The global medical coding market size was valued at USD 18,698 million in 2022. It is expected to reach USD 47,946.6 million by 2031, growing at a CAGR of 11.03% during the forecast period (2023–2031).
Medical coding converts diagnoses, treatments, services, and equipment used in healthcare into standard medical alphanumeric codes. It entails designating the proper codes, extracting the data from the supporting documentation, and producing a claim that insurance companies will pay. It examines the distribution of diseases among individuals. It provides information on national health trends, allowing the federal and state governments to plan the resources needed to combat serious health problems and launch programs to prevent and treat the affected population. As a result, it has many uses in hospitals and diagnostic facilities worldwide.
Medical coding converts data from patient medical records, physician notes, prescriptions, lab results, procedures, and diagnoses into standardized medical alphanumeric codes for billing third-party payers, like insurance companies. Medical coding and billing, which serve as the foundation of the healthcare system, enable modern healthcare by establishing quick communication between service providers and insurers. Medical coding organizes medical procedures and treatments into categories that physicians and insurance companies can comprehend. In the current environment, it is increasingly used to establish a proper patient care record, streamline the medical billing process, expedite physician payments, and pinpoint healthcare areas that need more attention. One of the crucial allied healthcare professionals is a medical coder, who ensures that medical data is transmitted accurately and effectively between healthcare providers and insurance companies. Over the forecast period, it is anticipated that the rising prevalence of chronic diseases like cancer will increase the number of patients and hospital admissions, producing enormous amounts of data in medical records.
When the right technology is used, the network and complexity of billing can be navigated much more successfully, simplifying everything from formatting a patient's name to catching overlooked items, not on the bill. Hospitals gain a much-needed advantage during the critical billing period by implementing information technology with the aid of medical billing to help streamline and simplify the billing process. Many IT solutions can aid in streamlining the billing process by giving automatic shortcuts, delivering more precise information about a patient, and even anticipating doctors' orders. As a result, the need for medical coding has grown over the past few years due to the advantages of streamlining the billing process and making medical records available to any hospital.
Healthcare cybersecurity is a significant threat. The U.S. HIPAA laws and the ethical responsibility to help patients and the harm healthcare security breaches can cause require IT professionals to continuously address healthcare data security issues. EHRs contain sensitive medical data, making hospital network security a top IT concern. EHRs and medical coding help insurance companies, doctors, and other healthcare professionals communicate. This simplifies care coordination and insurance issues.
Medical specialists can now innovate to meet patient needs. Modern healthcare's interconnectedness poses IT security risks. This field is a prime target for hackers and cybercriminals because almost everyone uses it. Healthcare data security has never been more critical. Medical organizations must be vigilant in establishing online safeguards, so a thorough understanding of the risks and safeguards is crucial. The risks and costs of healthcare data breaches put millions of people's private health information at risk. Medical coding has many security risks, limiting the market growth.
An essential but constantly changing composition of the healthcare industry is medical coding. However, the number of codes and diagnosis standards have grown exponentially and are now in the hundreds of thousands. When it comes to precise code assignment, the startling increase has made AI (Artificial Intelligence) necessary. Given that the ICD-11 has many advantages over the ICD-10 in the future, the market under study will benefit from its implementation. Additionally, the ICD-11 will be easier to set up and use and can be used online and offline. ICD-11 is more user-friendly than ever (compared to earlier generations), even coding will be less expensive, and the data captured is much more accurate for the highest quality output. The use of contemporary technology is the main reason for this. The cutting-edge design and digital format guarantee compatibility with the current IT infrastructure.
The healthcare sector has undergone several reforms due to rising costs, regulatory changes, evolving business models, expanding workforce requirements, and a persistent shift toward value-based patient care. These changes modernized existing technologies while speeding up the adoption of new ones. Artificial intelligence and other emerging technologies may spur medical coding development. Additionally, cloud services and affordable outsourcing medical coding services are anticipated to drive the market's future growth.
