How to Choose Between Outsourced vs. In-House Credentialing

Credentialing delays are costing healthcare practices far more than most administrators realize. Recent data show that physicians and surgeons lose up to $122,144 during the typical 120-day credentialing period, while dentists lose $87,274 and podiatrists lose $72,332. With credentialing taking an average of 90-120 days and over 85% of credentialing applications containing errors or missing information, the financial impact compounds quickly.

The problem isn’t just individual providers. From a systematic point of view, healthcare organizations collectively spend over $2.5 billion annually on credentialing activities, while over half of medical practices report increased claim denials related to provider credentialing errors. The worst part of it all is that physicians spend $2,000-$3,000 annually just submitting credentialing applications to payers.

So when it’s time to bring on new providers or expand your practice, one question becomes critical. The question is whether to outsource medical credentialing or handle it in-house. The right choice depends on your practice size, resources, growth trajectory, and tolerance for administrative complexity. Let’s break down!

Understanding In-House Medical Credentialing

In-house credentialing means your practice manages the entire credentialing process internally. This would require dedicated staff, technology, and oversight of the entire process. Here’s what is important to look out for in each resource:

Dedicated Staff

• Credentialing specialists who understand payer needs

• Compliance officers are required to ensure regulatory adherence

• IT support for system maintenance and security

Technology & Tools

• Credentialing software or tracking systems

• Secure document management platforms

• CAQH profile management tools

• Communication systems for payer follow-up

Established Processes

• Standard operating procedures for verification

• Quality control workflows

• Establish alerts for re-credentialing on the calendar

• Audit protocols for compliance

In-house credentialing works best for smaller practices with low provider volume, established credentialing expertise on staff, and limited payer networks.

Pros of In-House Medical Credentialing

1. Direct Control Over the Process

   You oversee every step from gathering documents to following up with payers. As a result, nothing is left to chance or happens without your knowledge.

2. Immediate Access to Information

   With in-house credentialing, there is no need to wait for third-party reports. Your team has real-time visibility into application status and can answer provider questions instantly.

3. Internal Knowledge Building

   During in-house credentialing, your staff develops deep expertise in your specific payer networks, requirements, and common issues.

4. Customization to Your Workflows

   You can tailor processes exactly to your practice’s needs without migrating or adapting to a vendor’s system.

5. Absence of Third-Party Data Sharing

   With no third-party app sign-ups, the sensitive provider information stays securely within your organization

Cons of In-House Medical Credentialing

1. High Fixed Costs

   A full-time credentialing specialist costs $40,000-$60,000 annually in salary alone, before benefits, training, and software expenses. For smaller practices, credentialing just a few providers each year is a steep overhead.

2. Staff Turnover Risk

   When your credentialing specialist leaves the organization (which happens frequently in this high-stress role), you’re left scrambling. Your trained resource is leaving, and knowledge loss is creating dangerous gaps in provider enrollment.

3. Time-Consuming Manual Work

   In-house teams often rely on outdated processes, spending hours searching for documents, calling players repeatedly, and updating spreadsheets one after another. This approach is slow and error-prone.

4. Limited Scalability

   When you’re expanding rapidly or bringing on multiple providers, your in-house team hits capacity fast or faces burnout. The entire cycle of hiring and training additional staff takes time you don’t have to begin with.

5. Compliance Burden

   Keeping up with constantly changing payer requirements, state regulations, and compliance standards falls entirely on your shoulders. Miss a deadline or requirement? That’s on you.

6. Opportunity Cost

   Your administrative team spends hours on credentialing paperwork instead of focusing on patient care, billing optimization, or other revenue-generating activities.

Understanding Outsourced Medical Credentialing

Medical credentialing outsourcing means partnering with a specialized company that handles the entire credentialing process, from initial verification to re-credentialing, on your behalf. This partnership works best in the following ways:

• Full-Service Model

  The vendor manages everything from start to finish, document collection, primary source verification, payer applications, follow-ups, and enrollment confirmation.

• Hybrid Model

  You handle some tasks internally (such as document collection), while the vendor manages payer submissions, follow-ups, and compliance tracking.

