Healthcare Information Management (HIM): Select Segment Overviews

Vertical: Healthcare Information Management (HIM)
Author: JC Lupis
Date: January 2020

Coding

Coding is at the heart of HIM: almost half of HIM professionals enter the profession in a role related to coding and the U.S. Bureau of Labor Statistics predicts that health information technician jobs will rise by 15% between 2014 and 2024. A healthy portion of these roles will be staffed by vendors: market research suggests that while a slight majority of coding functions will remain in-house, close to one-third will be outsourced to domestic US providers. The total outsourced coding market is currently estimated to be $2.2 billion in size, with 9% per annum growth predicted through 2023 (to $3.4 billion).

The outlook for outsourced medical coding is generally healthy, as an aging population will result in more encounters and the coming release of ICD-11 codes will create further complexity that outsourced providers will be asked to manage. Although coding will remain fundamental to the HIM profession in the years to come, this function will likely transition from entry-level to more sophisticated roles. As technological tools advance, much of basic coding could go the way of automation, and coding positions will entail more skilled tasks. Opportunities for providers will gravitate instead to data analytics, information governance and privacy, and auditing.

Denial Management

Denial management is a large and growing market that is closely related to billing and coding. It is the practice of determining the cause of claim denials, using data analyses to identify and prevent future claims denials (such as by making sure claims are error-free prior to submission), and examining billing practices via analysis of patterns in the revenue cycle management workflow.

Anecdotal evidence suggests that there is room for growth in outsourced denial management services, currently estimated to be about 10-20% of the total addressable market. The fragmented outsourced denial management service market is estimated to be roughly $1.3 billion in size, with impressive growth of 17% per annum predicted over the next 5 years to $2.2 billion.

Industry estimates indicate that providers experience initial claim denial rates of 5-10%, of which 90% is potentially recoverable. Additionally, around 80% of complex claim denials are attributed to medical coding errors. Denial management is important as two factors can be expected to contribute to growing denial losses:

  • Providers are constantly struggling to navigate changing (and ever-more stringent) payer rules, which can increase the denial rate; and
  • As the cost of healthcare grows, payer denials result in larger revenue losses for providers.

Care Management

Care management is another large and expanding market encompassing both disease management and case management. In the former, service providers coordinate interventions and communications for patients with chronic and long-term conditions, while in the latter they use patient engagement to minimize the severity of acute episodes.

Care management service vendors offer payers and providers outsourced staff to carry out these activities, and anecdotal evidence suggests that up to 30% of care management services are outsourced. The fragmented outsourced care management service market is currently estimated to be roughly $2.7 billion in size, with strong growth of 15% per annum predicted over the next 5 years to $5.6 billion.

Once again, general industry trends (the aging population, prevalence of chronic conditions, and shift to value-based care) are fueling the growth of the care management market. Utilization is increasing alongside growing Medicare and Medicaid membership, and as these patients live longer with chronic diseases, associated costs will climb.
In order to control those costs, payers will incentivize value-based contracting, and providers facing financial risk will likely invest more in care management solutions to ensure optimal outcomes. Vendors with sophisticated offerings will not only benefit from a competitive advantage but also broaden providers’ openness to outsourcing.

Registry Services

There are more than 200 registries in the US, the majority of which are cancer (~53%), trauma (~13%), and stroke (~13%) registries. These registries are overseen by various stewards and governing bodies, and can be state-run, regional, or national. Clinical registries primarily count quality improvement and benchmarking as their purposes, with the majority measuring processes and outcomes. Their success depends on high quality data, and they are often challenged with interoperability issues.

Registry management service vendors play a critical role in abstracting data from providers and assisting with data collection, audits, and submission processes. The outsourced registry market is fragmented and currently estimated to be $300 million in size, with healthy growth of 13% per annum predicted over the next 5 years to roughly $550 million.

The US’ aging population – along with the increasing prevalence of chronic diseases – has resulted in greater focus on population health management. This – along with the emergence of value-based care – raises the importance of registries and associated service providers for their ability to track performance and outcomes.

Registries are becoming more granular and complex, in part due to regulations. In 2018, close to 70% of the specialty society registries in the US were used by the Centers for Medicare & Medicaid Services (CMS) to measure clinical care quality. Registries’ evolving regulatory frameworks necessitate a high level of coding expertise, and the increasing complexity of registries as well as their use as performance tracking tools should contribute to a rise in demand for experienced service providers.

HIM Market: Key Data Point

The job market for health technologists and technicians is expected to grow at twice the rate as the total across all occupations between 2008 and 2018 (10% and 5%, respectively).

Source: Bureau of Labor Statistics, September 2019

HIM Market: Key Chart

Anticipated Future Outsourcing of Coding Function

GHA-HIM-Coding-Outsourcing

GHA’s HIM Market Brief includes the following sections:

  • HIM Market-At-A-Glance
  • HIM Segment Highlights:
    • Coding
    • Denial Management
    • Care Management
    • Registry Services
  • Key HIM Market Data
  • The Mergers & Acquisitions Landscape

To inquire about a copy, please contact research@ghadvisors.net.