The global medical coding market is segmented by classification system, component, and end-user.
Based on the classification system, the global medical coding market is bifurcated into the international classification of diseases (ICD) and the healthcare standard procedure code system (HCPCS).
The international classification of diseases (ICD) segment is the highest contributor to the market and is expected to grow at a CAGR of 11.97% during the forecast period. ICD is the foundation for identifying global health trends and statistics, according to the World Health Organization (WHO), and the global norm for reporting diseases and medical conditions. It is the benchmark for diagnostic classification in all clinical and academic settings. To share and compare health information between hospitals, regions, backgrounds, and countries as well as data comparisons in the exact location over periods, ICD defines the universe of diseases, disorders, injuries, and other related health conditions listed in a comprehensive, hierarchical manner that makes it simple to store, retrieve, and analyze health information. As a result, the ICD makes it simple to index medical records, facilitates the completion of medical reviews, and opens new opportunities for medical care.
ICD is now being used more and more frequently as a medical code. Over a century has passed since the International Classification of Diseases (ICD) codes first appeared in medicine. They were most recently adopted in the United States for the reporting of diagnoses on claims for medical services. To reflect advancements in the medical community, the ICD has also undergone periodic revision. As a result, increasing consumer awareness of the availability of cutting-edge hospital solutions increased the market penetration of private healthcare insurance providers. An increase in the number of medical coding outsourcing firms is some of the major factors anticipated to drive market growth.
Based on components, the global medical coding market is bifurcated into in-house and outsourced.
The outsourced segment owns the highest market and is expected to grow at a CAGR of 11.39% during the forecast period. Organizations all over the nation are increasingly turning to outsource as a resource. It has many benefits, including reduced turnaround times, higher accuracy rates, and certified coders. Outsourcing the services also lessens the burden of keeping the staff informed of the most current rules and regulations. Additionally, organizations that provide third-party coding follow ICD-10 guidelines and employ HIPAA-compliant security measures, guaranteeing quality. As a result, the direct and indirect costs related to medical coding are being significantly reduced by outsourcing. Consequently, outsourcing to a medical coding company is frequently the most cost-effective option. Additionally, rising competition among outsourcing firms will aid in reducing the budget. As a result, outsourcing has become more popular over the past few years.
The company that oversees teaching the internal staff members to code within its health organization is known as the in-house medical coding. Internal medical coders can guarantee accessibility and quality control. However, only some healthcare service providers can afford to hire medical coders on staff. It needs a formal infrastructure and potentially costly equipment. The use of in-house medical coding has benefits and drawbacks. The main advantage of in-house coding is that it will facilitate better communication between the doctor, the coder, and the other office staff. In-house coding allows for overcoming communication barriers, especially when working with complex coding. Additionally, it has been discovered that billing issues can be resolved more quickly and efficiently when done internally, as it saves a great deal of time. Control over patient records is also provided by in-house billing, which is essential for maintaining patient confidentiality.
Based on end-user, the global medical coding market is bifurcated into hospitals and diagnostic centers.
The hospital segment is the highest contributor to the market and is expected to grow at a CAGR of 11.43% during the forecast period. Modern technological equipment is available in hospitals for the treatment of many different diseases. The likelihood of getting sick increases significantly as people age due to the rising conditions in the world and the aging population. Hospitals remain the most common locations for people to receive medical care. With chronic illnesses like cancer and others becoming more common, hospitals are becoming the primary settings for treating them, so more people are anticipated to be admitted as inpatients. Medical coding has become increasingly important for hospitals to receive payments from insurance companies and governments. Additionally, hospitals have recognized the value of healthcare IT systems in addressing issues related to the industry, such as inconsistent healthcare quality and rising healthcare costs. Further, the market is expanding due to the use of big data analytics to support and promote such research activities. The adoption of IT has also aided the development of the medical coding industry in hospitals.
