The healthcare outsourcing market is growing, with technology, billing solutions and home health services becoming more common. Outsourcing can help your organization flourish by lowering equipment and software expenses, improving cash flow and enhancing the patient experience. This field has great potential, so let’s explore some key industry insights and how outsourcing can help healthcare organizations.

Healthcare Outsourcing Market Size 

In today’s competitive healthcare landscape, optimizing operational efficiency and financial performance is paramount. Due to the ongoing pressure to provide high-quality care, outsourcing in hospitals and healthcare organizations is gaining traction. Globally, analysts predict a compound annual growth rate (CAGR) of 10.34% between 2025 and 2034, from just over $421 billion to around $1021 billion. 

Outsourcing can offer dramatic benefits to healthcare organizations. Some technology solutions, for example, can help you provide a seamless experience with comprehensive resources throughout the patient journey. 

Other tasks might be more specific, such as outsourcing patient billing, which can also help reduce staffing requirements and improve quality. As staff shortages and billing errors are significant obstacles for the healthcare industry, the global medical billing outsourcing market is also booming. Experts expect it to grow from around $18 billion to almost $40 billion from 2025 to 2032, boasting a CAGR of 11.9%. 

Ultimately, outsourcing strategic functions lets your organization focus on core competencies — providing excellent patient care and achieving improved outcomes. 

Key Insights of Healthcare Outsourcing 

A 2024 survey by the Healthcare Financial Management Association (HFMA) revealed that the top three stressors for revenue cycle departments are payer challenges, prior authorization, and workforce issues such as costs, shortages and retention. With more providers turning to outsourcing and automation to navigate such financial challenges and operational inefficiencies, healthcare outsourcing is expanding. 

Here’s a look at some key insights from healthcare clients benefiting from outsourced services:

Collaboration and the Push for Outsourcing

The healthcare sector is experiencing significant staffing issues, mainly due to clinician burnout and a lack of skilled workers. This results from factors such as the tough demands of healthcare jobs and the aging workforce, which has strained resources and personnel. 

As a solution, healthcare organizations and hospitals are increasingly outsourcing, especially for time-consuming administrative tasks like coding, billing and claims processing. 

According to a 2023 Black Book Market Research survey, nearly 73% of medical group practices are collaborating with consultants to develop accountable care reimbursement strategies. Many are also contemplating revenue cycle outsourcing as they evaluate their technology options. The demand for these specific outsourcing services stems from the need to enhance return on investment (ROI) in revenue cycle management (RCM), cut costs and improve operational efficiency.

CFO Perspectives on RCM and ROI

Roadblocks aside, a 2024 BDO survey showed that most healthcare chief financial officers (CFOs) are optimistic about revenue and profitability. At the same time, they recognize the need for strategic cost reductions and effective RCM practices.

According to the HFMA’s findings, revenue cycle technology such as automation, artificial intelligence (AI) and machine learning (ML) is the highest priority for investment.

The Black Book survey reports that 54% of CFOs are confident that outsourcing RCM processes can boost productivity and solidify their financial foundations. The urgency for RCM upgrades is underscored by the fact that 89% of healthcare providers recognize the need for modernization.

However, a lack of a clear ROI is a pressing concern. For 79% of these financial leaders, eliminating non-ROI-generating financial and coding technology vendors is crucial.

Challenges in RCM Management

The Black Book survey also points out that a mix of outdated tools and modern technology complicates RCM management. As improper RCM practices impact cash flow, claims management is a critical area for vendor opportunities.

In fact, 83% of hospitals, 58% of contract management and 55% of denial management entities are already outsourcing certain aspects of accounts receivable and collections. 

Additionally, 74.2% of the healthcare executives surveyed by the HFMA state that their organization leverages vendors for partial outsourcing. Around a quarter of these leaders rely on outsourcing and third-party consulting to address revenue cycle staffing challenges. Plus, almost 65% plan to invest in revenue cycle automation to some degree.

Insights for Smaller Hospitals

According to the Black Book survey, 50% of U.S. hospitals anticipating a core RCM solution replacement have yet to launch a sustainable RCM plan. Findings show that 40% of hospitals with fewer than 200 beds are postponing RCM transformation efforts, potentially jeopardizing their financial stability and quality of patient care. 

Tough margins, increasing labor expenses and soaring interest rates are putting pressure on healthcare organizations of all sizes. That’s why it’s crucial for smaller facilities to consider outsourcing functions like RCM, which can often be performed at a lower cost and more efficiently. 

