reliable collections. 

As your billing company plans where to focus and invest in 2026 and beyond, keep in mind that overcoming many of these challenges doesn’t require an overnight transformation. The strongest billing companies start by benchmarking performance, identifying the most critical gaps, and investing in solutions that deliver the greatest impact.