The diagnostic centers are where various disease identification and diagnostic tests are carried out. They typically have top-notch machinery, and the outcomes of these laboratories are reliable. Diagnostic laboratories are found to be essential in terms of both the quality of care and the financial performance of the healthcare system. The increasing use of information technology in healthcare and the rising incidence of various diseases worldwide are the main factors fueling the growth of the market under study. To maintain contact with their referring clinicians, laboratories have begun to use healthcare IT solutions like revenue cycle management (RCM) solutions.
North America Dominates the Global Market
By Region, the global medical coding market is segmented into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa.
North America is the most significant revenue contributor and is expected to grow at a CAGR of 11.04% during the forecast period. The country's technological advancements, well-established healthcare infrastructure, rising geriatric population, and rising chronic disease rates are the main factors boosting market growth, which is expected to increase demand in the United States. One in seven deaths in the United States is caused by heart disease, according to the American Heart Association Research Report 2018. The leading cause of death from cardiovascular disease in the United States in 2018 was coronary heart disease (43.8%), which was followed by stroke (16.8%), heart failure (9.0%), high blood pressure (9.4%), diseases of the arteries (3.1%), and other cardiovascular diseases (17.9%). One of the top medical billing businesses in the US, Prestige Revenue Management, offers hassle-free insurance claim processing to medical professionals like doctors. The business provides inexpensive medical billing services nationwide by utilizing tools and technologies at the forefront of its industry.
Europe is expected to grow at a CAGR of 10.62% during the forecast period. Due to the growing elderly population, rising demand for coding services, and significant pressure to simplify hospital billing processes, the medical coding market in Germany is expanding. In Germany, the attending hospital doctor is legally obligated to record and code all inpatient and outpatient admissions. The organization's computerized health information system can be updated with the additional health information that needs to be abstracted from the chart using the German Coding Guidelines (DKR). In the upcoming years, the market is anticipated to be driven by such legal regulations regarding the use of coding in the nation.
China is one of the markets with the fastest growth in the medical coding industry. The main forces driving the Chinese medical coding market are the large patient population with rising chronic diseases and the rising demand for coding services. In China, the International Classification of Diseases (ICD) codes are now used for various purposes besides categorizing morbidity and mortality statistics, such as reimbursement, administration, epidemiology, and health service research. An increase is also aiding the growth of the market in hospitals and patient visits. Since there is less regulatory rigor and uniformity in China regarding information security standards and monitoring, this country has become famous for outsourcing billing and other services, leading to poorly-controlled security of sensitive data. Additionally, China quickly adopted new technology, becoming more significant in outsourced billing and other services. In China, Wipro automated RCM pre-services like patient admission and eligibility, benefits like medical coding and updating patient records, and post-services like automating payment posting and billing procedures. Therefore, due to the factors above, China's medical coding market is anticipated to expand significantly over the coming years.
Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, and other nations are included in the GCC. The governments of Dubai and Abu Dhabi in the United Arab Emirates (UAE) have mandated using standardized medical codes as part of providers' e-claim transactions. Medical coding is crucial for accurately capturing the medical services provided by the practice and turning those services into billable items, in addition to being necessary for regulatory compliance. A research study by Al-Surimi K et al. found that there were roughly 150,727 visits to the emergency room in Saudi Arabia each year. The study was published in the International Journal of General Medicine in March 2021. Around 7,696 people (9.38%) were frequent visitors. As a result, a high number of hospital visits is fueling market expansion.
Brazil is a significant marketplace. The rise in the elderly population, the rise in chronic diseases, an increase in the demand for coding, and the rise in hospital billing service providers are the main drivers of market growth. The adoption of medical technology in Brazil has increased along with the country's expanding demand for healthcare services. Brazilians' average life expectancy has risen steadily over the past 20 years, which has led to the aging of the population. The rising mortality rate in the nation due to the prevalence of various chronic diseases is anticipated to fuel the market for medical coding. To handle the extensive data on mortality, the mortality rate is also saved in the form of unique codes, which is a crucial component of medical coding and billing.
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