• Verification-Only Services

  The vendor verifies credentials and eligibility, but you manage payer submissions yourself. It is observed that most practices benefit from the full-service model. This provides them with complete credentialing management without internal burden.

Pros of Outsourcing Medical Credentialing

1. Specialized Expertise

   Credentialing companies do this all day, every day. They know payer requirements inside and out, stay up to date on regulatory changes, and have established relationships with insurance networks that can help expedite approvals.

2. Faster Turnaround Times

   Professional credentialing services can reduce credentialing time by 30-50% compared to in-house teams. The pre-established payer relationships, uniform processes, and dedicated focus would mean providers are enrolled faster and you can start billing sooner.

3. Significant Cost Savings

   Outsource medical credentialing typically costs $200-$500 per provider for initial credentialing, plus lower monthly maintenance fees. Compare that to the $40,000-$85,000 annual cost of maintaining an in-house team (salary, benefits, software, training, overhead).

4. Scalability Without Hiring

   If you want to add five new providers, it is no problem for your outsourced partner. They can scale capacity instantly without you posting job ads, conducting interviews, or training new staff.

5. Compliance Assurance

   Credentialing experts stay current on NCQA standards, CMS requirements, state-specific regulations, and payer policy changes. They ensure that every application complies with standards, reducing audit risk.

6. Reducing Mistakes

   Professional credentialing services use advanced technology, automated checks, and multiple layers of quality review to catch errors before submission. These numerous levels of checks prevent the delays that plague in-house teams.

7. Free Up Internal Resources

   The advantage of outsourced healthcare provider credentialing is that your administrative staff has more time in hand to focus on patient care, revenue cycle optimization, and other high-value activities instead of drowning in credentialing paperwork.

8. Continuity During Staff Changes

   Whether a provider leaves suddenly or the credentialing specialist quits, your outsourced partner should be able to maintain continuity without disruption or loss of knowledge.

Cons of Outsourcing Medical Credentialing

1. Less Direct Control

   You’re entrusting a third party with a critical process. Some practice managers feel uncomfortable not overseeing every detail directly. such issues, choose a transparent vendor who provides regular status updates, real-time dashboards, and clear communication channels.

2. Potential Communication Gaps

   If your credentialing partner doesn’t provide clear reporting or responsive services, you might feel out of the loop on application status. To clear these gaps, select a partner who offers dedicated account management and proactive communication (more on this below).

3. Vendor Dependency

   You’re relying on an external company’s performance. If they drop the ball, it affects your revenue. Mitigation: Vet partners carefully, check references, and establish clear service level agreements (SLAs) with performance guarantees.

4. Upfront Transition Effort

   Moving from in-house to outsourced credentialing requires initial setup, collecting documents, establishing a uniform workflow, and training your team on new communication processes. For a swift transition, choose a partner with proven implementation processes and dedicated onboarding support.

Side-by-Side Comparison of Outsourced vs. In-House Credentialing

How DrCatalyst’s Medical Credentialing Services Solve Your Challenges

At DrCatalyst, we understand that outsourced vs. in-house credentialing isn’t just a cost decision; it’s about protecting revenue, ensuring compliance, and freeing your team to focus on patient care. Here’s how we do it differently:

Comprehensive Credentialing Management

• Group and individual provider credentialing across all payers

• The new provider needs to be enrolled with the insurance networks

• New providers must be linked to the existing group contracts

• Complete CAQH profile management and updates

• Re-credentialing before expiration deadlines

• License, DEA, and certification tracking

Transparent Communication

• Dedicated credentialing specialists assigned to your account

• Real-time status updates and tracking dashboards

• Set proactive alerts prior to 90 days for expiration dates

• Regular meetings to review the credentialing pipeline

• Direct access to your credentialing team

Proven Efficiency

• Established relationships with major payers expedite approvals

• Streamlined processes reduce credentialing time by 30-50%

• Multiple quality review layers catch errors before submission

• Advanced software automates tracking and alerts

Flexible Service Models

• End-to-end credentialing:

  We handle everything from A to Z

• Hybrid support:

  We supplement your internal team with specific services, as well as provide completely reliable outsourced credentialing services, too.