Analyzing the efficiency and quality of solutions like outsourcing can make it easier to justify the costs, empowering facilities to boost efficiencies, streamline workflows and reduce overall expenses. 

In fact, the Council for Affordable Quality Healthcare (CAQH) 2024 Index report estimates that automation could save the healthcare industry over $20 billion while enhancing patient experience and reducing administrative burdens. Given their often limited resources, this could be transformative for smaller hospitals.

RCM Strategy and the Role of Outsourcing

The Black Book survey indicates a growing recognition of the value of RCM outsourcing. About 80% of hospital CFOs view outsourcing as a temporary solution until they can afford new RCM software. More than two-thirds are pursuing outsourcing agreements lasting 18 to 36 months.

Furthermore, 72% of CFOs in smaller hospitals see comprehensive RCM outsourcing as the most effective immediate strategy. In comparison, 93% of larger hospitals anticipate supplementing their RCM software with outsourcing services as they navigate coding challenges and explore value-based reimbursement opportunities.

3 Benefits of Healthcare Outsourcing 

As discussed, outsourcing can be a game-changer for the healthcare industry. Let’s take a closer look at three of the biggest ways your organization could benefit:

1. Significant Cost Savings

Cost savings rank high among the primary advantages that healthcare outsourcing provides. Your organization can minimize its spending on essential operations like IT while enjoying access to highly specialized knowledge and experience. With the money saved, you can increase investments in other areas, like upgrading patient access and outdated equipment.

2. Specialized Healthcare Solutions

Highly specialized services solve unique industry needs and complex workflows to improve revenue. For example, increasing patient revenue demands streamlined billing and payment processes, convenient payment options and communications catering to patients’ individual preferences. With AI-powered technology, you can effortlessly communicate with patients through their preferred channels, such as text, email or chat. 

3. Enhanced Focus on Patient Care

Healthcare organizations can gain many efficiencies through outsourcing. That’s especially true in service categories where the landscape changes rapidly.

By outsourcing, you leverage your vendor’s assets and expertise instead of adding responsibilities to an often already overwhelmed staff. As a result, your employees can focus on their core mission of delivering world-class patient care.

What to Know About Choosing a Healthcare Outsourcing Partner

Remember, these benefits depend on working with trustworthy partners. As outsourcing may put some patient-facing responsibilities in the hands of your vendor partners, a strong vetting process is essential.

Working with a provider who white labels their services is equally as important. That means they use your branding, scripting and processes to ensure patients get the same personalized service they would get from someone on your own team.

Look for a vendor with policies and procedures that align with your values and can offer your patients the best experience from start to finish. You’ll also want a partner with dedicated implementation resources who can manage the process for you. Partnering with the ideal vendor can translate directly into a healthier bottom line.

How to Streamline Your Revenue Cycle With Outsourcing

Healthcare RCM includes various parts of the patient’s journey, many of which you can outsource to an experienced provider. A revenue cycle strategy is crucial for value-based care and a positive patient experience, spanning nearly every interaction with your organization, from patient intake to patient payment. Doing it in-house usually requires a large team to manage these varying touchpoints while maintaining compliance and minimizing errors.

Some examples of tasks that can fall under healthcare revenue cycle outsourcing include:

• Collecting payments after appointments.
• Issuing statements.
• Providing self-pay options, such as mobile pay or a patient payment portal.
• Calling patients to collect unpaid bills.
• Helping patients make payments, understand bills and other processes.

Partner With Millennia and Increase Your Revenue

Dedicated vendors can help you respond to challenges such as worker shortages with a suite of fully integrated tools. Millennia, for instance, specializes in the patient payment aspect of RCM.

With hospitals and medical groups looking for ways to reduce costs and fill staffing gaps, patient payment outsourcing is a strategy that can result in financially healthier organizations. At Millennia, we make increasing patient revenue a seamless part of your workflow. By intelligently automating patient engagement, we also reduce the demands placed on your staff while improving the patient experience for better cash flow and compliance.

The Millennia Patient Payment Solution works with your existing health information systems to:

• Increase digital engagement: Provide patients with interactive technology that’s a joy to use to enhance adoption and save time.
• Boost patient revenue: Capture more patient payments faster with solutions that maximize payment processes and options.
• Create enjoyable patient journeys: Impress patients with a seamless digital experience to encourage their loyalty.

Our solution helps providers recover two to four times the national average in patient payments and achieve a 100%-300% increase in self-pay revenue. To learn more about how Millennia is a leader in healthcare payment outsourcing, schedule a consultation today. 

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