John Bou is co-founder and president at Modio Health, a CHG Healthcare company.
As a wave of significant federal administrative changes takes shape, there is growing scrutiny on how our healthcare system operates. One persistent and costly challenge is administrative waste—an issue that has long plagued the sector. The U.S. healthcare system is notoriously expensive, and inefficiencies contribute to billions of dollars in unnecessary costs.
Among the many ways to reduce administrative waste, one critical function remains largely unmentioned: provider credentialing. Credentialing (verification of a physician’s license and status at state and national levels) is fundamental to healthcare today—without it, providers cannot see patients or receive payment. It’s also necessary to ensure that healthcare providers have the proper qualifications to deliver safe and effective care to patients. Yet, credentialing remains bogged down by inefficiencies. While healthcare continues to advance in clinical care, technology innovation and policy reforms, credentialing lags behind—perhaps not seen as an enticing space to innovate.
What are the barriers to improving provider credentialing, where do the opportunities lie and, as healthcare and tech leaders, why should you care?
Costly—And Avoidable—Administrative Waste
The U.S. spent $4.3 trillion in 2021 on healthcare, nearly 25% of which is considered waste. We know delays in credentialing cost hospitals and healthcare organizations millions in lost revenue, disrupt operations and strain the healthcare workforce.
For example, a simple error in a provider’s paperwork can trigger delays of up to six months or more, leaving hospitals and medical practices short-staffed and patients unseen. This limits their ability to care for patients and serve their communities and results in substantial financial losses since healthcare organizations cannot bill for services that aren’t being provided. Beyond financial consequences, inefficient credentialing adds to administrative burdens that contribute to provider burnout and workforce shortages. The downstream effects impact patient care, increasing wait times and limiting access to essential services.
Prioritizing Credentialing
Despite the clear benefits, credentialing reform is not always in alignment with the reality of hospital budgets and, therefore, is not prioritized. The focus is understandably on frontline care and revenue-generating initiatives, rather than back-office modernization. However, it’s all part of the same system, and ultimately, these administrative tweaks can impact those priorities.
Current credentialing processes require providers to submit the same data—education and training, work history, board certification and so forth—multiple times across different organizations. The lack of a standardized credentialing repository leads to duplicate work and delays. This is where an automated process that relies on technology could come into play.
Technology And Policy Reform
While process and innovation are important, they are not the only factors needed to improve how our sector credentials providers; legislation and policy considerations are extremely relevant. The process of state-by-state credentialing can be ineffective. The length of time it takes to get a license in each state varies. Each state has its own licensing process, and although licensing requirements are very similar across the country, most states require physicians to be separately licensed in every state in which they practice. This can create huge delays for physicians.
It’s also worth taking a look at licensing reform. In Tennessee, a legislature responding to the physician shortage crisis by streamlining the licensure process for applicants from foreign medical schools was shot down by the licensing board. Tennessee ranked 44th in the nation for overall health in 2024, with many of its counties federally designated as primary care health professional shortage areas.
The need for measures to ensure patient safety and that high-quality, safe physicians and nurses are providing care is real. However, at what point does the red tape inhibit progress and solutions to our growing healthcare access problem?
Looking To The Future
Without modernization, hospitals will continue to lose revenue, providers will continue to face unnecessary burnout and patients will experience delays in care. There are some clear steps to make the process more efficient and less burdensome:
• Start an internal conversation. A review of current policies and practices within your organization can be a first step to determine if it’s time to upgrade your process and redirect focus.
• Optimize your processes. Develop interoperable, automated systems to minimize redundancy and slow manual verification processes. Consider leveraging AI-driven credentialing solutions to streamline verification and reduce lengthy processing times.
• Prioritize compliance. Collaborate with regulatory bodies such as CMS and state licensing boards to ensure technology aligns with evolving compliance standards. A push for data standardization and increased participation could help create a national credentialing database, which could reduce repetitive administrative work and improve efficiency.
• Stay informed. There is constant change within the healthcare sector; staying up to date with state and regulatory changes reduces the odds of barriers and challenges down the road.
As the healthcare industry works to curb waste and improve efficiency, credentialing reform must be a priority. We’re at a pivotal moment. Over the next few years, we have a real opportunity to transform credentialing and, in doing so, create a more sustainable and efficient healthcare system.
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