• Virtual credentialing specialists:

  Dedicated staff working your business hours

Part of the DrCatalyst Ecosystem

Credentialing is just one piece of practice success. Combine it with our other services for complete operational support:

• Revenue cycle management and medical billing

• Prior authorization specialists (40,000+ monthly tasks)

• Virtual medical assistants for phones and admin work

• Medical coding services (AAPC certified)

When Should You Outsource Medical Credentialing?

Medical credentialing outsourcing becomes the need of the hour when:

• There is an expansion, and multiple new providers are joining in

• Your practice lacks dedicated credentialing expertise on staff

• You’re experiencing credentialing delays that impact revenue

• Your administrative team is overwhelmed with multiple responsibilities

• Reduction of the overhead costs compared to full-time staff is a necessity

• You’re opening new locations requiring multi-state billing, rcm and credentialing

• You need scalable solutions without hiring headaches

• Your current credentialing staff left, and you need immediate continuity

• You want compliance assurance without the internal burden

• A crystal clear cost calculation is more important than variable staffing expenses

When Does In-House Credentialing Make Sense?

In-house credentialing might work if:

• You have very low provider volume (1-2 providers every few years)

• You already have employed an experienced credentialing specialist who isn’t overwhelmed

• You work with a limited number of payers with straightforward requirements

• You have the budget and infrastructure for credentialing software and support

• Your practice values complete direct control over every process step

• You’re not planning growth that would strain current capacity

• That said, even practices that meet these criteria often find that outsourcing medical credentialing leads to better ROI, with tangible results and minimal stress.

The Actual Cost Behind Credentialing Delays

Let’s talk numbers. Here’s what credentialing delays actually cost your practice:

Lost Revenue

• Primary care: $30,000 average loss during 3-6 month credentialing window

• Specialists: $50,000-$100,000+ depending on procedure volume and reimbursement rates

• Average across all specialties: $7,000 per provider per month was witnessed in missed collections

Administrative Costs

• Admin costs account for all the reworks, including the time spent fixing billing errors and resubmitting applications

• Staff overtime during credentialing crunches

• Recruitment and training costs when credentialing staff turnover

Opportunity Costs

• Delayed patient access to new providers

• There is a competitive disadvantage when a competitor credentials faster than you

• Internal team bandwidth diverted from revenue-generating activities

Compliance Risks

• Penalties for billing without proper credentialing

• Audit findings and corrective action costs

• Reputation damage from compliance failures

When you compare these real costs with the $200-$500 per-provider investment in professional credentialing services, the ROI becomes crystal clear.

Making the Right Decision for Your Practice

The outsourcing vs. in-house credentialing decision ultimately depends on your practice’s specific circumstances. Here’s a simple framework:

Choose In-House If

• You have low volume, simple credentialing needs

• There is sufficient trained staff for your practice

• There is an availability of budget for software implementation, staff training, and accommodating the overhead

• Direct control is a top priority

Choose Outsourcing If

• You’re growing or adding providers regularly

• Your current team is overwhelmed or lacks expertise

• You want faster turnaround and better compliance

• You prefer predictable costs and scalable solutions

• You value freeing staff to focus on patient care

For most practices, especially those experiencing growth, facing credentialing delays, or struggling with administrative burden, outsourcing medical credentialing provides the best combination of speed, expertise, cost-effectiveness, and peace of mind.

Credentialing Doesn’t Have to Be a Bottleneck

Credentialing is too important for your healthcare practice for you to leave it to chance. Whether you manage it in-house or outsource medical credentialing to specialists, the goal is the same. Faster credentialing practices should help the providers be enrolled accurately, quickly, and compliantly. This will benefit in billing after seeing patients without causing any major delay. Practices that want to eliminate credentialing headaches, reduce costs, and accelerate provider onboarding in the near future, medical credentialing outsourcing with DrCatalyst delivers proven results.